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AMEEICAN 

CASES  ON  CONTRACT 


ARRANGED  IN  ACCORDANCE  WITH  THE  ANALYSIS 
OF  ANSON  ON  CONTRACT  AND  EDITED 


BY 

ERNEST  W.  HUFFCUT 

AND 

EDWIN  H.  WOODRUFF 

PROFESSORS  IN  THE  CORNELL  UNIVERSITY  COLLEGE  OF  LAW 


SECOND  EDITION 
WITH  SUPPLEMENTARY  CASES 


BANKS  &  COMPANY 
ALBANY,   N.  Y. 
rgoi 


190I 


Copyright,  1894, 
By  ERNEST  W.  HUFPCUT  and  EDWIN  H.  WOODRUFF. 

Copyright,  igoi, 
By  ERNEST  W.  HUFFCUT  and  EDWIN  H,  WOODRUFF. 


5 


4^ 

N 


NOTE  TO  SECOND  EDITION. 

-.>Ko- —  \ 

The  supplementary  cases  added  to  this  edition  have  been 
selected,  for  the  most  part,  from  among  those  decided  during 
the  six  years  that  have  passed  since  the  first  edition  was  pub- 
lished. A  few  earlier  cases  have  been  inserted  at  points  where 
experience  in  the  class-room  has  shown  that  additional  case 
material  is  desirable. 

The  supplementary  cases  (pp.  703-882)  are  arranged  in  the 
order  of  the  main  portion  of  the  book.  To  facilitate  the  use 
of  the  supplementary  cases,  each  case  has  a  topical  heading,  at 
the  left  of  which  is  the  page  number  where  the  same  heading: 
is  found  in  the  main  portion,  and  at  the  right  the  page  number 
where  the  case  should  be  added  in  the  assignment  of  work. 

October,  1900. 


PEEFACE. 


This  volume  is  the  outcome  of  a  need  experienced  in 
the  classes  of  a  professional  law  school  on  the  one  hand, 
and  the  undergraduate  classes  of  a  university  on  the  other. 
It  is  an  additional  proof  of  the  value  of  law  as  a  culture 
study,  as  well  as  a  professional  study,  that  the  editors  have 
encountered  no  difficulty  in  uniting  in  a  selection  of  cases 
equally  suited  to  both  purposes.  The  admirable  analysis 
by  Sir  William  Anson  in  his  "Principles  of  the  English 
Law  of  Contract "  has  been  followed  in  the  arrangement 
of  the  cases.  That  work,  prepared  originally  for  under- 
graduate study  at  Oxford,  has  been  found  highly  valuable 
in  the  professional  schools  of  this  country,  and  is  every- 
where recognized  as  a  masterly  exposition  of  the  subject.  It 
is  believed,  however,  that  the  cases  will  be  found  equally 
well  adapted  for  use  with  any  of  the  elementary  treatises, 
or  in  connection  with  lectures,  or  without  either  text  or 
lectures. 

The  selection  is  confined  to  American  cases  because  the 
limits  of  a  single  volume  did  not  admit  of  an  adequate 
representation  of  both  English  and  American  decisions, 
and  because  excellent  collections  of  English  cases  are 
already  available.  It  is  believed,  moreover,  that  the  decis- 
ions of  the  Federal  courts,  and  the  courts  of  the  various 
States,  now  afford  for  the  American  law  student  a  sufficient 
number  of  illustrative  cases  that  are  adequate  in  content, 
and  that  possess  the   additional  value   of  being   stated  in 


IV  PREFACE. 

terms  reflecting  the  character  and  procedure  of  our  own 
courts.  The  frequent,  and  often  exhaustive  discussion  of 
English  authorities  in  the  cases  selected,  as  well  as  in  the 
leading  treatises,  removes  all  danger  of  losing  sight  of  the 
fountain  sources  of  our  law. 

Subjects  commonly  treated  at  length  in  related  courses 
—  as  the  Statute  of  Frauds,  capacity  of  parties,  and  inter- 
pretation of  contract  —  have  been  much  abridged,  the 
object  being  to  indicate  the  trend  of  judicial  decision 
without  attempting  to  develop  details  or  refinements. 
Compression  at  these  points  has  permitted  a  fuller  illus- 
tration of  difiicult  or  disputed  topics,  and  the  addition  of 
some  special  topics  not  indicated  by  Anson,  as  substantial 
performance,  joint  obligations,  and  laws  impairing  the 
obligation  of  contracts.  The  subject  of  agency  has  been 
omitted  altogether.  Notes  have  been  added  where  it 
seemed  impracticable  to  develop  a  subject  fully  by  the  use 
of  cases. 

In  many  of  the  cases  it  has  been  thought  advisable,  for 

the   sake   of  brevity,  to   rewrite  or  abridge  the  statement 

of  facts,  and  this  has  been   done  without  calling  special 

attention  to   the   matter.     Portions   of   opinions  on  points 

irrelevant  to  the  subject  illustrated  are  often  omitted,  but 

such    omissions   are   clearly   indicated.     Every   citation   in 

the  opinions  has  been  verified,  and  corrections  made  where 

the   original   is  manifestly  wrong.     It  is  hoped  that   the 

addition  of  a  full  index  may  render  the  volume  of  service 

to  practitioners  as  well  as  students. 

E.  W.  H. 

E.  H.  W. 

OOTOBIB,  1894. 


TABLE  OF  CONTENTS. 


By  the  nse  of  this  table  the  supplementary  cases  can  be  conTeniently  found 
under  the  proper  topics. 


PART  I. 
INTRODUCTION  . 1 

PART    II. 

FORMATION  OF  CONTRACT. 

CHAPTER  I. 

Offer  and  Acckpta»cb. 

eXOTIOK 

1.  Contract  springs  from  acceptance  of  offer 7-9 

2.  Offer  and  acceptance  may  be  made  by  words  or  conduct  .         10-14 

3.  Offer  must  be  communicated 14-20,  703-706 

(t.)  Ignorance  of  offered  promise 14 

(I'i.)  Ignorance  of  offered  act 14 

(ill.)  Ignorance  of  offered  terms 15-20 

(iv.)  Unauthorized  communication 703 

4.  Acceptance  must  be  communicated 21-29,  706-709 

5.  What  amounts  to  communication  of  acceptance       .        .  29-36,  710-718 

6.  Offer  may  lapse  or  be  revoked 36-62,  716-718 

(i.)  Lapse. 

a.  Lapse  by  death 36 

&.  Lapse  by  failure  to  accept  in  prescribed  manner     ...      38 

c.  Lapse  by  expiration  of  time 41 

(if.)  Revocation. 

a.  Offer  may  be  revoked  before  acceptance 49 

6.  Offer  made  irrevocable  by  acceptance 50 

c.  Offer  under  seal  irrevocable 54 

d.  Must  revocation  be  communicated  ?         ....       67,  715 

7.  Offer  made  to  unascertained  persons         ....  62-71f  718-721 

(f.)  Offer  of  rewards 62,  718 

(ii.)  Invitations  to  treat 67 

8.  Offer  must  contemplate  legal  relations       .        .        .        .        .        .71 

0.  Acceptance  must  be  absolute     .        ...       •       •       •       •       .74 

V 


VI  TABLE  OF  CONTENTS. 


CHAPTER  n. 
Form  and  Consideration. 

BKOTION  PAOB 

1.  Contract  of  record 76-81 

2.  Contract  under  seal 82-92 

3.  Statute  of  frauds 92-132,  721-732 

(i.)  Requirements  of  form 92 

(ii.)  Provisions  of  fourth  section 110,  721 

(in.)  Provisions  of  seventeenth  section 123 

4.  Consideration 133-214,  732-762 

(i.)  Necessity  of  consideration 133 

(ii.)  Adequacy  of  consideration 138,  732 

Three  tests  of  reality  of  consideration. 

a.  Did  the  promisee  suffer  any  detriment  ? 150 

b.  Was  the  detriment  of  any  ascertainable  value  ? 

(a)  Prima  facie  impossibility 152 

(/3)  Uncertainty 157,  736 

(7)  Forbearance  to  sue 162 

(5)  Compromise 165 

(e)  Gratuitous  undertakings 167 

c.  Was  the  detriment  more  than  the  promisee  was  legally  bound 

to  suffer  ? 
(o)  Delivering  property  wrongfully  withheld  ....     174 

(/3)  Performance  of  public  duty 176 

(7)  Promise  to  perform  existing  contract  .  177-187,  738-750 
(5)  Payment  of  smaller  sum  in  satisfaction  of  larger       .     187,  750 

(e)  Composition  with  creditors 195 

(f)  Mutual  promises  and  subscriptions     .        .        .       199,  754-762 

{iii.)  Legality  of  consideration 199 

(i».)  Past  consideration 199 

(a)  Consideration  moved  by  previous  request  ....  206 
(/3)  Voluntarily  doing  what  another  was  legally  bound  to  do  .  206 
(7)  Reviving  agreement  barred  by  rule  of  law         .        .        .    208 


CHAPTER  III. 

Capacity  of  Fabties. 

1.  Political  status ,        .  216 

2.  Infants 218 

3.  Corporations 222 

4.  Lunatics  and  drunken  persons 224 

5.  Married  women  .......•*..  233 


TABLE  OF  CONTENTS.  VU 


CHAPTER  IV. 
Reality  of  CoNSEyr. 

SXOnOK  PAOB 

1.  Mistake 238-264,  762-778 

(t.)  As  to  nature  or  existence  of  contract  ....  238,  762 
(ii.)  As  to  identity  of  person  with  whom  contract  is  made  .  .  243 
(iii. )  As  to  subject-matter  of  contract. 

a.  As  to  identity  of  subject-matter 246 

6.  As  to  existence  of  subject-matter     .        .        .        247-262,  766-778 
c.  As  to  intention,  known  to  other  party 262 

2.  Misrepresentation 265-282 

(i.)  Distinguished  from  fraud 265 

(u.)  Distinguished  from  terms         . 265 

(iii.)  Effects  of  misrepresentation. 

a.  In  contracts  generally       .        . 268 

b.  In  contT&cts  uberrimce  fidei 273 

(i».)  Remedies  for  misrepresentation  :  estoppel       ....  280 

8.   Fraud  ...  282-307,  778-788 

(i.)  Essential  features, 

a.  It  is  a  false  representation 282,  778 

6.  It  is  a  representation  of  fact 288 

c.  Made  with  knowledge  of  falsity,  or  recklessly         .        .        .    298 

d.  Made  with  intent  that  it  be  acted  upon  by  person  injured       .    303 

e.  It  must  actually  deceive 306 

4.   Duress 308-311,  788-795 

6.  Undue  influence 811-314 


CHAPTER  V. 

Legality  of  Object. 

Nature  of  illegality  in  contract 815-372,  796-801 

(i.)  Contracts  illegal  by  statute. 

a.  General  rules  of  construction 316 

6.  Contracts  in  breach  of  Sunday  statutes 318 

c.  Wagers  in  general 324 

d.  Wagers  on  rise  and  fall  of  prices 325,  796 

e.  Wagering  policies 333 

(t'l.)  Contracts  illegal  at  common  law. 

a.  Agreements  to  commit  indictable  offense  or  civil  wrong .        .  338 
6.  Agreements  to  do  what  it  is  policy  of  law  to  prevent, 

(o)  Agreements  tending  to  injure  the  State  with  other  States  .  340 

(j8)  Agreements  tending  to  injure  the  public  service         .        .  340 

(7)  Agreements  tending  to  pervert  the  course  of  justice  .     348,  799 

(5)  Agreements  tending  to  abuse  of  legal  process    .        .        .  354 

(e)  Agreements  contrary  to  good  morals 357 


TUl  TABLE  OF  CONTENTS. 

SKOnOK  PA6B 

(f)  Agreements  affecting  the  freedom  or  security  of  marriage 

359,  801 

(t;)  Agreements  in  restraint  of  trade         .        .        .        .        .     362 

2.   Effect  of  illegality  upon  contracts      ....       373-411,  802-808 

(i.)  When  contract  is  divisible 373,  802 

(ii.)  When  contract  is  indivisible 378,  802 

(m.)  Comparative  effects  of  avoidance  and  illegality        .        .        .    383 

(ir.)  The  intention  of  the  parties 390,  805-«08 

(v.)  Securities  for  money  due  on  illegal  contract    ....    395 
(ri.)  Relief  from  contract  known  to  be  illegal .        .        .        •        .    402 


PART   III. 

THE  OPERATION  OF  CONTRACT. 

CHAPTER  I. 

The  Limits  of  the  Contractual  Obligatiok. 

1.  Third  party  incurring  liabilities 412-419 

(».)  Paying  another's  debt 412 

(h.)  Inducing  breach  of  contract 416 

2.  Third  party  acquiring  rights:  Promise  for  benefit  of  third  party 

420-437,  809-840 

CHAPTER  II, 
The  Assignment  of  Contract. 

1.  Assignment  by  act  of  parties 438-467 

(t.)  Assignment  of  liabilities 438 

(ii.)  Assignment  of  rights. 

a.  At  common  law 442 

b.  In  equity 462 

c.  By  statute 459 

d.  By  the  law  merchant :  negotiability 460 

2.  Assignment  by  operation  of  law 468-485 

(i.)  Assignment  of  obligations  upon  transfer  of  interests  in  land  .  468 

a.  Leasehold  interests 468 

6.  Freehold  interests 472 

(ii.)  Assignment  of  obligations  upon  marriage         ....  478 

(Hi.)  Assignment  of  obligations  by  death         .....  479 

CHAPTER  UL 

Joint  Obligations. 

1.  Joint  promises 486-492 

(t.)  Joint  promisors        ...••••..    486 
(ti.)  Joint  promisees 490 


TABLE  OP  CONTENTS.  IX 

■BEOnOW  PAGH 

2.  Joint  and  several  promises 492-499 

(i.)  Joint  and  several  promisors 492 

(n.)  Joint  or  several  promisees 496 

PART  IV. 

THE  INTERPRETATION  OF  CONTRACT. 

CHAPTER  I. 

Rules  relating  to  Evidencb. 

1.  Proof  of  document 600 

2.  Evidence  as  to  fact  of  agreement       .......  602 

3.  Evidence  as  to  terms  of  contract 503 

a.  Supplementary  and  collateral  terms 503 

b.  Explanation  of  terms 504 

c.  Usages  of  trade 508 

CHAPTER  11. 
Rules  belating  to  Constkuctiok. 

1.  General  Rules 511 

2.  Rules  as  to  time  and  penalties 515 

PART   V. 

DISCHARGE  OF  CONTRACT. 

CHAPTER  I. 

DiSCHABOE   OF   CONTBACT  BT  AgBEEMENT. 

1.  Waiver      .        .        .        .        .        .       .       .       .       .       .     522, 840 

2.  Substituted  contract 524 

3.  Provisions  for  discbarge 531 

CHAPTER  II. 

DiSCHABGE   OF   CONTBACT  BY  PeBFOBMANCE. 

1.  Payment 636 

2.  Tender 541 

3.  Substantial  performance 542 

CHAPTER  III. 
DiSCHABGE  OF  Contract  bt  Breach. 

1.  Position  of  party  discharged  by  breach      ...*•.    555 

2.  Forms  of  discharge  by  breach. 

(i.)  Renunciation  before  performance  due     .        •       •       •     ^5,  843 


X  TABLE  OF  CONTENTS. 

IXOTION  PA6K 

(n.)  Impossibility  created  by  one  party  before  performance  due    .  560 

(in.)  Renunciation  in  course  of  performance    ....     561,857 

(tr.)  Impossibility  created  by  one  party  in  course  of  performance   .  574 

(v.)  Failure  of  performance. 

a.  Absolute  promises  and  concurrent  conditions  ....  576 

6.  Divisible  promises  and  virtual  failure  of  consideration    .     584,  859 

c.  Conditions  and  warranties. 

(a)  Condition,  or  vital  promise 594 

(/3)  "Warranty,  or  subsidiary  promise 607 

8.   Remedies  for  breach  of  contract. 

(i.)  Damages 611 

(ti.)  Specific  performance  and  injunction        •        .        .        .        .  613 
4.   Discharge  of  right  of  action  for  breach. 

(t.)  By  consent  of  the  parties 625,  864,  869 

(ti.)  By  judgment 631,  869,  871 

(iii.)  By  lapse  of  time 635 

CHAPTER  IV. 

luPOSSIBILITT  OF   FeRFORHAKCE. 

1.  General  principles 639 

2.  Exceptions. 

(i. )  Legal  impossibility 645 

(li.)  Destruction  of  subject-matter 649,  873,  875 

(tu.)  Death  or  disability  of  party  in  contract  for  personal  service    .  65& 

CHAPTER  V. 
Discharge  by  Operation  of  Law. 

1.  Merger 65& 

2.  Alteration  or  loss  of  vrritten  instrument    ......  660 

8.  Bankruptcy 669 

CHAPTER  VL 
Impairment  op  Obligation  of  Contract  bt  Statutb. 

1.  Statutes  discharging  obligation  of  contracts 674 

(i.)  Discharge  under  bankruptcy  statutes. 

a.  As  to  antecedent  debts     ........  674 

6.  As  to  foreign  creditors 683 

(it.)  Discharge  under  statutes  imposing  new  conditions  .        .        .  686 

2.  Statutes  impairing  the  remedy  on  contracts 690 

8.  Impairment  of  contracts  of  record 696 

4.  Contracts  with  the  State 696 

Index 883 


TABLE  OF  CASES  REPORTED. 


Abbott  V.  Doane,  163  Mass.  433    . 

Ackert  v.  Barker,  131  Mass.  436   . 

Adams  v.  Messinger,  147  Mass.  185 

Adams  v.  Union  R.  Co.,  42  Atl.  Rep.  (R.  I.)  615 

Adams  Radiator  &c.  Works  v.  Schnader,  155  Penn.  St 

Alden  v.  Thurber,  149  Mass.  271  . 

Alexander  v.  Brogley,  43  Atl.  Rep.  (N.  J.)  888 

Alie  V.  Nadeau,  93  Me.  282   . 

Allen  V.  Brown,  44  N.  Y.  288 

Allen  V.  Collier,  70  Mo.  138  . 

Allen  V.  Colliery  Eng.  Co.,  46  Atl.  Rep.  (Penn.)  899 

Aller  V.  Aller,  40  N.  J.  Law  446    . 

Anderson  v.  May,  50  Minn.  280    . 

Angus  V.  Scully,  57  N.  E.  (Mass.)  674 

Anheuser-Busch  Brewing  Ass'n  v.  Mason,  44  Minn.  318 

Arkansas  &c.  Co.  v.  Belden  &c.  Co.,  127  U.  S.  379 


Bangor  Bank  v.  Treat,  6  Greenl.  (Me.)  207 

Barrett  v.  Buxton,  2  Aikens  (Vt.),  167  . 

Bartholomew  v.  Jackson,  20  Johns.  (N.  Y.)  28 

Bassett  v.  Hughes,  53  Wis.  319     . 

Beebe  v.  Johnson,  19  Wend.  (N.  Y.)  500 

Bellows  V.  Sowles,  57  Vt.  164 

Bender  v.  Been,  78  Iowa,  283 

Benton  v.  Springfield  &c.  Ass'n,  170  Mass.  534 

Bernard  v.  Taylor,  23  Ore.  416      . 

Bird  V.  Munroe,  66  Me.  337  . 

Bishop  V.  Eaton,  161  Mass.  496     . 

Bishop  V.  Palmer,  146  Mass.  469  . 

Bixby  V.  Moor,  51  N.  H.  402 

Blade  v.  Noland,  12  Wend.  (N.  Y.)  173 

Boggs  V.  Curtin,  10  S.  &  R.  (Penn.)  211 


394 


PAOX 

746 
354 
613 
826 
549 
630 
762 
871 
459 
637 
869 
82 
639 
873 
805 
438 


.  494 

.  228 

.  14 

.  428 

.  152 

.  110 

.  87 

.  703 

.  407 

.  92 

.  706 
372,  380 

.  378 

.  666 

.  497 


xu 


TABLE  OF  CASES  REPORTED. 


Boigneres  v.  Boulon,  54  Cal.  146  . 

Borden  v.  Boardman,  157  Mass.  410 

Boston  Ice  Co.  v.  Potter,  123  Mass.  28  . 

Boston  Safe  Dep.  &c.  Co.  v.  Salem  Water  Co.,  94  Fed. 

238 

Bragg  V.  Wetzell,  5  Blackf.  (Ind.)  95    . 
Brauer  v.  Shaw,  168  Mass.  198 
Brown  v.  Kinsey,  81  N.  C.  245       . 
Brusie  v.  Peck  Bros.,  14  U.  S.  App.  21 . 
Bryant  v.  Isburgh,  13  Gray  (Mass.)  607 
Bryson  v.  Haley,  68  N.  H.  337       . 
Buchanan  v.  Tilden,  158  N.  Y.  109 


Eep. 


Carter  v.  United  States  Ins.  Co.,  1  Johns.  Ch.  (N.  Y.) 

Chatham  Purnace  Co.  v.  Moffatt,  147  Mass.  403   . 

Clandeboye,  The,  70  Fed.  Eep.  631 

Clark  V.  Marsiglia,  1  Den.  (N.  Y.)  317  . 

Clason  V.  Bailey,  14  Johns.  (N.  Y.)  484 

Clayton  v.  Clark,  74  Miss.  499       . 

Clifton  V.  Jackson  Iron  Co.,  74  Mich-  183 

Clough  V.  Seay,  49  Iowa,  111 

Colby  V.  Dearborn,  59  N.  H.  326  . 

Coleman  v.  Applegarth,  68  Md.  21 

Collyer  v.  Moulton,  9  R.  I.  90 

Compton  V.  Jones,  4  Cow.  (N.  Y.)  13    . 

Connolly  v.  Sullivan,  173  Mass.  1 

Cook  V.  Bradlfey,  7  Conn.  57  . 

Cook  V.  Googins,  126  Mass.  410    . 

Cooper  V.  Lansing  Wheel  Co.,  94  Mich.  272 

Coplay  Iron  Co.  v.  Pope,  108  N.  Y.  232 

Cordes  v.  Miller,  39  Mich.  581       . 

Cort  V.  Lassard,  18  Ore.  221  . 

Coyner  v.  Lynde,  10  Ind.  282 

Cross  V.  Cross,  58  N.  H.  373  . 

Crumlish's  Adm'r  v.  Cent.  Imp.  Co.,  38  W.  Va.  390 

Cummings  v.  People,  60  111.  132    . 

Davison  v.  Von  Lingen,  113  U.  S.  40    . 
Dawe  V.  Morris,  149  Mass.  188 
Dawkins  v.  Sappington,  26  Ind.  199 
Dearborn  v.  Bowman,  3  Metcalf  (Mass.)  155 


463 


PASS 

357 
435 
243 

832 
486 
715 
395 
582 
609 
808 
809 

452 
298 
778 
572 
102 
750 
659 
665 
601 

57 
522 
444 
867 
133 
690 

50 
697 
645 
619 
177 
361 
412 
492 


694,  265 
.  292 
14,65 
.  199 


TABLE  OF  CASES  REPORTED. 


XllI 


Delamater  v.  Miller,  1  Cow.  (N.  Y.)  75 . 

Derby  v.  Johnson,  21  Vt.  17 

Dermott  v.  Jones,  2  Wall.  (U.  S.)  1       . 

Devecmon  v.  Shaw  and  Devries,  Ex'rs,  69  Md.  199 

Dexter  v.  Norton,  47  N.  Y.  62 

Diamond  Match  Co.  v.  Koeber,  106  N.  Y.  473 

Dickinson  v.  Calahan's  Adm'rs,  19  Penn.  St.  227 . 

Dingley  v.  Oler,  117  U.  S.  490       . 

Duplex  Safety  Boiler  Co.  v.  Garden,  101  N.  Y.  387 

Dusenbury,  Executor,  v.  Hoyt,  53  N.  Y.  521 

Duval  V.  Wellman,  124  N.  Y.  156  . 


.  561 
.  668 

555,  641 
.  141 
.  649 
.  362 
.  479 
.  556 
.  546 
.  208 

361,  402 


Economy  &c.  Co.  v.  West  Jersey  &c.  Co.,  44  Atl.  Eep.  (N.  J.) 

854 824 

Eliason  et  cU.  v.  Henshaw,  4  Wheat.  (U.  S.)  225    .        .        .  38 

Endriss  v.  Belle  Isle  Ice  Co.,  49  Mich.  279   .        .        .        .  180 

Erie  Ry.  Co.  v.  Union  &c.  Co.,  35  N.  J.  Law  240  .        .        .  373 

Field  V.  Mayor,  2  Seld.  (N.  Y.)  179 453 

Fink  V.  Cox,  18  Johns.  (N.  Y.)  145 150 

Eish  V.  Cleland,  33  111.  237 288 

Fishell  V.  Gray,  60  N.  J.  L.  5 802 

Fisher  v.  Deering,  60  111.  114 470 

Fisher  v.  Seltzer,  23  Penn.  St.  308 49 

Fisk  V.  Jefferson  Police  Jury,  116  U.  S.  131          ...  693 

Fitch  V.  Snedaker,  38  N.  Y.  248 14,  62 

Fletcher  v.  Peck,  6  Cranch  (U.  S.)  87 696 

Flynn  v.  Hurlock,  194  Penn.  St.  462 869 

Fogg  V.  Portsmouth  Athenaeum,  44  N.  H.  115       ...  10 

Fonseca  v.  Cunard  &c.  Co.,  153  Mass.  553     ....  15 

Ford  V.  Mitchell,  15  Wis.  304 536 

Foster  v.  Metts  &  Co.,  55  Miss.  77 164 

Freyman  v.  Knecht,  78  Penn.  St.  141 607 

Galusha  v.  Sherman,  81  N.  W.  (Wis.)  495    .        .        .        .  792 

Ganson  v.  Madigan,  15  Wis.  144 504 

Gerli  V.  Poidebard  Silk  Mfg.  Co.,  57  N.  J.  L.  432         .        .  859 

Gibson  v.  Pelkie,  37  Mich.  380 247 

Gillespie  Tool  Co.  v.  Wilson,  123  Penn.  St.  19      .        .        .544 

Gilman  v.  Lockwood,  4  Wall.  (U.  S.)  409      ...        .  683 

Gleason  v.  Dyke,  22  Pick.  (Mass.)  390  .         .         .        c         .  206 

Goddard  v.  Binney,  115  Mass.  450 127 


XIV 


TABLE  OF  CASES  REPORTED. 


Gordon  v.  George,  12  Ind.  408      .... 
Gorham's  Adm'r  v.  Meacham's  Adm'r,  63  Vt.  231 
Gorrell  v.  Greensboro  Water  Supply  Co.,  124  N.  0.  328 
Graves  v.  Jolinson,  156  Mass.  211 
Greenwood  v.  Law,  55  N.  J.  Law  168 
Gribben  v.  Maxwell,  34  Kans.  8    . 
Grigsby  v.  Stapleton,  94  Mo.  423  . 
Guernsey  v.  Wood,  130  Mass.  503 

Hale  V.  Spaulding,  145  Mass.  482 . 

Hale  V.  Trout,  35  Cal.  229     . 

Hall  V.  Perkins,  3  Wend.  (N.  Y.)  626 

Hamer  v.  Sidway,  124  N.  Y.  538  . 

Hamilton  v.  Home  Ins.  Co.,  137  U.  S.  370 

Hamilton  v.  Liverpool  &c.  Ins.  Co.,  136  U.  S.  242 

Handy  v.  St.  Paul  Globe  Pub.  Co.,  41  Minn.  188 

Hart  V.  Georgia  R.  Co.,  101  Ga.  188      . 

Harvey  v.  Merrill,  150  Mass.  1      .        .        . 

Hayes  v.  Willio,  4  Daly  (K  Y.  C.  P.)  259    . 

Heaton  v.  Angier,  7  N.  H.  397       . 

Hecht  V.  Batcheller,  147  Mass.  335 

Heermans  v.  Ellsworth,  64  N.  Y.  159    . 

Hertzog  v.  Hertzog,  29  Penn.  St.  465    . 

Heyn  v.  Philips,  37  Cal.  529  ... 

Hicks  V.  Burhans,  10  Johns.  (N.  Y.)  242      . 

Hill  V.  Grigsby,  35  Cal.  656  . 

Hirth  V.  Graham,  50  Ohio  St.  57  . 

Hobbs  V.  Massasoit  Whip  Co.,  158  Mass.  194 

Hough  V.  Barton,  20  Vt.  455  ... 

Howarth  v.  Warmser,  58  111.  48    . 

Hughes  V.  Wamsutta  Mills,  11  Allen  (Mass.)  201 

Hunnewell  v.  Duxbury,  154  Mass.  286  . 

Jaffray  v.  Davis,  124  N.  Y.  164     . 

Jeffries  v.  Ferguson,  Adm'r,  87  Mo.  244 

Jessel  V.  Williamsburgh  Ins.  Co.,  3  Hill  (N.  Y.)  88 

Johnson's  Adm'r  v.  Sellers'  Adm'r,  33  Ala.  265 

Jones  V.  Stanly,  76  N.  C.  355         ... 

Keller  v.  Holderman,  11  Mich.  248 

Kellett  V.  Kobie,  99  Wis.  303        ..        . 


.  468 

.  9,88 

.  836 
340,  391 

.  131 

.  224 

.  285 

.  685 

.  487 

.  561 

.  311 

.  143 
353  n. 

.  351 

.  318 

.  736 
332,  383 

.  451 

.  442 

.  255 

.  457 
1 

.  118 

.  205 

.  580 

.  124 

.  24 

.  445 

.  479 

.  647 

.  303 

.  187 

.  489 

.  444 

.  185 

.  418 

.  71 

.  840 


TABLE   OF  CASES  BSFOBTSD. 


XV 


PAOB 

Eadder  v.  Kidder,  33  Penn.  St.  268        .        .        .        .        .  625 

King  V.  Duluth  &c.  Ry.,  61  Minn.  482        ...        .  738 

Knight  V.  Abbott,  30  Vt.  577 641 

Kowalke  v.  Milwaukee  &c.  Co.,  103  Wis.  472        ..        .  765 

Kromer  v.  Heim,  75  N.  Y.  574 627 

Kurtz   V.   Frank,   76   Ind.   594 358 

Kyle  V.   Kavanagh,  103  Mass.   356 246 

Laidlaw  v.  Organ,  2  Wheat.  (U.  S.)  178        .    '    .        .        .  282 

Lawrence  v.  Fox,  20  N.  Y.  268 422 

Lehow  V.  Simonton,  3  Colo.  346 420 

Lewis  V.  Jewell,  151  Mass.  345 306 

Lingenfelder  et  al.  v.  Wainwright  Brewing  Co.,  103  Mo.  578  181 

Lord  V.  Thomas,  64  N.  Y.  107 700 

Love  V.  Harvey,  114  Mass.  80 324 


(Mass 


McClurg  V.  Terry,  21  N.  J.  Eq.  225 

McCreery  v.  Day,  119  N.  Y.  1 

McKinney  v.  Alvis,  14  111.  33 

McKown  V.  Furgason,  47  Iowa  636 

Maclay  v.  Harvey,  90  111.  525 

McMillan   v.   Ames,   33   Minn.   257 

McRaven   v.    Crisler,   53   Miss.   542 

Malone  v.  Boston  &  Worcester  R.  R.,  12  Gijay 

Manchester  v.  Braedner,  107  N.  Y.  346 

Manetti  v.  Doege,  48   N.  Y.  App.  Div.   567 

Materne  v.  Horwitz,  101  N.  Y.  469 

Mather  v.  Butler  Co.,  28  Iowa  253 

May  V.  Hanson,  6  Cal.  642         ..        . 

May  V.  Williams,  61  Miss.  125 

Merrill   v.    Packer,    80    Iowa    542 

Middlefield  v.  Church  Mills  Knitting  Co.,  160  Mass 

Miles    V.    Schmidt,    168    Mass.    339 

Miller  v.  Covert,  1  Wend.   (N.  Y.)  487 

Mills  V.  Wyman,  3  Pick.  (Mass.)  207 

Minneapolis  and  St.  Louis  Ry.  v.  Columbus 

119    U.     S.    149 

Minnesota  Oil  Co.  v.  Collier  &c.  Co.,  4  Dillon  (TT 

431 

Mohr  V.   Miesen,  47  Minn.  228 

Moore  v.  Phoenix  Ins.  Co.,  62  N.  H.  240 


.  72 

.  524 

.  443 

.  301 

.  41 

.  54 

666,  577 

5.)  388  .  19 

.  635 

.  748 

.  338 

.  612 

.  496 

.  113 
.  339n. 


267 


Rolling  Mill, 
S.  C.  C.) 


476 
799 
631 
201 

74 

46 
325 
531 


XVI 


TABLE   OF  CASES  REPORTED. 


PAOB 

Morse  v.  Woodworth,  155  Mass.  233 308 

Moulton  V.  Kershaw,   59  Wis.  316        .....      67 

Nassoiy  v.  Tomlinson,  148  N.  Y.  326 864 

New  V.  Walker,  108  Ind.   365        .        .        ...        .        .399 

Nolan   V.   Whitney,   88   N.   Y.    648 542 

Norrington   v.    Wright,   115    U.    S.    188        .        .        .        .  584 
Northern  et  al.  v.  The  State  on  the  Kelation  of  Lathrop, 

1    Ind.    113 123 

Northrup  v.  Northnip,  6  Cow.   (N.  Y.)  296        ..        .  576 


O'Brien  v.  Young,  95  N.  Y.  428 
O'Donnell  v.  Leeman,  43  Me.  158 


.    696,  "   76 
.    502,    100 


Pangborn  v.  Westlake,  36  Iowa,  546 315 

Partridge  v.   Hood,   120  Mass.   403 348 

Pennsylvania  Coal  Co.  v.  Blake,  85  N.  Y.  226        ..        .  162 

Perkins  v.  Lockwood,  100  Mass.  249 197 

Peters  v.  Westborough,  19  Pick.  (Mass.)  364        ..        .  120 

Phoenix  Life  Ins.  Co.  v.  Eaddin,  120  U.  S.  183        ..        .  275 

Platner  v.  Patchin,  19  Wis.  333 478 

Poison   V.    Stewart,   167   Mass.   211 801 

Pope  V.  Allis,  115  U.   S.  363 595 

Pratt  V.  Trustees,  93  111.  475 35 

Presbyterian  Church  of  Albany  v.  Cooper,  112  N.  Y.  517        .  756 

Bay  V.  Thompson,  12  Cush.  (Mass.)  281        ...        .  534 

Eeed  v.  Insurance  Co.,  95  U.  S.  23 511 

Eeed  v.  Pierce,  36  Me.  455 669 

Reynolds  v.  Eobinson,  110  N.  Y.  654 502 

Reynolds  v.   Stevenson,  4  Ind.  619 322 

Eicketts   v.    Scothorn,    57   Neb.    51 732 

Eobinson  v.  Magee,  9  Cal.  81 686 

Eochester  Lantern  Co.  v.  Stiles  &c.  Co.,  135  N.  Y.  209    612,  447 

Eoebon  v.  Horst,  178  U.  S.  1 843 

Eoosevelt  v.  Cebra,  17  Johns.  (N.  Y.)  108        ...        .  683 

Eoss  V.  Drinkard's  Adm'r,  35  Ala.  434        ...        .  291 

Eovegno   v.  Defferari,  40   Cal.   459 261 

Eoyal  Ins.  Co.  v.  Beatty,  119  Penn.  St.  6        ,        .        .        .21 

Eussell  V.  Cook,  3  Hill  (N.  Y.)  504 165 


TABLE  OF  CASES  REPORTED. 


XVU 


Sanders  v.  Pottlitzer  Bros.  Fruit  Co.,  144  N 
Santa  Clara  &c.  Co.  v.  Hayes,  76  Cal.  387 
Schnell  v.  Nell,  17  Ind.  29     .         .         . 
School  Directors  v.  Boomhour,  83  111.  17 
Sears  v.  Grand  Lodge  &c.,  163  N.  Y.  374 
Shaber  v.  St.  Paul  Water  Co.,  30  Minn.  179 
Shaw  V.  Railroad  Co.,  101  U.  S.  557      . 
Sheldon  v.  Davidson,  85  Wis.  138 
Shelton  v.  Ellis,  70  Ga.  297  . 
Shepard  v.  Rhodes,  7  R.  I.  470      , 
Sherman  v.  Kitsmiller,  Adm'r,  17  S.  &  R. 
Sherwin  v.  Fletcher,  168  Mass.  413 
Sherwood  v.  Walker,  66  Mich.  568 
Siegel,  Cooper  &  Co.  v.  Easton  &  Prince  Co, 

650 

Silsbee  v.  Webber,  171  Mass.  378  . 
Slater  Woollen  Co.  v.  Lamb,  143  Mass.  420 
Smith  V.  Mace,  44  N.  H.  553 
Smith  V.  Whildin,  10  Penn.  St.  39 
Southard  v.  Boyd,  51  N.  Y.  177     . 
Soutier  v.  Kellerman,  18  Mo.  509  . 
Spalding  v.  Rosa,  71  N.  Y.  40 
Stensgaard  v.  Smith,  43  Minn.  11 
Sterling  V.  Sinnickson,  2  South.  (N.  J.)  756 
Stevens  v.  Coon,  1  Pinney  (Wis.)  356   . 
Stevens  v.  Ludlum,  46  Minn.  160  . 
Story  V.  Lovett,  1  E.  D.  Smith  (N.  Y.  C.  P.) 
Stovall  V.  McCutchen,  54  S.  W.  (Ky.)  969 
Streeper  v.  Williams,  48  Penn.  St.  450 
Sturges  V.  Crowninshield,  4  Wheat.  (U.  S.) 
Sullivan  v.  Sullivan,  161  N.  Y.  554 
Sweigart  v.  Berk,  8  S.  &  R.  (Penn.)  308 


(Penn. 


,165 


Tayloe  v.  Ins.  Co.,  9  Howard  (U.  S.)  390 
Taylor  &  Co.,  Assigned  Estate  of,  192  Penn, 
Thome  v.  Deas,  4  Johns.  (N.  Y.)  84      . 
Thurston  v.  Arnold,  43  Iowa,  43   . 
Tolhurst  V.  Powers,  133  N.  Y.  460 
Tracy  v.  Albany  Exch.  Co.,  7  N.  Y.  472 
Trainer  v.  Trumbull,  141  Mass.  527 
Trist  V.  Child,  21  Wall.  (U.  S.)  441 


Y.  209 


45 


lU. 


153 


122 


St.  304 


PA«B 

.  710 
372,  376 

.  138 

.  271 

.  774 

.  472 

.  460 

.  295 

.  262 

.  210 
73, 157 

.  761 

.  249 

.  875 

.  788 

.  222 

.  660 

.  176 

.  347 

.  608 

.  655 

.  26 

.  359 

.  155 

303,  280 

.  600 

.  754 

613,  617 

.  674 

.  821 

.  490 

.  29 

.  796 

.  167 
504,  515 

.  174 

.  579 

.  220 

.  340 


xvm 


TABLE  OF  CASES  REPORTED, 


Traeblood  v.  Trueblood,  8  Ind.  195 
Tyler  v.  Carlisle,  79  Me.  210 


PAOB 

218 
390 


United  States  v.  Grossmayer,  9  Wall.  (U.  S.)  72  . 


340,  215 


Vanuxem  v.  Burr,  151  Mass.  386 632 

Vitty  V.  Ely,  51  N.  Y.  App.  Div.  44 718 

Walden  v.  Louisiana  Ins.  Co.,  12  La.  134      ....  273 

Walker  v.  Cronin,  107  Mass.  555 416 

Walker  v.  Ebert,  29  Wis.  194 238 

Walker  v.  Whitehead,  16  Wall.  (U.  S.)  314  .        .        .        .  690 

Warner  v.  Texas  &  Pac.  Ey.,  164  U.  S.  418  .        .        .        ^  721 

Wamock  v.  Davis,  104  U.  S.  775 333 

Wells  V.  Caywood,  3  Col.  487 233 

White  V.  Corlies,  46  N.  Y.  467 21,  50,  7 

Whitehead  v.  Burgess,  61  N.  J.  L.  75 822 

Wilcox  V.  Iowa  Wesleyan  Univ.,  32  Iowa.  367      .        .        .  268 

Williams  v.  Carrington,  1  Hilton  (N.  Y.  C.  P.)  615       .        .  195 

Willoughby  v.  Willoughby,  5  N.  H.  244        .        .        .        .  496 

Wilmington  Transp.  Co.  v.  O'Neil,  98  Cal.  1         .        .        .  654 

Windmuller  v.  Pope,  107  N.  Y.  674 555 

Wolcott  V.  Mount,  36  N.  J.  L.  262        .        .        .        .     611,  598 

Wolf  V.  Marsh,  54  Cal.  228 560 

Wood  V.  Boynton,  64  Wis.  265 257 

Wood  V.  Moriarty,  15  E.  I.  518 503,  430 

Woodberry  v.  Warner,  53  Ark.  488 574 

Woodruff  V.  Saul,  70  Ga.  271 272 


TABLE   OF   CASES   CITED. 


KoTB. — This  table  includes  only  the  esses  cited  by  the  editors  In  the  notes.     Cases  digested,  or 
to  which  particular  attention  is  called,  are  indicated  by  a  "  d  "  after  the  page  number. 


Adams  v.  Gay,  323. 

Adams  Radiator  &c.  Co.  v,  Schnader, 

486. 
Albany  City  Say.  Inst.  v.  Burdick, 

307. 
Alden  v.  Thurber,  524. 
Alexander  v.  Morgan,  479  d. 
Allen  V.  Baker,  485. 
Allen  ».  Bryson,  205  d. 
Allen  V.  Gardiner,  323. 
Allen  V.  Hammond,  248. 
Allison  V.  Chandler,  611. 
Alpaugh  V.  Wood,  487  d. 
Anderson  v.  Rice,  572. 
Anderson  v.  Spence,  118. 
Andrews  v.  Dyer,  507. 
Auditor  v.  Ballard,  67. 


B. 


Bacon  v.  Bonham,  456. 

Bagley  v.  Cleveland  Rolling  Mill  Co., 

603. 
Baldwin  v.  Hale,  682. 
Ballon  V.  Earle,  19. 
Barfield  v.  Price,  247. 
Beach  v.  First  M.  E.  Ch.,  38. 
Beck  &c.   Co.  V.  Colorado  &c.  Co., 

517-18  d. 
Bedell  v.  Herring,  243. 
Bedell  v.  Wilder,  248. 
Beecher  v.  Conradt,  582. 
Beeman  v.  Banta,  612. 
Bellows  V.  Sowles,  167. 
Beninger  v.  Corwin,  288. 
Bernard  v.  Taylor,  325,  658. 
Bigelow  V.  Stilphens,  666. 
Billings'  Appeal,  486. 


Binghamton  Bridge,  The,  699  d. 

Bixby  V.  Dunlap,  418. 

Blewitt  V,  Boorum,  503. 

Bloch  V.  Isham,  476. 

Bloom  V.  Richards,  323. 

Blossom  V.  Dodd,  20. 

Boothby  v.  Scales,  611. 

Boston  &  Maine  R.  v.  Bartlett,  62. 

Bourlier  Bros.  v.  Macauley,  418  d. 

Bowery  Nat.  Bk.  v.  Wilson,  347, 452. 

Bowman  v.  Phillips,  351. 

Boyle  V.  Adams,  347. 

Boyson  v.  Thorn,  419  d. 

Bradley  v.  Levy,  572. 

Bradshaw  v.  Combs,  503. 

Brigg  V.  Hilton,  609. 

Britton  v.  Turner,  658. 

Bronson  v.  Kinzie,  690,  692. 

Brooks  V.  Cooper,  347, 

Brown  v.  Everhard,  503. 

Brown  v.  Farmers'  Loan  &  Trust  Co., 

100  d. 
Brown  v.  Montgomery,  288  d. 
Brown  v.  Tattle,  357. 
Brownlee  v.  Lowe,  187. 
Brunswick  Gas  Light  Co.  v.  United 

Gas  &c.  Co.,  224  d, 
Bryan  v.  Watson,  323  d. 
Burns  v.  Lane,  292. 
Burton  v.  Larkin,  421. 
Butler  V.  Butler,  574. 


C. 


Cahen  v.  Piatt,  594. 
Canada  So.  Ry.  v.  Gebhard,  674. 
Canal  Co.  v.  Ray,  530. 
Candee  v.  Smith,  489. 
Cape  Fear  &c.  Nav.   Co.  v.  Wilcox, 
561. 


XIX 


XX 


TABLE  OF  CASES  CITED, 


Capen  v.  Barrows,  497  d. 
Carter  v.  Nichols,  457. 
Gary  v.  Gruman,  609. 
Catskill  Bk.  v.  Messenger,  488. 
Central  Trans.  Co.  v.  Pullman's  Car 

Co.,  223  d. 
Chaffee  v.  Jones,  489. 
Chalfant  v.  Payton,  360-1  d. 
Chamberlain  v.  Ins.  Co.,  437,  445. 
Chambers  v.  Baldwin,  419  d. 
Chapin  v.  Dobson,  503. 
Chapman  v.  Rose,  243. 
Chase  v.  Fitz,  485. 

Chatham  Furnace  Co.  v.  Moffat,  271. 
Chipley  v.  Atkinson,  418  d. 
Chipman  v.  Morrill,  489. 
Christian  College  v.  Hendley,  199. 
Clapp  V.  Pawtucket  Inst,  for  Sav., 

497  d. 
Clark  V.  Allen,  337. 
Clark  V.  Marsiglia,  613. 
Clark  V.  Mayor,  572  d. 
Clark  V.  Owens,  501 . 
Cleary  v.  Sohier,  653. 
Clodfelter  v.  Cox,  459. 
Clough  V.  Baker,  576. 
Clough  V.  Goggins,  .323. 
Coates  V.  Penn.  Ins.  Co.,  421. 
Cole  V.  Hughes,  476. 
Collyer  v.  Moulton,  626. 
Connor  v.  Stanley,  314  d. 
Cooke  1?.  Nathan,  292. 
Costello  V.  Ten  Eyck,  323. 
Cotheal  v.  Talmage,  521. 
Cottage  St.  Ch.  v.  Kendall,  38, 199. 
Coulter  V.  Robertson,  401. 
Cowley  V.  Smyth,  301. 
Crane  v.  Ailing,  488. 
Crane  v.  Powell,  100. 
I  Cranson  v.  Goss,  323. 
Crawford  v.  Chapman,  472. 
Crocker  v.  Beal,  492. 
Crocker  v.  Whitney,  444. 
Cromwell  tj.  Tate's  Ex'r,  86. 
Crouch  V.  Gutmann,  643. 
Croyle  v.  Moses,  284  d. 


Da  Lee  v.  Blackburn,  301. 
Danforth  v.  Tennessee  &c.  R'y  Co., 
568. 


Dartmouth    College     v.   Woodward, 

699  d. 
Davenport  v.  First  Cong.  Society,  187. 
Davis  V.  Bronson,  574  d. 
Davis  V.  Nuzum,  301. 
Davis  V.  Wells,  29. 
Davison  v.  Von  Lingen,  515,  611. 
Day  V.  McAllister,  323, 
Day  V.  Pool,  609. 
Dazey  v.  Mills,  446. 
Dean  v.  Emerson,  376. 
Dean  v.  Morey,  284. 
Dean  v.  St.  Paul  &  D.  R.  Co.,  457. 
Dean  v.  Walker,  421. 
Deaver  v.  Bennett,  389. 
De  Camp  v.  Hamma,  243. 
Delaware  Railroad  Tax,  699. 
Denny  v.  Bennett,  685. 
Denver  Fire  Ins.  Co.  v.  McClelland, 

224. 
Devlin  v.  Mayor,  449  d. 
Diamond  Match  Co.  v.  Roeber,  521. 
Dickinson  v.  Calahan's  Adm'r,  658. 
Dickson  v.  Dickson,  418. 
Dillon  V.  Anderson,  574. 
Dodge  V.  McClintock,  576. 
Doggett  V.  Emerson,  271. 
Donnell  v.  Manson,  492. 
Doolittle  V.  McCuUough,  672  d,  675  d. 
Doty  V.  Wilson,  208. 
Douglass  V.  Rowland,  29. 
Drummond  v.  Crane,  485. 
Duff  any  v.  Ferguson,  291. 
Dulaney  v.  Rogers,  301. 
Duncan  v.  N.  Y.  Mut.  Ins.  Co.,  248. 
Durant  v.  Rhener,  323. 
Durbin  v.  Kuney,  489. 
Duval  V.  Wellman,  668. 


E. 


Easterly  v.  Barber,  490  d. 
Eaton  V.  Avery,  306. 
Eberle  v.  Mehrback,  323. 
Eckstein  v.  Downing,  619. 
Eddy  V.  Davis,  582. 
Edwards?;.  Kearzey,  692 d. 
Edwards  v.  Peterson,  466. 
Edwards  v.  Skirving,  398. 
Eggleston  v.  Buck,  496. 
Ehle  V.  Purdy,  492. 
Eldred  v.  Bank,  489, 


TABLE   OF  CASKS   CITED. 


XXI 


EDiott  V.  Bell,  487. 

EllioU  D.  Caldwell,  545-6  d. 

Ely  V.  Hallett,  274. 

Emmeiuth  v.  Home  &c.  Association, 

497  d. 
Etting  V.  Bank  of  U.  S.,  284. 
Exchange  Bank  v.  McLoon,  457, 
Exhaust  Vent.   Co.  v.  Chicago  &c. 

Ry.,  554. 


FarnI  v.  Tesson,  492. 

Faulkner  v.  Faulkner,  437  d. 

Fay  &  Co.  v.  Jenks  &  Co.,  494  d. 

Fay  V.  Guynon,  446. 

Fetrow  v.  Wiseman,  219-20  d. 

Finn  v.  Donahue,  333. 

First  N.  B.  v.  Yocum,  301. 

First  Pres.  Ch.  v.  Cooper,  199. 

Fish  V.  Cleland,  314. 

Fitch  V.  Snedaker,  75. 

Foley  V.  Speir,  380. 

Ford  V.  Mitchell,  467. 

Foster  v.  Hooper,  489. 

Fowler  v.  Callan,  357. 

T^'ranklin  v.  Long,  611. 

G. 

Gamewell  Fire  Alarm  Tel.   Co.  v. 

Crane,  372. 
Gelpcke  v.  Dubuque,  376,  674. 
Gibbs  V.  Consolidated  Gas  Co.,  372  d. 
Gibbs  V.  Linabury,  243. 
Gibson  v.  Cooke,  457. 
Giles  V.  Canary,  495  d. 
Given  v.  Driggs,  398. 
Given  v.  Wright,  699. 
Gleason  v.  Dyke,  415. 
Glenn  v.  Farmers'  Bank,  401. 
Goddard  v.  Monitor  Ins.  Co.,  274. 
Goldsborough  v.  Gable,  185. 
Goodrich  v.  Tenney,  351. 
Goss  V.  Ellison,  488. 
Gottschalk  v.  Stein,  619. 
Gould  V.  Brown,  576. 
Grandin  v.  Grandin,  167  d. 
Gray  v.  Haniil,  205. 
Green  v.  Batson,  504. 
Green  v.  Gilbert,  658. 
Greenawalt  v.  Kohne,  504. 


Greenfield  v.  Gllman,  372  d. 
Gregory  v.  Schoenell,  273  d. 
Griffin  V.  Colver,  611. 


Hacker's  Appeal,  86. 

Hale  V.  Spaulding,  603,  626. 

Hale  V.  Trout,  611. 

Halloran  v.  Whitcomb,  446. 

Halstead  v.  Francis,  437. 

Hamer  v.  Sidway,  6,  100. 

Hamilton  v.  Home  Ins.  Co.,  353  d. 

Hammond  v.  Pennock,  271. 

Handy  v.  St.  Paul  Globe  Co.,  880. 

Hardy  v.  Waters,  219  d. 

Harms  v.  McCormick,  429. 

Hamer  v.  Dipple,  220. 

Hart  V.  Lyon,  476. 

Hartford  Ins.  Co.  v.  Olcott,  446. 

Haskins  v.  Royster,  418. 

Hastings  v.  Dollarhide,  219  d. 

Hastings  v.  Ins.  Co.,  445. 

Haven  v.  Neal,  301. 

Hawkins  t.  Graham,  548  d. 

Hayward  v.  Leonard,  543. 

Hazard  v.  New  Eng.  Marine  Ins.  Co., 

247  d. 
Heaton  v.  Angier,  530. 
Heckemann  v.  Young,  439. 
Hellams  «.  Abercrombie,  323. 
Hendrick  v.  Lindsay.  421  d. 
Higert  v.  Indiana  Asbury  Univ.,  199. 
Hill  V.  Morse,  490  d. 
Hix  V.  Davis,  495. 
Hoeflinger  v.  Wells,  541  d. 
Holcomb  V.  Noble,  301. 
Homer  v.  Ins.  Co.,  503. 
Hosmer  v.  Wilson,  572  d. 
Houghwout  V.  Boisaubin,  62. 
Howard  v.  Daly,  613. 
Howard  v.  Mfg.  Co.,  613. 
Howl  and  v.  Lounds,  65. 
Hubble  V.  Cole,  610. 
Hudson  v.  Hudson,  572  d. 
Hughes  V.  Oregon  Ry.  &  Nav.  Co., 

429. 
Hull  V.  Ruggles,  318,  391. 
Hunt  V.  Danforth,  469. 
Hunt  V.  Jones,  100. 


xxn 


TABLB  OF  CASES  CITED. 


Indiana  &c.  Ry.  «.  Adamson,  492. 

J. 
Jackson  v.  Port,  469. 
Jacobs  V.  Davis,  497. 
James  v.  Newton,  457. 
Jamieson  v.  Indiana  Nat.  Gas  Co. 

647. 
Janin  v.  Browne,  485. 
Jefferson  v.  Asch,  428,  429. 
Johnson  v.  Brooks,  618-19. 
Johnson  v.  Harvey,  490  d. 
Juilliard  v.  Greenman,  674. 

K. 

Kadish  v.  Young,  574 

Kane  v.  Clough,  456. 

Kane  v.  Hood,  583. 

Katz  V.  Bedford,  543. 

Kellogg  V.  Tompson,  503. 

Kelly  V.  Bradford,  543. 

Kendall  v.  Robertson,  401. 

Kershaw  v.  Kelsey,  217. 

Kidder  v.  Kidder,  488. 

Kimball,  The,  541. 

King  V.  Eagle  Mills,  301. 

Kitchin  v.  Loudenback,  156. 

Kurtz  V.  Frank,  556. . 

Kyte  V.  Com,  Un.  Ins.  Co.,  534  d. 


Lacy  ».  Getman,  485,  658. 

Laidlaw  v.  Organ,  264. 

Lansing  v.  Dodd,  521. 

Lapish  V.  Wells,  284  d. 

La  Rue  t.  Groezinger,  448-9  d. 

Lathrop  v.  Knapp,  199. 

Lawrence  v.  Miller,  658. 

Legal  Tender  Cases,  674. 

Lennox  v.  Eldred,  479. 

Lewis  V.  Browning,  35. 

Lewis  V.  McLemore,  271. 

Lindsay  v.  Smith,  376,  378. 

Linneman  v.  Moross,  437. 

Long  V.  Warren,  307. 

Loper  V.  Robinson,  301. 

Loud  V.  Pomona  «&c.  Co.,  676,  588. 

Louisiana  b.  Mayor,  81. 


Ludlow  V.  McCrea,  497. 

Lynch  v.  Mercantile  Trust  Co.,  301. 

Lynch  v.  Sellers,  575. 

Lyon  «.  Mitchell,  347. 

M. 
McAllester  v.  Sprague,  488-9  d. 
McCandless  v.  Alleghany  Bessemer 

Steel  Co.,  177  d. 
McCauley  v.  Davidson,  174. 
McClair  v.  Austin,  572. 
McCracken  v.  Hayward,  692  d. 
McCreery  v.  Day,  631. 
McCulloch  V.  Eagle  Ins.  Co.,  85. 
McDowell  V.  Laev,  429  d.^ 
Mclntyre  v.  Buell,  301. 
McKenzie  v.  Harrison,  530  d. 
Maclay  «.  Harvey,  75. 
McMillan  v.  Ames,  86. 
Mactier  v.  Frith,  35. 
Madden  v.  Gilmer,  479. 
Madison  Sq.  Bk.  v.  Pierce,  415  d. 
Mandeville  v.  Welch,  457. 
Manhattan  Life  Ins.  Co.  v.  Buck,  658. 
Manning  v.  Sprague,  356  d. 
Marquis  v.  Laureston,  576. 
Marsh  v.  Low,  609. 
Marston  v.  Knight,  611. 
Mason  v.  Eldred,  489. 
Matteson  v.  Holt,  609. 
Matthews  v.  Associated  Press,  871-3d 
Maynard  v.  Maynard,  288  d,  613. 
Meguire  v.  Corwine,  347. 
Melbourne  &c.  R.  Co.  v.  Louisville 

«fcc.  R.  Co.,  174. 
Merrill  v.  Packer,  156,  889  d. 
Merritt  v.  Earle,  323  d. 
Miller  v.  Ammon,  318. 
Miller  v.  The  State,  699  d. 
Millerd  v.  Thorn,  435  d. 
Minneapolis  &c.  Ry.  v.    Columbus 

Rolling  Mill.  41. 
Moline  Scale  Co.  v.  Beed,  574. 
Moore  v.  Detroit  Loc.  Works,  180. 
Moore  v.  Ins.  Co.,  515. 
Moore  v.  Murdock,  323. 
Moreland  v.  Atchison,  292. 
Morley  v.  Lake  Shore  Ry.,  696. 
Morrill  v.  Wallace,  268. 
Mott  V.  Oppenheimer,  476  d. 


TABLE  OF  GASES  CITED. 


ZXIU 


Moulton  V.  Kershaw,  64. 
MuUer  v.  Eno,  609. 
Mulvey  v.  King,  301. 
Murray  v.  Mumford,  492. 
Mustard  v.  Wohlford's  Heirs,  220. 
Mutual  &c.  Ass'n  v.  Hurst,  206  d. 
Myrick  v.  Dame,  492. 


N. 


Nash  V.  Minn.  &c.  Co.,  306. 
National   Bank  v.   Union   Ins.  Co., 

280  d. 
National    Furnace    Co.   v.  Keystone 

Mfg.  Co.,  54. 
Naumberg  v.  Young,  603. 
Nebraska,  City  of,  v.  Nebraska  &c. 

Coke  Co.,  674. 
New  V.  Walker,  467. 
New  Jersey  v.  Wilson,  699  d. 
New  Orleans  Gas  Co.  v.  Louisiana 

Light  Co.,  699  d. 
New  York  &c.  Co.  v.  Memphis  Water 

Co.,  462-3  d. 
Niblo  V.  Binsse,  653. 
Nichols  t>.  S.  S.  Co.,  668. 
Norrington  v.  Wright,  268,  515,  546. 
Norton  v.  Coons,  489. 


O. 


O'Brien  v.  Young,  6. 

Odell  V.  Gray,  467  d. 

O'Donnell  v.  Leeman,  618. 

Ogden  V.  Saunders,  682. 

Old  Dominion  S.  S.  Co.  v.  McKenna, 

417  d. 
Oliver  v.  Gilmore,  377. 
Oregon  Steam  Nav.  Co.  v.  Winsor, 

376. 
Osborne  v.  O'Reilly,  180. 
Oscanyan  v.  Arms  Co.,  347. 
Owen  V.  Hall,  666. 

P. 

Paddock  v.  Strobridge,  284. 
Parker  v.  Macomber,  658. 
Parsons  v.  Sutton,  613. 
Patrick  v.  Bowman,  36. 
Patterson  v.  Caldwell,  466. 
Peltz  V.  Eichele,  376. 


Penniman's  Case,  692  d. 

People  V.  Keyser,  492. 

Perry  v.  Mount  Hope  Iron  Co.,  35. 

Phillips  V.  Gallant,  243. 

Pierson  v.  Hooker,  492. 

Pipp  V.  Reynolds,  437. 

Pope  V.  Porter,  594. 

Porter  v.  Dunn,  572. 

Powers  V.  Bumcratz,  29. 

Providence  Bk.  v.  Billings,  699. 

B. 

Reece  v.  Kyle,  367. 

Rice  V.  Manley,  419  d. 

Rich  V.  N.  Y.  C.  &  H.  R.  R.  R.  Co.,  6. 

Richards  v.  Amer.  Desk  &c.  Co.,  372. 

Richmond  v.  Moore,  323. 

Riegel  v.  Amer.  Life  Ins.  Co.,  248. 

Robinson  v.  Harbour,  582. 

Robinson  i;.  Jewett,  187. 

Roebling  &c.  Co.  v.  Lock  Stitch  &c. 

Co.,  674. 
Rogers  v.  Gosnell,  421. 
Rogers  v.  Hanson,  611. 
Rogers  v.  Rogers,  181. 
Rothholz  V.  Schwartz,  619. 
Rowland  v.  N.  Y.  &c.  R.  Co.,  262. 
Rowley  v.  Stoddard,  488. 
Runkle  v.  Johnson,  582. 
Rupley  V.  Daggett,  262. 
Russell  V.  Stewart,  67. 


S. 


Salisbury  v.  Howe,  302. 

Salisbury  v.  Shirley,  469. 

Sanborn  v.  Cole,  501  d. 

Santa  Clara  &c.  Co.  v.  Hayes,  872. 

Savings  Bk.  v.  Shaffer,  666. 

Sayre  v.  Wilson,  504. 

Sceva  17.  True,  6. 

Schnell  v.  Nell,  151,  167. 

School  Directors  v.  Boomhour,  801. 

Schuler  v.  Myton,  187. 

Schumaker  v.  Mather,  307. 

Scott  V.  McMillan,  476. 

Searles  v.  Reed,  323. 

Seattle  Bd.  of  Trade  t>.  Hayden,  237. 

Sessions  v.  Johnson,  495  d. 

Seymour  v.  Western  R.  Co.,  497. 

Shaffner  v.  Pinchback,  389.  " 


XXIV 


TABLE  OF  CASES  CITED. 


Shamp  V.  Meyer,  421. 

Shaw  V.  Carpenter,  380. 

Sheldon  v.  Davidson,  307. 

Sherley  v.  Peehl,  62. 

Sherman  v.  Kitsmiller,  611. 

Shoemaker  v.  Benedict,  489. 

Siler  V.  Gray,  485. 

Silsby  Mfg.  Co.  v.  Chico,  664. 

Sims  V.  Ferrill,  291  d. 

Singleton  v.  Bremar,  398,  401. 

Slater  Woollen  Co.  v.  Lamb,  6. 

Slaughter's  Adm'r  v.  Gerson,  307  d. 

Smith's  Appeal,  376. 

Smith  V.  Collins,  81. 

Smith  V.  Hale,  614. 

Smith  V.  Ferine,  151. 

Solon  V.  Williamsburgh  Sav.  Bk.,  86. 

Spurr  V.  Benedict,  271. 

Stamper  v.  Temple,  66. 

Stanton  v.  Embrey,  356-7  d. 

Stark  V.  Parker,  668. 

State  V.  Chandler,  494. 

Steele  v.  Lord,  669. 

Stewart  v.  Keteltas,  180. 

Stewart  v.  Stone,  653. 

Stewart   v.  "Wyoming   Ranche  Co., 

284  d. 
Stockbridge    v.    West    Stockbridge, 

501  d. 
Strauss  v.  Meertief ,  613. 
Sun  Mut.  Ins.  Co.  v.  Ocean  Ins.  Co., 

274  d. 
Swain  v.  Schieflelin,  612. 
Swan  V.  Scott,  398. 
.Swann  v.  Swann,  323. 
Sweeney  v.  Thomason,  510. 

T. 

Tayloe  v.  Merchants'  Fire  Ins.  Co., 

641. 
Taylor  v.  Bemiss,  367  d. 
Taylor  v.  Leith,  271. 
Terry  v.  Anderson,  692. 
Thayer  v.  Daniels,  459. 
Thomas  v.  Barnes,  180. 
Thomas  v.  Rock  Island  &c.  Mining 

Co.,  467. 
Thompson  v.  Rose,  469. 
'ITiornton  t>.  Wynn,  609. 
Thurston  v.  Arnold,  619. 
Tobias  v.  Rogers,  489-90  d. 


Toledo  &c.  Ry.  Co.  v.  Penn.  Co.,  417  d. 

Tool  Co.  V.  Norris,  347  d. 

Traders'  Bank  v.  Alsop,  401. 

Trainer  v.  Trumbull,  6. 

Trevor  v.  Wood,  35. 

Trimble  v.  Strother,  421. 

Trist  V.  Child,  457. 

Troewert  v.  Decker,  323. 

Trustees  v.  Stewart,  199. 

Trustees  of  Dartmouth  Coll.  v.  Wood- 
ward, 699.  . 

Tucker  v.  White,  301. 

Tufts  V.  Lawrence,  674. 

Twenty-Third  St.  Bap.  Ch.  v.  Cornell, 
38. 

Tyler  v.  Carlisle,  411. 


U. 


Union  Bk.  v.  Coster's  Ex'rs,  29. 

Union  Bk.  v.  Willis,  600. 

Univ.  of  Des  Moines  v.  Livingstone, 

199. 
Upton  17.  Tribilcock,  291. 
United  States  v.  Behan,  667-8  d,  612. 
United  States  v.  Bradley,  376. 
United  States  v.  Peck,  661. 

V. 

Van  Brunt  v.  Day,  603. 

Van  Buskirk  v.   Hartford  Ins.  Co., 

459  d. 
Van  Clief  v.  Van  Vechten,  646  d. 
Vassar  v.  Camp,  35  d. 
Voorhees  v.  Earl,  609. 
Vrooman  v.  Turner,  428  d. 

Wade  V.  Kalbfleisch,  486. 
Wakeman  v.  Dalley,  301. 
Wakeman  v.  Wheeler  &  Wilson  Mfg. 

Co.,  611-12  d. 
Walker  v.  Brooks,  463. 
Walker  v.  Ebert,  467. 
Walker  v.  Mauro,  460  d. 
Walker  v.  Ocean  Bk.,  467  d. 
Walls  V.  Bailey,  610. 
Walter  A.  Wood  &  Co.  v.  Smith,  664  d. 
Ward  V.  Morrison,  459. 
Wamock  v.  Davis,  462. 


TABLE  OF  CASES  CITED. 


XXV 


Webb  V.  Steele,  446  d. 

Webber  v.  Barry,  418  d. 

Wells  V.  Alexandre,  54. 

Wells  V.  Monihan,  100  d. 

Wells,  Fargo  &  Co.  v.  Pacific  Ins.  Co., 

268. 
Westman  v.  Krumweide,  503. 
Wharton  v.  Winch,  568  d. 
Wheat  V.  Cross,  35. 
Whitaker  v.  Whitaker,  151. 
White  tJ.  Rintoul,  118. 
Wickham  v.  Grant,  273  d. 
Widiman  v.  Brown,  181. 
Wilkinson  v.  Heavenrich,  110. 
Williams  v.  Ingersoll,  458-9  d. 
Wilson  V.  Tucker,  502. 
WindmuUer  v.  Pope,  611. 
Wolcott  V.  Mount,  268. 


Wolfe  V.  Howes,  658. 

Wood  V.  Orford,  479.     . 

Wood  Mowing  &c.  Co.   v,  Gaertner, 

503. 
Woods  V.  Woods,  690. 
Woodstock  Iron  Co,  v.  Kichmond  &a 

Co.,  347. 
Worley  v.  Sipe,  421. 
Wortendyke  v.  Meehan,  401. 
Worthington,  Matter  of,  452. 

Y. 

Yorks  V.  Peck,  489. 
Young  V.  Stevens,  227. 

Z. 

Zimmer  v.  N.  Y.  C.  &c.  R.,  19. 


CASES    ON    CONTRACT. 

Pakt  I. 
INTKODUCTION. 

HERTZOG  V.  HERTZOG. 

29  PENNSYLVANIA  STATE,  465.  — 188T. 

This  suit  was  brought  by  John  Hertzog  to  recover  from  the 
estate  of  his  father  compensation  for  services  rendered  the  latter 
in  his  lifetime,  and  for  money  lent. 

LowRifi,  J.  "  Express  contracts  are,  where  the  terms  of  the  agree- 
ment are  openly  uttered  and  avowed  at  the  time  of  the  making :  as,  to 
deliver  an  ox  or  ten  loads  of  timber,  or  to  pay  a  stated  price  for  certain 
goods.  Implied  are  such  as  reason  and  justice  dictate ;  and  which,  there- 
fore, the  law  presumes  that  every  man  undertakes  to  perform.  As,  if  I 
employ  a  person  to  do  any  business  for  me,  or  perform  any  work,  the  law 
implies  that  I  undertook  and  contracted  to  pay  him  as  much  as  his  labor 
deserves.  If  I  take  up  wares  of  a  tradesman  without  any  agreement  of 
price,  the  law  concludes  that  I  contracted  to  pay  their  real  value." 

This  is  the  language  of  Blackstone  (2  Comm.  443),  and  it  is 
open  to  some  criticism.  There  is  some  looseness  of  thought  in 
supposing  that  reason  and  justice  ever  dictate  any  contracts  be- 
tween parties,  or  impose  such  upon  them.  All  true  contracts 
grow  out  of  the  intentions  of  the  parties  to  transactions,  and 
are  dictated  only  by  their  mutual  and  accordant  wills.  When 
this  intention  is  expressed,  we  call  the  contract  an  express  one. 
When  it  is  not  expressed,  it  may  be  inferred,  implied,  or  presumed, 
from  circumstances  as  really  existing,  and  then  the  contract,  thus 
ascertained,  is  called  an  implied  one.  The  instances  given  by 
Blackstone  are  an  illustration  of  this. 

But  it  appears  in  another  place  (3  Comm.  159-166)  that  Black- 
stone introduces  this  thought  about  reason  and  justice  dictating 


2  INTRODUCTION.  [Part  I. 

contracts,  in  order  to  embrace,  under  his  definition  of  an  implied 
contract,  another  large  class  of  relations,  which  involve  no  in- 
tention to  contract  at  all,  though  they  may  be  treated  as  if  they 
did.  Thus,  whenever,  not  our  variant  notions  of  reason  and  jus- 
tice, but  the  common  sense  and  common  justice  of  the  country, 
and  therefore  the  common  law  or  statute  law,  impose  upon  any  one 
a  duty,  irrespective  of  contract,  and  allow  it  to  be  enforced  by  a 
contract  remedy,  he  calls  this  a  case  of  implied  contract.  Thus 
out  of  torts  grows  the  duty  of  compensation,  and  in  many  cases 
the  tort  may  be  waived,  and  the  action  brought  in  assumpsit. 

It  is  quite  apparent,  therefore,  that  radically  different  relations 
are  classified  under  the  same  term,  and  this  must  often  give  rise 
to  indistinctness  of  thought.  And  this  was  not  at  all  necessary ; 
for  we  have  another  well-authorized  technical  term  exactly  adapted 
to  the  office  of  making  the  true  distinction.  The  latter  class  are 
merely  constructive  contracts,  while  the  former  are  truly  implied 
ones.  In  one  case  the  contract  is  mere  fiction,  a  form  imposed 
in  order  to  adapt  the  case  to  a  given  remedy ;  in  the  other  it  is  a 
fact  legitimately  inferred.  In  one,  the  intention  is  disregarded ; 
in  the  other,  it  is  ascertained  and  enforced.  In  one,  the  duty 
defines  the  contract;  in  the  other,  the  contract  defines  the  duty. 
We  have,  therefore,  in  law  three  classes  of  relation  called 
contracts. 

I        1.    Constructive  contracts,  which  are  fictions  of  law  adapted 

I    to  enforce  legal  duties  by  actions  of  contract,  where  no  proper 

I    contract  exists,  express  or  implied. 

\  2.  Implied  contracts,  which  arise  under  circumstances  which, 
according  to  the  ordinary  course  of  dealing  and  the  common 
understanding  of  men,  show  a  mutual  intention  to  contract. 
3.  Express  contracts,  already  sufficiently  distinguished. 
In  the  present  case  there  is  no  pretense  of  a  constructive  con- 
tract, but  only  of  a  proper  one,  either  express  or  implied.  And  it 
is  scarcely  insisted  that  the  law  would  imply  one  in  such  a  case 
as  this;  yet  we  may  present  the  principle  of  the  case  the  more 
clearly,  by  showing  why  it  is  not  one  of  implied  contract. 

The  law  ordinarily  presumes  or  implies  a  contract  whenever 
this  is  necessary  to  account  for  other  relations  found  to  have 
existed  between  the  parties. 


Part  I.]  INTRODUCTION.  ^  B 

Thus  if  a  man  is  found  to  have  done  work  for  another,  and  there 
appears  no  known  relation  between  them  that  accounts  for  such 
service,  the  law  presumes  a  contract  of  hiring.  But  if  a  man's 
house  takes  fire,  the  law  does  not  presume  or  imply  a  contract  to 
pay  his  neighbors  for  their  services  in  saving  his  property.  The 
common  principles  of  human  conduct  mark  self-interest  as  the 
motive  of  action  in  the  one  case,  and  kindness  in  the  other;  and 
therefore,  by  common  custom,  compensation  is  mutually  counted 
on  in  one  case,  and  in  the  other  not. 

On  the  same  principle  the  law  presumes  that  the  exclusive 
possession  of  land  by  a  stranger  to  the  title  is  adverse,  unless 
there  be  some  family  or  other  relation  that  may  account  for  it. 
And  such  a  possession  by  one  tenant  in  common  is  not  presumed 
adverse  to  his  co-tenants,  because  it  is,  prima  facie,  accounted  for 
by  the  relation.  And  so  of  possession  of  land  by  a  son  of  the 
owner.  And  in  Mayow's  Case  (Latch,  68)  where  an  heir  was  in 
a  foreign  land  at  the  time  of  a  descent  cast  upon  him,  and  his 
younger  brother  entered,  he  was  presumed  to  have  entered  for 
the  benefit  of  the  heir.  And  one  who  enters  as  a  tenant  of  the 
owner  is  not  presumed  to  hold  adversely  even  after  his  term  has 
expired.  In  all  such  cases,  if  there  is  a  relation  adequate  to 
account  for  the  possession,  the  law  accounts  for  it  by  that  rela- 
tion, unless  the  contrary  be  proved.  A  party  who  relies  upon  a 
contract  must  prove  its  existence ;  and  this  he  does  not  do  by , 
merely  proving  a  set  of  circumstances  that  can  be  accounted  for  j 
by  another  relation  appearing  to  exist  between  the  parties. 

Mr.  Justice  Rogers  is  entitled  to  the  gratitude  of  the  public 
for  having,  in  several  cases,  demonstrated  the  force  of  this  prin- 
ciple in  interpreting  transactions  between  parents  and  children : 
3  Penn.  R.  365;  3  Rawle,  249 ;  5  W.  &  S.  357,  513;  and  he  has 
been  faithfully  followed  in  many  other  cases:  8  Watts,  366;  8 
Penn.  State  R.  213;  9  Id.  262;  12  Id.  175;  14  Id.  201;  19  Id.  251, 
366;  25  Id.  308;  26  Id.  372,  383. 

Every  induction,  inference,  implication,  or  presumption  in  rea- 
soning of  any  kind,  is  a  logical  conclusion  derived  from,  and 
demanded  by,  certain  data  or  ascertained  circumstances.  If  such 
circumstances  demand  the  conclusion  of  a  contract  to  account  for 
them,  a  contract  is  proved ;  if  not,  not.      If  we  find,  as  ascer- 


4  _  INTRODUCTION.  [Pabt  L 

tained  circumstances,  that  a  stranger  has  been  in  the  employ- 
ment of  another,  we  immediately  infer  a  contract  of  hiring, 
because  the  principles  of  individuality  and  self-interest,  common 
to  human  nature,  and  therefore  the  customs  of  society,  require 
this  inference. 

But  if  we  find  a  son  in  the  employment  of  his  father,  we  do 
not  infer  a  contract  of  hiring,  because  the  principle  of  family 
affection  is  sufficient  to  account  for  the  family  association,  and 
does  not  demand  the  inference  of  a  contract.  And  besides  this, 
the  position  of  a  son  in  a  family  is  always  esteemed  better  than 
that  of  a  hired  servant,  and  it  is  very  rare  for  sons  remaining  in 
their  father's  family,  even  after  they  arrive  at  age,  to  become 
mere  hired  servants.  If  they  do  not  go  to  work  or  business  on. 
their  own  account,  it  is  generally  because  they  perceive  no  suffi- 
cient inducement  to  sever  the  family  bond,  and  very  often  because 
they  lack  the  energy  and  independence  necessary  for  such  a 
course ;  and  very  seldom  because  their  father  desires  to  use  them 
as  hired  servants.  Customarily  no  charges  are  made  for  board- 
ing and  clothing  and  pocket-money  on  one  side,  or  for  work  on 
the  other ;  but  all  is  placed  to  the  account  of  filial  and  parental 
duty  and  relationship. 

Judging  from  the  somewhat  discordant  testimony  in  the 
present  case,  this  son  remained  in  the  employment  of  his  father 
Tintil  he  was  about  forty  years  old ;  for  we  take  no  account  of  his 
temporary  absence.  While  living  with  his  father,  in  1842,  he 
got  married,  and  brought  his  wife  to  live  with  him  in  the  house 
of  his  parents.  Afterwards  his  father  placed  him  on  another 
farm  of  the  father,  and  very  soon  followed  him  there,  and  they 
all  lived  together  until  the  father's  death  in  1849.  The  farm  was 
the  father's,  and  it  was  managed  by  him  and  in  his  name,  and 
the  son  worked  on  it  under  him.  No  accounts  were  kept  between 
them,  and  the  presumption  is  that  the  son  and  his  family  obtained 
their  entire  living  from  the  father  while  they  were  residing  with 
him. 

Does  the  law,  under  the  circumstances,  presume  that  the  parties 
mutually  intended  to  be  bound,  as  by  contract,  for  the  service  and 
compensation  of  the  son  and  his  wife  ?  It  is  not  pretended  that 
it  does.      But  it  is  insisted  that  there  are  other  circumstances 


Part  I.]  INTRODUCTION.  6 

besides  these  which,  taken  together,  are  evidence  of  an  express 
contract  for  compensation  in  some  form,  and  we  are  to  examine 
this. 

In  this  court  it  is  insisted  that  the  contract  was  that  the  farm 
should  be  worked  for  the  joint  benefit  of  the  father  and  son,  and 
that  the  profits  were  to  be  divided ;  but  there  is  not  a  shadow 
of  evidence  of  this.  And  moreover  it  is  quite  apparent  that  it 
was  wages  only  that  was  claimed  before  the  jury  for  the  services 
of  the  son  and  his  wife,  and  all  the  evidence  and  the  charge 
point  only  in  that  direction.  There  was  no  kind  of  evidence  of 
the  annual  products. 

Have  we  then  any  evidence  of  an  express  contract  of  the 
father  to  pay  his  son  for  his  work  or  that  of  his  wife  ?  We 
concede  that,  in  a  case  of  this  kind,  an  express  contract  may  be 
proved  by  indirect  or  circumstantial  evidence.  If  the  parties 
kept  accounts  between  them,  these  might  show  it.  Or  it  might 
be  sufficient  to  show  that  money  was  periodically  paid  to  the 
son  as  wages ;  or,  if  there  be  no  creditors  to  object,  that  a  settle- 
ment for  wages  was  had,  and  a  balance  agreed  upon.  But  there 
is  nothing  of  the  sort  here. 

The  court  told  the   jury  that  a  contract  of  hiring  might  be 
inferred  from  the  evidence  of  Stamm  and  Roderick.     Yet  these    { 
witnesses  add  nothing  to  the  facts  already  recited,  except  that 
the  father  told  them,  shortly  before  his  death,  that  he  intended 
to  pay  his  son  for  his  work.     This  is  no  making  of  a  contract  or   . 
admission  of  one ;  but  rather  the  contrary.     It  admits  that  the  ! 
son  deserved  some  reward  from  his  father,  but  not  that  he  had  ' 
a  contract  for  any. 

And  when  the  son  asked  Roderick  to  see  the  father  about  pay-   *  i 
ing  him  for  his  work,  he  did  not  pretend   that  there  was  any  I   » 
contract,  but  only  that  he  had  often  spoken  to  his  father  about  /  f 
getting  pay,  and  had  always  been   put  off.     All  this  makes  it- 
very  apparent  that  it  was  a  contract  that  was  wanted,  and  not 
at  all  that  one  already  existed;  and  the  court  was  in  error  in  / 
saying  it  might  be  inferred,  from  such   talk,  that  there  was  a 
contract  of  any  kind  between  the  parties. 

The  difficulty  in  trying  causes  of  this  kind  often  arises  from 
juries  supposing  that,  because   tney  have   the  decision  of  the 


6  INTRODUCTION.  Part  I.] 

cause,  therefore  they  may  decide  according  to  general  principles 
of  honesty  and  fairness,  without  reference  to  the  law  of  the 
case.  But  this  is  a  despotic  power,  and  is  lodged  with  no  por- 
tion of  this  government. 

Their  verdict  may,  in  fact,  declare  what  is  honest  between  the 
parties,  and  yet  it  may  be  a  mere  usurpation  of  power,  and  thus 
be  an  effort  to  correct  one  evil  by  a  greater  one.  Citizens  have 
a  right  to  form  connections  on  their  own  terms  and  to  be  judged 
accordingly.  When  parties  claim  by  contract,  the  contract  proved 
must  be  the  rule  by  which  their  rights  are  to  be  decided.  To 
judge  them  by  any  other  rule  is  to  interfere  with  the  liberty  of 
the  citizen. 

It  is  claimed  that  the  son  lent  $500  of  his  wife's  money  to  his 
father.  The  evidence  of  the  fact  and  of  its  date  is  somewhat 
indistinct.  Perhaps  it  was  when  the  farm  was  bought.  If  the 
money  was  lent  by  her  or  her  husband,  or  both,  before  the  law 
of  1848  relating  to  married  women,  we  think  he  might  sue  for 
it  without  joining  his  wife. 

Judgment  reversed  and  a  new  trial  awarded. 

Note.  —  For  cases  on  constructive,  or  quasi,  contract,  see  Trainer  v. 
Trumbull,  141  Mass.  527,  post,  p.  220  ;  Slater  Woollen  Co.  v.  Lamb,  143  Mass. 
420,  pi, St,  p.  222,  and  note  ;  Sceva  v.  True,  63  N.  H.  627  ;  O^Brien  v.  Young, 
95  N.  Y.  428,  post,  p.  76. 

For  a  case  discussing  obligation  arising  from  delict  as  distinguished  from 
obligation  arising  from  breach  of  contract,  see  Sich  v.  New  York  Cent.  & 
Hud.  Riv.  B.  B.  Co.,  87  N,  Y.  382 ;  S.  C,  Burdick's  Cases  on  Torts,  p.  1. 

For  a  case  discussing  obligation  springing  from  agreement  and  yet  dis- 
tinguishable from  contract  see  the  latter  portion  of  Hamer  v.  Sidway,  124 
N.  Y.  538,  post,  p.  143. 


Part  II. 
THE  FORMATION  OF   THE   CONTRACT. 

CHAPTER  I. 

OFFER   AND    ACCEPTANCE. 
§  1.   Every  contract  springs  from  the  acceptance  of  an  offer. 
»  WHITE  V.  CORLIES. 

46  NEW  YORK,  467.  — 1871. 

Appeal  from  judgment  of  the  General  Term  of  the  first  judicial 
district,  affirming  a  judgment  entered  upon  a  verdict  for  plaintiff. 

The  action  was  for  an  alleged  breach  of  contract.  The  plaintiff 
■was  a  builder.  The  defendants  were  merchants.  In  September, 
1865,  the  defendants  furnished  the  plaintiff  with  specifications 
for  fitting  up  a  suit  of  offices  at  57  Broadway,  and  requested  him 
to  make  an  estimate  of  the  cost  of  doing  the  work.  On  Septem- 
ber twenty^eighth  the  plaintiff  left  his  estimate  with  the  defend- 
ants, and  they  were  to  consider  upon  it,  and  inform  the  plaintiff 
of  their  conclusions.  On  the  same  day  the  defendants  made  a 
change  in  their  specifications  and  sent  a  copy  of  the  same,  so 
changed,  to  the  plaintiff  for  his  assent  under  his  estimate,  which 
he  assented  to  by  signing  the  same  and  returning  it  to  the  defend- 
ants. On  the  day  following,  the  defendants'  book-keeper  wrote 
the  plaintiff  the  following  note : 

"  New  York,  September  29/A. 

"  Upon  an  agreement  to  finish  the  fitting  up  of  offices  57  Broadway  in 
two  weeks  from  date,  you  can  begin  at  once. 

"  The  writer  will  call  again,  probably  between  five  and  six  this  p.m. 

"W.  H.  R., 
"  For  J.  W.  CoRLiES  &  Co.,  32  Dey  street." 
7 


8  FORMATION  OF  CONTRACT.  [Pabt  n. 

No  reply  to  this  note  was  ever  made  by  the  plaintiff;  and  on 
the  next  day  the  same  was  countermanded  by  a  second  note  from 
the  defendants. 

Immediately  on  receipt  of  the  note  of  September  twenty-ninth, 
and  before  the  countermand  was  forwarded,  the  plaintiff  com- 
menced a  performance  by  the  purchase  of  lumber  and  beginning 
work  thereon.  And  after  receiving  the  countermand,  the  plaintiff 
brought  this  action  for  damages  for  a  breach  of  contract. 

The  court  charged  the  jury  as  follows:  "From  the  contents  of 
this  note  which  the  plaintiff  received,  was  it  his  duty  to  go  down 
to  Dey  street  (meaning  to  give  notice  of  assent)  before  commenc- 
ing the  work?  In  my  opinion  it  was  not.  He  had  a  right  to 
act  upon  this  note  and  commence  the  job,  and  that  was  a  binding 
contract  between  the  parties."     To  this  defendants  excepted. 

FoLGEK,  J.  We  do  not  think  that  the  jury  found,  or  that  the 
testimony  shoAvs,  that  there  was  any  agreement  between  the 
parties,  before  the  written  communication  of  the  defendants  of 
September  thirtieth  was  received  by  the  plaintiff.  This  note  did 
not  make  an  agreement.  It  was  a  proposition,  and  must  have 
been  accepted  by  the  plaintiff  before  either  party  was  bound,  in 
contract,  to  the  other.  The  only  overt  action  which  is  claimed 
by  the  plaintiff  as  indicating  on  his  part  an  acceptance  of  the 
offer,  was  the  purchase  of  the  stuff  necessary  for  the  work,  and 
commencing  work,  as  we  understand  the  testimony,  upon  that  stuff. 

We  understand  the  rule  to  be,  that  where  an  offer  is  made  by 
one  party  to  another  when  they  are  not  together,  the  acceptance 
of  it  by  that  other  must  be  manifested  by  some  appropriate  act. 
It  does  not  need  that  the  acceptance  shall  come  to  the  knowledge 
of  the  one  making  the  offer  before  he  shall  be  bound.  But  though 
the  manifestation  need  not  be  brought  to  his  knowledge  before  he 
becomes  bound,  he  is  not  bound,  if  that  manifestation  is  not  put 
in  a  proper  way  to  be  in  the  usual  course  of  events,  in  some 
reasonable  time  communicated  to  him.  Thus  a  letter  received 
by  mail  containing  a  proposal,  may  be  answered  by  letter  by 
mail,  containing  the  acceptance.  And  in  general,  as  soon  as  the 
answering  letter  is  mailed,  the  contract  is  concluded.  Though 
one  party  does  not  know  of  the  acceptance,  the  manifestation 
thereof  is  put  in  the  proper  way  of  reaching  him. 


Chap.  I.  §  1.]        OFFER  AND  ACCEPTANCE. 

In  the  case  in  hand,  the  plaintiff  determined  to  accept.  But  a\ 
mental  determination  not  indicated  by  speech,  or  put  in  course' 
of  indication  by  act  to  the  other  party,  is  not  an  acceptance  which 
will  bind  the  other.  Nor  does  an  act,  which,  in  itself,  is  no 
indication  of  an  acceptance,  become  such,  because  accompanied 
by  an  unevinced  mental  determination.  Where  the  act  uninter- 
preted by  concurrent  evidence  of  the  mental  purpose  accompany- 
ing it,  is  as  well  referable  to  one  state  of  facts  as  another,  it  is 
no  indication  to  the  other  party  of  an  acceptance,  and  does  not 
operate  to  hold  him  to  his  offer. 

Conceding  that  t^e  testimony  shows  that  the  plaintiff  did 
resolve  to  accept  this  offer,  he  did  no  act  which  indicated  an 
acceptance  of  it  to  the  defendants.  He,  a  carpenter  and  builder, 
purchased  stuff  for  the  work.  But  it  was  stuff  as  fit  for  any  other 
like  work.  He  began  work  upon  the  stuff,  but  as  he  would  have 
done  for  any  other  like  work.  There  was  nothing  in  his  thought 
formed  but  not  uttered,  or  in  his  acts,  that  indicated  or  set  in 
motion  an  indication  to  the  defendants  of  his  acceptance  of  their 
offer,  or  which  could  necessarily  result  therein. 

But  the  charge  of  the  learned  judge  was  fairly  to  be  understood 
by  the  jury  as  laying  down  the  rule  to  them,  that  the  plaintiff 
need  not  indicate  to  the  defendants  his  acceptance  of  their  offer; 
and  that  the  purchase  of  stuff  and  working  on  it  after  receiving 
the  note,  made  a  binding  contract  between  the  parties.  In  this 
we  think  the  learned  judge  fell  into  error. 

The  judgment  appealed  from  must  be  reversed,  and  a  new  trial 
ordered,  with  costs  to  abide  the  event  of  the  action. 

All  concur,  but  Allen,  J.,  not  voting. 

Judgment  reversed,  and  new  trial  ordered. 


GORHAM'S  ADM'R  v.   MEACHAM'S  ADM'R. 

63  VERMONT,  231.  — 1891. 
[Beport«d  herein  at  p.  88.] 


10  FORMATION  OF  CONTRACT.  [Part  II. 

§  2.  An  offer  or  its  acceptance  or  both  may  be  made  either  by 
■words  or  by  conduct. 

FOGG  V.  POETSMOUTH  ATHENuEUM. 

44  NEW  HAMPSHIRE,   115.  — 1862. 

Assumpsit. 

The  case  was  submitted  to  the  decision  of  the  court  upon  the 
following  agreed  statement  of  facts : 

The  defendants  are  a  corporation  whose  object  is  the  support  of 
a  library  and  public  reading-room,  at  which  latter  a  large  number 
of  newspapers  are  taken.  Some  are  subscribed  and  paid  for  by 
the  defendants ;  others  are  placed  there  gratuitously  by  the  pub- 
lishers and  others ;  and  some  are  sent  there  apparently  for  adver- 
tising purposes  merely,  and  of  course  gratuitously. 

The  Independent  Democrat  newspaper  was  furnished  to  the 
■defendants,  through  the  mail,  by  its  then  publishers,  from  Vol.  3, 
No.  1  (May  1,  1847).  On  the  29th  day  of  November,  1848,  a  bill 
for  the  paper,  from  Vol.  3,  No.  1  (May  1,  1847),  to  Vol.  5,  No.  1 
(May  1,  1849),  two  years,  at  $1.50  per  year,  was  presented  to  the 
•defendants  by  one  T.  H.  Miller,  agent  for  the  then  publishers,  for 
payment.  The  defendants  objected  that  they  had  never  sub- 
scribed for  the  paper,  and  were  not  bound  to  pay  for  it.  They 
at  first  refused  on  that  ground  to  pay  for  it,  but  finally  paid  the 
bill  to  said  Miller,  and  took  upon  the  back  thereof  a  receipt  in 
the  following  words  and  figures : 

«  Nov.  29,  1848. 
"  The  within  bill  paid  this  day,  and  the  paper  is  henceforth  to  be  dis- 
continued. 

"T.  H.  Miller,  for  Hood  &  Co." 

Hood  &  Co.  were  the  publishers  of  the  paper  from  May  1, 
1847,  until  February  12,  1849,  when  that  firm  was  dissolved,  and 
the  paper  was  afterward  published  by  the  present  plaintiffs.  The 
change  of  publishers  was  announced,  editorially  and  otherwise, 
in  the  paper  of  February  15,  1849,  and  the  names  of  the  new 
publishers  were  conspicuously  inserted  in  each  subsequent  num- 
ber of  the  paper,  but  it  did  not  appear  that  the  change  was 
^UJtually  known  to  Mr.  Hatch,  the  secretary  and  treasurer  of  the 


•Chap.  I.  §  2.]  OFFER  AND  ACCEPTANCE.  11 

•corporation,  who  settled  the  above-named  bill,  and  who  continued 
in  the  office  till  January,  1850. 

The  plaintiffs  had  no  knowledge  of  the  agreement  of  the  agent 
of  Hood  &  Co.  to  discontinue  the  paper,  as  set  forth  in  the 
receipt  of  November  29,  1848,  until  notified  thereof  by  the 
defendants,  after  they  had  furnished  the  paper  to  the  defendants 
for  a  year  or  more;  the  books  of  Hood  &  Co.,  which  came  into 
their  hands,  only  showing  that  the  defendants  had  paid  for  the 
paper,  in  advance,  to  May  1,  1849. 

After  the  payment  of  the  bill  and  the  giving  of  the  receipt 
above  recited,  the  paper  continued  to  be  regularly  forwarded  by 
its  publishers,  through  the  mail,  to  the  defendants,  from  the  date 
of  said  receipt  until  May  1,  1849,  the  expiration  of  the  period 
named  in  said  bill;  and  was  in  like  manner  forwarded  from  May 
1,  1849,  to  January  1,  1860,  or  from  Vol.  5,  No.  1,  to  Vol.  15, 
No.  35,  inclusive,  the  period  claimed  to  be  recovered  for  in  this 
suit;  and  was  during  all  that  time  constantly  taken  from  the 
post-office  by  the  parties  employed  by  the  defendants  to  take 
charge  of  their  reading-room,  build  fires,  etc.,  and  placed  in  their 
reading-room.  Payment  was  several  times  demanded  during  the 
latter  period,  of  the  defendants,  by  an  agent  or  agents  of  the 
plaintiffs ;  but  the  defendants  refused  to  pay,  on  the  ground  that 
they  were  not  subscribers  for  the  paper. 

Conspicuously  printed  in  each  number  of  the  paper  sent  to  and 
received  by  the  defendants  were  the  following: 

"  Terms  of  Publication :  By  mall,  express,  or  carrier,  $1.50  a  year,  in 
advance  ;  $2  if  not  paid  within  the  year.  No  paper  discontinued  (except 
at  the  option  of  the  publishers)  unless  all  arrearages  are  paid." 

The  questions  arising  upon  the  foregoing  case  were  reserved 
and  assigned  to  the  determination  of  the  whole  court. 

Nesmith,  J.  There  is  no  pretense  upon  the  agreed  statement 
of  this  case  that  the  defendants  can  be  charged  upon  the  ground 
that  they  were  subscribers  for  the  plaintiffs'  newspaper,  or  that 
they  were  liable  in  consequence  of  the  existence  of  any  express 
contract  whatever.  But  the  question  now  is,  have  the  defendants 
so  conducted  as  to  make  themselves  liable  to  pay  for  the  plaintiffs* 
newspaper  for  the  six  years  prior  to  the  date  of  the  plaintiffs' 


12  FORMATION  OF  CONTRACT.  [Pabt  II. 

writ,  under  an  implied  contract  raised  by  the  law  and  made 
applicable  to  this  case. 

If  the  seller  does  in  any  case  what  is  usual,  or  what  the  nature 
of  the  case  makes  convenient  and  proper,  to  pass  the  effectual 
control  of  the  goods  from  himself  to  the  buyer,  this  is  always  a 
delivery.  In  like  manner,  as  to  the  question  of  acceptance,  we 
must  inquire  into  the  intention  of  the  buyer,  as  evinced  by  his 
declarations  and  acts,  the  nature  of  the  goods,  and  the  circum- 
stances of  the  case.  If  the  buyer  intend  to  retain  possession  of 
the  goods,  and  manifests  this  intention  by  a  suitable  act,  it  is 
an  actual  acceptance  of  them;  or  this  intention  may  be  mani- 
fested by  a  great  variety  of  acts  in  accordance  with  the  varying 
circumstances  of  each  case.     2  Pars,  on  Con.  325. 

Again,  the  law  will  imply  an  assumpsit,  and  the  owner  of  goods 
has  been  permitted  to  recover  in  this  form  of  action,  where  they 
have  been  actually  applied,  appropriated,  and  converted  by  the 
defendant   to    his    own   beneficial    use.      Hitchin  v.    Campbell, 

2  W.  Black,  827;  Johnson  v.  Spiller,  1  Doug.  167;  Hill  v.  Davis, 

3  N.  H.  384,  and  the  cases  there  cited. 

Where  there  has  been  such  a  specific  appropriation  of  the 
property  in  question,  the  property  passes,  subject  to  the  vendor's 
lien  for  the  price.  Rohde  v.  Thwaites,  6  B.  &  C.  392,  In 
Baines  v.  Jevons  (7  C.  &  P.  617)  the  question  was,  whether  the 
defendant  had  purchased  and  accepted  a  fire  engine.  It  was  a 
question  of  fact  for  the  jury  to  determine.  Lord  Abinger  told 
the  jury,  if  the  defendant  had  treated  the  tire  engine  as  his  own, 
and  dealt  with  it  as  such,  if  so,  the  plaintiff  was  entitled  to 
recover  for  its  price.  And  the  jury  so  found.  2  Greenl.  Ev. 
sec.  108. 

In  Weatherby  v.  Banham  (5  C.  &  P.  228)  the  plaintiff  was 
publisher  of  a  periodical  called  the  Kacing  Calendar.  It  appeared 
that  he  had  for  some  years  supplied  a  copy  of  that  work,  as  fast 
as  the  numbers  came  out,  to  Mr.  Westbrook ;  Westbrook  died  in 
the  year  1820;  the  defendant,  Bonham,  succeeded  to  Westbrook's 
property,  and  went  to  live  in  his  house,  and  there  kept  an  inn. 
The  plaintiff,  not  knowing  of  Westbrook's  death,  continued  to 
send  the  numbers  of  the  Calendar,  as  they  were  published,  by  the 
stage-coach,  directed  to  Westbrook.     The  plaintiff  proved  by  a 


Chap.  I.  §  2.]         OFFER  AND  ACCEPTANCE.  13 

servant  that  they  were  received  by  the  defendant,  and  no  evidence 
v^as  given  that  the  defendant  had  ever  offered  to  return  them. 
The  action  was  brought  to  recover  the  price  of  the  Calendar  for 
the  years  1825  and  1826.  Talford,  for  the  defendant,  objected 
that  there  never  was  any  contract  between  the  plaintiff  and  the 
present  defendant,  and  that  the  plaintiif  did  not  know  him.  But 
Lord  Tenterden  said :  "  If  the  defendant  received  the  books  and 
used  them,  I  think  the  action  is  maintainable.  Where  the  books 
come  addressed  to  the  deceased  gentleman  whose  estate  has  come 
to  the  defendant,  and  he  keeps  the  books,  I  think,  therefore,  he 
is  clearly  liable  in  this  form  of  action,  being  for  goods  sold  and 
delivered." 

The  preceding  case  is  very  similar,  in  many  respects,  to  the  case 
before  us.  Agreeably  to  the  defendants'  settlement  with  Hood 
&  Co.,  their  contract  to  take  their  newspaper  expired  on  the  first 
of  May,  1849.  It  does  not  appear  that  the  fact  that  the  paper 
was  then  to  stop  was  communicated  to  the  present  plaintiffs,  who 
had  previously  become  the  proprietors  and  publishers  of  the 
newspaper  establishment;  having  the  defendants'  name  entered 
on  their  books,  and  having  for  some  weeks  before  that  time  for- 
warded numbers  of  their  newspaper,  by  mail,  to  the  defendants, 
they,  after  the  first  day  of  May,  continued  so  to  do  up  to  January 
1,  1860.  During  this  period  of  time  the  defendants  were  occa- 
sionally requested,  by  the  plaintiffs'  agent,  to  pay  their  bill. 
The  answer  was,  by  the  defendants,  we  are  not  subscribers  to 
your  newspaper.  But  the  evidence  is,  the  defendants  used,  or 
kept  the  plaintiffs'  books,  or  newspapers,  and  never  offered  to 
return  a  number,  as  they  reasonably  might  have  done,  if  they 
would  have  avoided  the  liability  to  pay  for  them.  Nor  did  they 
ever  decline  to  take  the  newspapers  from  the  post-office. 

If  the  defendants  would  have  avoided  the  liability  to  pay  the 
plaintiffs,  they  might  reasonably  have  returned  the  paper  to  the 
plaintiffs,  or  given  them  notice  that  they  declined  to  take 
the  paper  longer. 

We  are  of  the  opinion  that  the  defendants  have  the  right  to 
avail  themselves  of  the  statute  of  limitations.  Therefore,  the 
plaintiffs  can  recover  no  more  of  their  account  than  is  embraced 
in  the  six  years  prior  to  the  date  of  their  writ,  and  at  the  sum  of 


i^ 


14  FORMATION   OF  CONTRACT.  [Pakt  U, 

^2  per  year,  with  interest,  from  date  of  writ,  or  the  date  of  the 
earliest  demand  of  the  plaintiffs'  claim  upon  the  defendants. 


§  3.   An  offer  is  made  when,  and  not  until,  it  is  communicated  to 
the  offeree. 

(t.)  Ignorance  of  offered  promise. 

FITCH   V.   SNEDAKER. 

38  NEW  YORK,  248.— 1868. 
[Reported  herein  at  p.  62.] 


DAWKINS  V.  SAPPINGTON. 

26  INDIANA,   199.  — 1866. 
[Reported  herein  at  p.  65.] 


(it. )  Ignorance  of  offered  act. 
BAETHOLOMEW  v.  JACKSON". 

20  JOHNSON  (N.  Y.),  28.-1822. 

In  error,  on  certiorari  to  a  justice's  court.  Jackson  sued 
Bartholomew  before  a  justice,  for  work  and  labor,  etc.  B.  pleaded 
non  assumpsit.  It  appeared  in  evidence,  that  Jackson  owned  a 
wheat  stubble-field,  in  which  B.  had  a  stack  of  wheat,  which  he 
had  promised  to  remove  in  due  season  for  preparing  the  ground 
for  a  fall  crop.  The  time  for  its  removal  having  arrived,  J. 
sent  a  message  to  B.,  which,  in  his  absence,  was  delivered  to  his 
family,  requesting  the  immediate  removal  of  the  stack  of  wheat, 
as  he  wished,  on  the  next  day,  to  burn  the  stubble  on  the  field. 
The  sons  of  B.  answered,  that  they  would  remove  the  stack  by 
10  o'clock  the  next  morning.  J.  waited  until  that  hour,  and 
then  set  fire  to  the  stubble,  in  a  remote  part  of  the  field.  The 
fire  spreading  rapidly,  and  threatening  to  burn  the  stack  of 
wheat,  and  J.,  finding  that  B.  and  his  sons  neglected  to  remove 
the  stack,  set  to  work  and  removed  it  himself,  so  as  to  secure  it 
for  B. ;  and  he  claitned  to  recover  damages  for  the  work  and 


Chap.  I.  §  3.]  OFFER  AND  ACCEPTANCE.  15 

labor  in  its  removal.     The  jury  gave  a  verdict  for  the  plaintiff 
for  50  cents,  on  which  the  justice  gave  judgment,  with  costs. 

Platt,  J.  I  should  be  very  glad  to  affirm  this  judgment;  for 
though  the  plaintiff  was  not  legally  entitled  to  sue  for  damages, 
yet  to  bring  a  certiorari  on  such  a  judgment  was  most  unworthy. 
The  plaintiff  performed  the  service  without  the  privity  or  re- 
quest of  the  defendant,  and  there  was,  in  fact,  no  promise,  ex- 
press or  implied.  If  a  man  humanely  bestows  his  labor,  and 
even  risks  his  life,  in  voluntarily  aiding  to  preserve  his  neigh- 
bor's house  from  destruction  by  fire,  the  law  considers  the  ser- 
vice rendered  as  gratuitous,  and  it,  therefore,  forms  no  ground 
of  action.     The  judgment  must  be  reversed. 

Judgment  reversed. 


(m.)  Ignorance  of  offered  terms. 
FONSECA  V.  CUNAKD   STEAMSHIP  COMPANY. 

153  MASSACHUSETTS,  553.  — 1891. 

Contract,  with  a  count  in  tort,  against  the  defendant,  as  owner 
of  the  steamship  Samaria,  for  damage  to  the  plaintiff's  trunk 
and  its  contents. 

When  the  plaintiff  engaged  his  passage  in  London,  he  received 
a  passage  ticket  from  the  defendant's  agent  there.  This  ticket 
consisted  of  a  sheet  of  paper  of  large  quarto  size,  the  face  and 
back  of  which  were  covered  with  written  and  printed  matter. 
Near  the  top  of  the  face  of  the  ticket,  after  the  name  of  the 
defendant  corporation  and  its  list  of  offices  in  Great  Britain, 
appeared  in  bold  type  the  following:  "Passengers'  Contract 
Ticket."  Upon  the  side  margins  were  various  printed  notices 
to  passengers,  including  the  following : 

"All  passengers  are  requested  to  take  notice  that  the  owners  of  the 
ship  do  not  hold  themselves  responsible  for  detention  or  delay  arising 
from  accident,  extraordinary  or  unavoidable  circumstances,  nor  for  loss, 
detention,  or  damage  to  luggage." 

The  body  of  the  face  of  the  ticket  contained  statements  of  the 
rights  of  the  passenger  respecting  his  person  and  his  baggage, 


16  FORMATION  OF  CONTRACT.  [Pabt  H. 

the  plaintiff's  name,  age,  and  occupation,  the  bills  of  fare  for 
each  day  of  the  week,  and  the  hours  for  meals,  etc.  At  the  bot- 
tom was  printed  the  following: 

"  Passengers'  luggage  is  carried  only  npon  the  conditions  set  forth  on 
the  back  hereof." 

Upon  the  back,  among  other  printed  matter,  was  the  following : 

"  The  company  is  not  liable  for  loss  of  or  injury  to  the  passenger  or 
his  luggage,  or  delay  in  the  voyage,  whether  arising  from  the  act  of  God, 
the  Queen's  enemies,  perils  of  the  sea,  rivers,  or  navigation,  restraint  of 
princes,  rulers,  and  peoples,  barratry,  or  negligence  of  the  company's  ser- 
vants (whether  on  board  the  steamer  or  not),  defect  in  the  steamer,  her 
machinery,  gear,  or  fittings,  or  from  any  other  cause  of  whatsoever 
nature." 

When  the  plaintiff  received  his  ticket,  his  attention  was  not 
called  in  any  way  to  any  limitation  of  the  defendant's  liabilty. 

Knowlton,  J.  It  is  not  expressly  stated  in  the  report,  that 
the  law  of  England  was  put  in  evidence  as  a  fact  in  the  case,  but 
it  seems  to  have  been  assumed  at  the  trial,  if  not  expressly  agreed 
that  this  law  should  be  considered,  and  the  argument  before 
this  court  has  proceeded  on  the  same  assumption.  It  is  conceded 
that  the  presiding  justice  correctly  found  and  ruled  as  follows : 
"That  the  contract  was  a  British  contract;  that,  by  the  English 
law,  a  carrier  may  by  contract  exempt  himself  from  liability, 
even  for  loss  caused  by  his  negligence ;  that  in  this  case,  as  the 
carrier  has  so  attempted,  and  the  terms  are  broad  enough  to 
exonerate  him,  the  question  remains  of  assent  on  the  part  of 
the  plaintiff."  That  part  of  his  ruling  which  is  called  in  ques- 
tion by  the  defendant  is  as  follows :  "  This  has  been  decided  in 
Massachusetts  to  be  a  question  of  evidence,  in  which  the  lex  fori 
is  to  govern;  that,  although  it  has  been  decided  that  the  law 
conclusively  presumes  that  a  consignor  knows  and  assents  to  the 
terms  of  a  bill  of  lading  or  a  shipping  receipt  which  he  takes 
without  dissent,  yet  a  passenger  ticket,  even  though  it  be  called 
a  'contract  ticket,'  does  not  stand  on  the  same  footing;  that  in 
this  case  assent  is  not  a  conclusion  of  law,  and  is  not  proved  as 
a  matter  of  fact." 

The  principal  question  before  us  is  whether  the  plaintiff,  by 
reason  of  his  acceptance,  and  use  of  his  ticket,  shall  be  conclu- 


Chap.  I.  §  3.]  OFFER  AND  ACCEPTANCE.  17 

sively  held  to  have  assented  to  its  terms.  It  has  often  been 
decided,  that  one  who  accepts  a  contract,  and  proceeds  to  avail 
himself  of  its  provisions,  is  bound  by  the  stipulations  and  con- 
ditions expressed  in  it,  whether  he  reads  them  or  not.  Rice  v. 
Dwight  Manuf.  Co.,  2  Cush.  80;  Orace  v.  Adams,  100  Mass. 
505;  Hoadley  v.  Northern  Transportation  Co.,  115  Mass.  304; 
Monitor  Ins.  Co.  v.  Buffum,  115  Mass.  343;  Germania  Insur- 
ance  Co.  v.  Memphis  &  Charleston  Railroad,  72.  N.  Y.  90.  This 
rule  is  as  applicable  to  contracts  for  the  carriage  of  persons  or 
property  as  to  contracts  of  any  other  kind.  Grace  v.  Adams, 
100  Mass.  505;  Boston  &  Maine  Railroad  v.  Chipman,  146 
Mass.  107;  Parker  v.  South  Eastern  Railway,  2  C.  P.  D.  416, 
428;  Harris  v.  Great  Western  Railway,  1  Q.  B.  D.  515;  York 
Co.  V.  Central  Railroad,  3  Wall.  107;  Hill  v.  Syracuse,  Bing- 
hamton  &  New  York  Railroad,  73  N.  Y.  351.  The  cases  in 
which  it  is  held  that  one  who  receives  a  ticket  that  appears 
to  be  a  mere  check  showing  the  points  between  which  he  is  en- 
titled to  be  carried,  and  that  contains  conditions  on  its  back  which 
he  does  not  read,  is  not  bound  by  such  conditions,  do  not  fall 
within  this  rule.  Brown  v.  Eastern  Railroad,  11  Cush.  97; 
Malone  v.  Boston  &  Worcester  Railroad,  12  Gray,  388;  Hen- 
derson  v.  Stevenson,  L.  E.  2  H.  L.  Sc.  470;  Quimby  v.  Van- 
derhilt,  17  N.  Y.  306;  Railway  Co.  v.  Stevens,  95  U.  S.  655. 
Such  a  ticket  does  not  purport  to  be  a  contract  which  expressly 
states  the  rights  of  the  parties,  but  only  a  check  to  indicate  the 
route  over  which  the  passenger  is  to  be  carried,  and  he  is  not 
expected  to  examine  it  to  see  whether  it  contains  any  unusual 
stipulations.  The  precise  question  in  the  present  case  is  whether 
the  "  contract  ticket "  was  of  such  a  kind  that  the  passenger  tak- 
ing it  should  have  understood  that  it  was  a  contract  containing 
stipulations  which  would  determine  the  rights  of  the  parties  in 
reference  to  his  carriage.  If  so,  he  would  be  expected  to  read 
it,  and  if  he  failed  to  do  so,  he  is  bound  by  its  stipulations.  It 
covered  with  print  and  writing  the  greater  part  of  two  large 
quarto  pages,  and  bore  the  signature  of  the  defendant  company, 
affixed  by  its  agent,  with  a  blank  space  for  the  signature  of  the 
passenger.  The  fact  that  it  was  not  signed  by  the  plaintiff  is 
immaterial.      Quimby  v.  Boston  &  Maine  Railroad,  150  Mass. 


18  FORMATION  OK  CONTRACT.  [Part  II. 

• 

305,  and  cases  there  cited.  It  contained  elaborate  provisions 
in  regard  to  the  rights  of  the  passenger  on  the  voyage,  and  even 
went  into  such  detail  as  to  give  the  bill  of  fare  for  each  meal  in 
the  day  for  every  day  of  the  week.  No  one  who  could  read 
could  glance  at  it  without  seeing  that  it  undertook  expressly  to 
prescribe  the  particulars  which  should  govern  the  conduct  of  the 
parties  until  the  passenger  reached  the  port  of  destination.  In 
that  particular,  it  was  entirely  unlike  the  pasteboard  tickets 
which  are  commonly  sold  to  passengers  on  railroads.  In  refer- 
ence to  this  question,  the  same  rules  of  law  apply  to  a  contract  to 
carry  a  passenger,  as  to  a  contract  for  the  transportation  of 
goods.  There  is  no  reason  why  a  consignor  who  is  bound  by  the 
provisions  of  a  bill  of  lading,  which  he  accepts  without  reading, 
should  not  be  equally  bound  by  the  terms  of  a  contract  in  similar 
form  to  receive  and  transport  him  as  a  passenger.  In  Henderson 
V,  Stevenson,  ubi  supra,  the  ticket  was  for  transportation  a  short 
distance,  from  Dublin  to  Whitehaven,  and  the  passenger  was 
held  not  bound  to  read  the  notice  on  the  back,  because  it  did  not 
purport  to  be  a  contract,  but  a  mere  check  given  as  evidence  of 
his  right  to  carriage.  In  later  English  cases,  it  is  said  that  this 
decision  went  to  the  extreme  limit  of  the  law,  and  it  has  repeatedly 
been  distinguished  from  cases  where  the  ticket  was  in  a 
different  form.  Parker  v.  South  Eastern  Railway,  2  C.  P.  D. 
416,  428;  Burke  v.  South  Eastern  Railway,  5  C.  P.  D.  1; 
Harris  v.  Great  Western  Railway,  1  Q.  B.  D.  515.  The  pas- 
senger in  the  last  mentioned  case  had  a  coupon  ticket,  and  it  was 
held  that  he  was  bound  to  know  what  was  printed  as  a  part  of 
the  ticket.  Steers  v.  Liverpool,  New  York  &  Philadelphia  Steam- 
ship Co.  (57  N.  y.  1)  is  in  its  essential  facts  almost  identical 
with  the  case  at  bar,  and  it  was  held  that  the  passenger  was 
bound  by  the  conditions  printed  on  the  ticket.  In  Quimby  v. 
Boston  &  Maine  Railroad,  ubi  supra,  the  same  principle  was 
applied  to  the  case  of  a  passenger  travelling  on  a  free  pass,  and 
no  sound  distinction  can  be  made  between  that  case  and  the  case 
at  bar. 

We  are  of  opinion  that  the  ticket  delivered  to  the  plaintiff 
purported  to  be  a  contract,  and  that  the  defendant  corporation 
had  a  right  to  assume  that  he  assented  to  its  provisions.     All 


Chap.  I.  §  3.]        OFFER  AND  ACCEPTANCE.  19 

these  provisions  are  equally  binding  on  him  as  if  he  had  read 
them. 

The  contract  being  valid  in  England,  where  it  was  made,  and 
the  plaintiff's  acceptance  of  it  under  the  circumstances  being 
equivalent  to  an  express  assent  to  it,  and  it  not  being  illegal  or 
immoral,  it  will  be  enforced  here,  notwithstanding  that  a  similar 
contract  made  in  Massachusetts  would  be  held  void  as  against 
public  policy.  Greenwood  v.  Curtis,  6  Mass.  358;  Forepaugh 
V.  Delaware,  Lackawanna  &  Western  Railroad,  128  Penn.  St. 
217,  and  cases  cited;  In  re  Missouri  Steamship  Co.,  42  Ch. 
D.  321,  326,  327;  Liverpool  aiid  Great  Western  Steam  Co.  v. 
Fhenix  Ins.  Co.,  129  U.  S.  397. 

Judgment  for  the  defendant.* 


MALONE  V.  BOSTON  &  WOECESTER  RAILROAD. 

12  GRAY  (Mass.),  388.  — 1859. 

Action  of  tort  against  the  defendants  as  common  carriers,  for 
the  loss  upon  their  railroad  of  a  trunk  and  its  contents. 

The  ticket  issued  to  plaintiff  had  printed  upon  its  face,  "  Look 
on  the  back."  On  the  back  was  a  clause  limiting  the  liability  of 
defendant  for  baggage  to  fifty  dollars,  and  a  notice  that  other 
regulations  were  posted  in  the  cars.  In  the  cars  was  a  similar 
notice  as  to  liability  for  baggage.  Plaintiff  testified  that  he 
never  saw  the  notice  on  the  ticket  or  in  the  car. 

The  trial  judge  submitted  to  the  jury  the  question  whether 
the  plaintiff  ever  assented  to  the  limitation,  and  charged  that 
the  receiving  of  the  ticket  raised  no  legal  presumption  that  plain- 
tiff had  the  necessary  notice.  The  jury  returned  a  verdict  for 
the  plaintiff. 

Drwey,  J.  This  case  must  be  held  to  be  analogous  to  the  case 
of  Broton  v.  Eastern  Railroad  (11  Gush.  97),  and  may,  like  thal^ 
be  decided  without  any  adjudication  upon  the  broader  question 
whether  a  limitation  of  the  liability  of  the  railroad  company 
as  to  the  amount  and  value  of  the  baggage  of  passengers  trans- 

1  Accord:  Zimmer  v.  N.  Y.  0.  etc.  B.,  137  N.  Y.  460;  Ballon  v.  Earle^ 
17  R.  I.  441. 


20  FORMATION  OF  CONTRACT.  [Pabt  tt 

ported  on  the  road  may  not  be  effectually  secured  by  tbe  delivery 
of  a  ticket  to  the  passenger  so  printed  in  large  and  fair  type  on 
the  face  of  the  ticket,  that  no  one  could  read  the  part  of  the 
ticket  indicating  the  place  to  which  it  purports  to  entitle  him  to 
be  conveyed  without  also  having  brought  to  his  notice  the  fact 
of  limitation  as  to  liability  for  his  baggage.  The  present  case 
as  to  the  ticket  only  differs  from  the  case  of  Brown  v.  Eastern 
Railroad,  in  having  printed  in  small  type  on  the  face  of  the 
ticket,  "Look  on  the  back."  But  there  is  nothing  on  the  face 
of  the  ticket  alluding  to  the  subject  of  baggage;  no  notice  to 
look  on  the  back  for  regulations  as  to  baggage.  The  delivery  of 
such  a  ticket  does  not  entitle  the  railroad  company  to  ask  for 
instructions  that  there  results  therefrom  a  legal  presumption  of 
notice  of  the  restricted  liability  as  to  the  baggage  of  the  passen- 
ger. The  ruling  as  to  the  placards  posted  in  the  cars  was  correct, 
and  no  legal  presumption  of  notice  arose  therefrom.  The  court 
properly  submitted  the  question  of  notice  to  the  jury  as  a  ques- 
tion of  fact. 

We  have  not  particularly  considered  the  question  of  liability 
of  the  defendants  as  to  certain  small  items,  if  any,  of  the  wear- 
ing apparel  of  the  husband,  that  were  contained  in  the  lost 
trunk.  The  articles  are  stated  in  the  bill  of  exceptions  to  have 
■been  "nearly  wholly  his  wife's  wearing  apparel,"  and  the  court 
was  not  asked  to  direct  the  jury  to  exclude  the  other  articles  in 
assessing  damages.  Without  expressing  any  opinion  upon  the 
point  whether  these  articles,  if  any,  of  the  husband's  would  be 
embraced  in  the  baggage  which  the  defendants  assumed  to  trans- 
port as  common  carriers,  the  husband  paying  no  fare  for  his 
personal  transportation,  the  court  are  of  opinion  that  in  the 
present  aspect  of  the  case  judgment  should  be  entered  generally 
on  the  verdict. 

Exceptions  overruled.^ 

1  Accord:  Blossom  v.  Dodd,  43  N,  Y.  264. 


Chap.  I.  §  4.]  OFFER  AND  ACCEPTANCE.  21 

§  4.    Acceptance  must  be  commimicated  by  words  or  conduct 
WHITE  V.  CORLIES. 

46  NEW  YORK,  467.  — 1871. 
[Beported  herein  at  p.  7.] 


ROYAL   INS.   CO.   v.   BEATTY. 

119  PENNSYLVANIA  STATE,  6.— 1888. 

Assumpsit  to  recover  upon  two  policies  of  insurance. 

At  the  close  of  the  testimony,  the  defendant  requested  the 
court  to  charge  the  jury  that  there  was  no  evidence  of  an 
acceptance  by  the  defendant  of  the  offer  of  the  plaintiff  to  renew 
the  policies,  and  to  direct  a  verdict  for  the  defendant.  The  court 
refused  the  request,  and  submitted  the  question  to  the  jury. 
Verdict  for  plaintiff. 

Green,  J.  We  find  ourselves  unable  to  discover  any  evidence 
of  a  contractual  relation  between  the  parties  to  this  litigation. 
The  contract  alleged  to  exist  was  not  founded  upon  any  writing, 
nor  upon  any  words,  nor  upon  any  act  done  by  the  defendant. 
It  was  founded  alone  upon  silence.  While  it  must  be  conceded 
that  circumstances  may  exist  which  will  impose  a  contractual 
obligation  by  mere  silence,  yet  it  must  be  admitted  that  such 
circumstances  are  exceptional  in  their  character,  and  of  ex- 
tremely rare  occurrence.  We  have  not  been  furnished  with 
a  perfect  instance  of  the  kind  by  the  counsel  on  either  side 
of  the  present  case.  Those  cited  for  defendant  in  error  had 
some  other  element  in  them  than  mere  silence,  which  contributed 
to  the  establishment  of  the  relation. 

But  in  any  point  of  view  it  is  difiicult  to  understand  how  a  legal 
liability  can  arise  out  of  the  mere  silence  of  the  party  sought  to 
be  affected,  unless  he  was  subject  to  a  duty  of  speech,  which 
was  neglected  to  the  harm  of  the  other  party.  If  there  was  no 
duty  of  speech,  there  could  be  no  harmful  omission  arising  from 
mere  silence.  Take  the  present  case  as  an  illustration.  The 
alleged  contract  was  a  contract  of  fire  insurance.  The  plaintiff 
held  two  policies  against  the  defendant,  but  they  had  expired 
before  the  loss  occurred  and  had  not  been  formally  renewed.     At 


22  FORMATION  OF  CONTRACT.  [Pabt  U. 

the  time  of  the  fire,  the  plaintiff  held  no  policy  against  the  defend- 
ant. But  he  claims  that  the  defendant  agreed  to  continue  the 
operation  of  the  expired  policies  by  what  he  calls  "  binding  "  them. 
How  does  he  prove  this  ?  He  calls  a  clerk,  who  took  the  two 
policies  in  question,  along  with  other  policies  of  another  person, 
to  the  agent  of  the  defendant  to  have  them  renewed,  and  this  is 
the  account  he  gives  of  what  took  place :  "  The  Royal  Company 
had  some  policies  to  be  renewed,  and  I  went  in  and  bound  them. 
Q.  State  what  was  said  and  done.  A.  I  went  into  the  office 
of  the  Royal  Company  and  asked  them  to  bind  the  two  policies 
of  Mr.  Beatty  expiring  to-morrow.  The  court:  Who  were  the 
policies  for  ?  A.  For  Mr.  Beatty.  The  court :  That  is  your 
name,  is  it  not  ?  A.  Yes,  sir.  These  were  the  policies  in 
question.  I  renewed  the  policies  of  Mr.  Priestly  up  to  the  1st 
of  April.  There  was  nothing  more  said  about  the  Beatty  pol- 
icies at  that  time.  The  court :  What  did  they  say  ?  A.  They  did 
not  say  anything,  but  I  suppose  that  they  went  to  their  books  to 
do  it.  They  commenced  to  talk  about  the  night  privilege,  and 
that  was  the  only  subject  discussed."  In  his  further  examina- 
tion he  was  asked :  "  Q.  Did  you  say  anything  about  those 
policies  (Robert  Beatty's)  at  that  time?  A.  No,  sir;  I  only 
spoke  of  the  two  policies  for  William  Beatty.  Q.  What  did 
you  say  about  them?  A.  I  went  in  and  said,  'Mr.  Skinner, 
will  you  renew  the  Beatty  policies  and  the  night  privilege  for 
Mr.  Priestly  ? '  and  that  ended  it.  Q.  Were  the  other  com- 
panies bound  in  the  same  way  ?  A.  Yes,  sir ;  and  I  asked  the 
Royal  Company  to  bind  Mr.  Beatty." 

Th3  foregoing  is  the  whole  of  the  testimony  for  the  plaintiff 
as  to  what  was  actually  said  at  the  time  when  it  is  alleged  the 
policies  were  bound.  It  will  be  perceived  that  all  that  the  wit- 
ness says  is,  that  he  asked  the  defendant's  agent  to  bind  the 
two  policies,  as  he  states  at  first,  or  to  renew  them,  as  he  says 
last  He  received  no  answer,  nothing  was  said,  nor  was  anything 
done.  How  is  it  possible  to  make  a  contract  out  of  this  ?  It 
is  not  as  if  one  declares  or  states  a  fact  in  the  presence  of 
another  and  the  other  is  silent.  If  the  declaration  imposed  a 
duty  of  speech  on  peril  of  an  inference  from  silence,  the  fact  of 
silence  might  justify  the  inference  of  an  admission  of  the  truth 


Chap.  I.  §  4.]  Oi-'FER  AND  ACCEPTANCE.  23 

of  the  declared  faot.  It  would  then  be  only  a  question  of  hear* 
ing,  which  would  be  chiefly  if  not  entirely  for  the  jury.  But 
here  the  utterance  was  a  question  and  not  an  assertion,  and  there 
was  no  answer  to  the  question.  Instead  of  silence  being  evidence 
of  an  agreement  to  do  the  thing  requested,  it  is  evidence,  either 
that  the  question  was  not  heard,  or  that  it  was  not  intended  to 
comply  with  the  request.  Especially  is  this  the  case  when,  if  a 
compliance  was  intended,  the  request  would  have  been  followed 
by  an  actual  doing  of  the  thing  requested.  But  this  was  not  done ; 
how  then  can  it  be  said  it  was  agreed  to  be  done  ?  There  is  liter- 
ally nothing  upon  which  to  base  the  inference  of  an  agreement, 
upon  such  a  state  of  facts.  Hence  the  matter  is  for  the  court 
and  not  for  the  jury ;  for  if  there  may  not  be  an  inference 
of  the  controverted  fact,  the  jury  must  not  be  permitted  to 
make  it. 

What  has  thus  far  been  said  relates  only  to  the  effect  of  the 
non-action  of  the  defendant,  either  in  responding  or  in  doing  the 
thing  requested.  There  remains  for  consideration  the  effect  of 
the  plaintiff's  non-action.  When  he  asked  the  question  whether 
defendant  would  bind  or  renew  the  policies  and  obtained  no 
answer,  what  was  his  duty  ?  Undoubtedly  to  repeat  his  question 
until  he  obtained  an  answer.  For  his  request  was  that  the 
defendant  should  make  a  contract  with  him,  and  the  defendant 
says  nothing.  Certainly  such  silence  is  not  an  assent  in  any 
sense.  There  should  be  something  done,  or  else  something  said 
before  it  is  possible  to  assume  that  a  contract  was  established. 
There  being  nothing  done  and  nothing  said,  there  is  no  footing 
upon  which  an  inference  of  an  agreement  can  stand.  But  what 
was  the  position  of  the  plaintiff  ?  He  had  asked  the  defendant 
to  make  a  contract  with  him  and  the  defendant  had  not  agreed  to 
do  so ;  he  had  not  even  answered  the  question  whether  he  would 
do  so.  The  plaintiff  knew  he  had  obtained  no  answer,  but  he 
does  not  repeat  the  question ;  he,  too,  is  silent  thereafter,  and  he 
does  not  get  the  thing  done  which  he  asks  to  be  done.  Assur- 
edly it  was  his  duty  to  speak  again,  and  to  take  further  action  if 
he  really  intended  to  obtain  the  defendant's  assent.  For  what, 
he  wanted  was  something  affirmative  and  positive,  and  without 
it  he  has  no  status.     But  he  desists,  and  does  and  says  nothing 


24  FORMATION  OF  CONTRACT.  [Pakt  U. 

further.  And  so  it  is  that  the  whole  of  the  plaintiff's  case  is  an 
unanswered  request  to  the  defendant  to  make  a  contract  with  the 
plaintiff,  and  no  further  attempt  by  the  plaintiff  to  obtain  an 
answer,  and  no  actual  contract  made.  Out  of  such  facts  it  is 
not  possible  to  make  a  legal  inference  of  a  contract. 

The  other  facts  proved  and  offered  to  be  proved,  but  rejected 
improperly,  as  we  think,  and  supposed  by  each  to  be  consistent 
with  his  theory,  tend  much  more  strongly  in  favor  of  the  de- 
fendant's theory  than  of  the  plaintiff's.  It  is  not  necessary  to 
discuss  them,  since  the  other  views  we  have  expressed  are  fatal 
to  the  plaintiff's  claim.  Nor  do  I  concede  that  if  defendant 
heard  plaintiff's  request  and  made  no  answer,  an  inference  of 
assent  should  be  made.  For  the  hearing  of  a  request  and  not 
answering  it  is  as  consistent,  indeed,  more  consistent,  with  a  dis- 
sent than  an  assent.  If  one  is  asked  for  alms  on  the  street,  and 
hears  the  request,  but  makes  no  answer,  it  certainly  cannot  be 
inferred  that  he  intends  to  give  them.  In  the  present  case  there 
is  no  evidence  that  defendant  heard  the  plaintiff's  request,  and 
without  hearing  there  was,  of  course,  no  duty  of  speech. 

Judgment  reversed. 


HOBBS  V.  MASSASOIT  WHIP  CO. 

158  MASSACHUSETTS,  194.— 1893. 

Holmes,  J.  This  is  an  action  for  the  price  of  eelskins  sent 
by  the  plaintiff  to  the  defendant,  and  kept  by  the  defendant 
some  months,  until  they  were  destroyed.  It  must  be  taken  that 
the  plaintiff  received  no  notice  that  the  defendants  declined  to 
accept  the  skins.  The  case  comes  before  us  on  exceptions  to  an 
instruction  to  the  jury,  that,  whether  there  was  any  prior  con- 
tract or  not,  if  the  skins  are  sent  to  the  defendant,  and  it  sees 
fit,  whether  it  has  agreed  to  take  them  or  not,  to  lie  back,  and 
to  say  nothing,  having  reason  to  suppose  that  the  man  who  has 
sent  them  believes  that  it  is  taking  them,  since  it  says  nothing 
about  it,  then,  if  it  fails  to  notify,  the  jury  would  be  warranted 
in  finding  for  the  plaintiff. 

Standing  alone,  and  unexplained,  this  proposition  might  seem 


Chap.  I.  §  4.]  OFFER  AND  ACCEPTANCE.  25 

to  imply  that  one  stranger  may  impose  a  duty  upon  another,  and 
make  him  a  purchaser,  in  spite  of  himself,  by  sending  goods  ta 
him,  unless  he  will  take  the  trouble,  and  be  at  the  expense,  of 
notifying  the  sender  that  he  will  not  buy.  The  case  was  argued 
for  the  defendant  on  that  interpretation.  But,  in  view  of  the 
evidence,  we  do  not  understand  that  to  have  been  the  meaning 
of  the  judge,  and  we  do  not  think  that  the  jury  can  have  under- 
stood that  to  have  been  his  meaning.  The  plaintiff  was  not  a 
stranger  to  the  defendant,  even  if  there  was  no  contract  between 
them.  He  had  sent  eelskins  in  the  same  way  four  or  five  times 
before,  and  they  had  been  accepted  and  paid  for.  On  the  de- 
fendant's testimony,  it  is  fair  to  assume  that,  if  it  had  admitted 
the  eelskins  to  be  over  twenty-two  inches  in  length,  and  fit  for 
its  business,  as  the  plaintiff  testified,  and  the  jury  found  that 
they  were,  it  would  have  accepted  them ;  that  this  was  under- 
stood by  the  plaintiff;  and,  indeed,  that  there  was  a  standing^ 
offer  to  him  for  such  skins.  In  such  a  condition  of  things,  the 
plaintiff  was  warranted  in  sending  the  defendant  skins  conform- 
ing to  the  requirements,  and  even  if  the  offer  was  not  such  that 
the  contract  was  made  as  soon  as  skins  corresponding  to  its 
terms  were  sent,  sending  them  did  impose  on  the  defendant  a 
duty  to  act  about  them ;  and  silence  on  its  part,  coupled  with 
a  retention  of  the  skins  for  an  unreasoaable  time,  might  be 
found  by  the  jury  to  warrant  the  plaintiff  in  assuming  that  they 
were  accepted,  and  thus  to  amount  to  an  acceptance.  See  Bushell 
V.  Wheeler,  15  Q.  B.  442;  Benjamin  on  Sales,  §§  162,  164; 
Taylor  v.  Dexter  Engine  Co.,  146  Mass.  613,  615.  The  proposi- 
tion stands  on  the  general  principle  that  conduct  which  imports 
acceptance  or  assent  is  acceptance  or  assent  in  the  view  of  the 
law,  whatever  may  have  been  the  actual  state  of  mind  of  the 
party,  —  a  principle  sometimes  lost  sight  of  in  the  cases. 
O'Donnell  v.  Clinton,  145  Mass.  461,  463 ;  McCarthy  v.  Boston  & 
Lowell  Railroad,  148  Mass.  560,  552. 

Exceptions  overruled. 


26  FORMATION  OF  CONTRACT.  [Pabt  II. 

STENSGAARD  v.  SMITH. 

43  MINNESOTA,  11.  —  1890. 

Dickinson,  J.  This  action  is  for  the  recovery  of  damages  for 
breach  of  contract.  The  rulings  of  the  court  below,  upon  the  trial, 
were  based  upon  its  conclusion  that  no  contract  was  shown  to  have 
been  entered  into  between  these  parties.  We  are  called  upon  to 
review  the  case  upon  this  point.  The  plaintiff  was  engaged  in 
business  as  a  real-estate  broker.  On  the  11th  of  December,  1886,  he 
procured  the  defendant  to  execute  the  following  instrument,  which 
was  mostly  in  printed  form : 

"  St.  Paul,  Dec.  11,  1886. 
"  In  consideration  of  L.  T.  Stensgaard  agreeing  to  act  as  agent  for  the 
«ale  of  the  property  hereinafter  mentioned,  I  have  hereby  given  to  said  L.  T. 
Stensgaard  the  exchisive  sale,  for  three  months  from  date,  of  the  following 
property,  to  wit :  (Here  follows  a  description  of  the  property,  the  terms 
of  sale,  and  some  other  provisions  not  necessary  to  be  stated. )  I  further 
agree  to  pay  said  L.  T.  Stensgaard  a  commission  of  two  and  one-half  per 
<;ent  on  the  first  §2000,  and  two  and  one-half  per  cent  on  the  balance  of 
the  purchase  price,  for  his  services  rendered  in  selling  of  the  above-men- 
tioned property,  whether  the  title  is  accepted  or  not,  and  also  whatever  he 
may  get  or  obtain  for  the  sale  of  said  property  above  $17,000  for  such 
property,  if  the  property  is  sold. 

"John  Smith." 

The  evidence  showed  that  the  plaintiff  immediately  took  steps 
to  effect  the  sale  of  the  land,  posted  notices  upon  it,  published 
advertisements  in  newspapers,  and  individually  solicited  purchas- 
ers. About  a  month  subsequent  to  the  execution  by  the  defend- 
ant of  the  above  instrument,  he  himself  sold  the  property.  This 
constitutes  the  alleged  breach  of  contract  for  which  a  recovery  of 
damages  is  sought. 

The  court  was  justified  in  its  conclusion  that  no  contract  was 
shown  to  have  been  entered  into,  and  hence  that  no  cause  of  action 
was  established.  The  writing  signed  by  the  defendant  did  not  of 
itself  constitute  a  contract  between  these  parties.  In  terms  indi- 
cating that  the  instrument  was  intended  to  be  at  once  operative, 
it  conferred  present  authority  on  the  plaintiff  to  sell  the  land,  and 
included  the  promise  of  the  defendant  that,  if  the  plaintiff  should 


Chap.  I.  §  4.]  OFFER  AND  ACCEPTANCE.  27 

sell  the  land,  he  should  receive  the  stated  compensation.  This 
alone  was  no  contract,  for  there  was  no  mutuality  of  obligation, 
nor  any  other  consideration  for  the  agreement  of  the  defendant. 
The  plaintiff  did  not  by  this  instrument  obligate  himself  to  do 
anything,  and  therefore  the  other  party  was  not  bound.  Bailey 
V.  Austrian,  19  Minn.  465  (535)  ;  Tarbox  v.  Gotzian,  20  Minn. 
122  (139).  If,  acting  under  the  authority  thus  conferred,  the 
plaintiff  had,  before  its  revocation,  sold  the  land,  such  performance 
would  have  completed  'a  contract,  and  the  plaintiff  would  have 
earned  the  compensation  promised  by  the  defendant  for  such  per- 
formance. Andreas  v.  Holcombe,  22  Minn.  339;  Ellsworth  v. 
Southern  Minn.  Ry.  Extension  Co.,  31  Minn.  643.  But  so  long  as 
this  remained  a  mere  present  authorization  to  sell,  without  contract 
obligations  having  been  fixed,  it  was  revocable  by  the  defendant. 
The  instrument  does,  it  is  true,  commence  with  the  words:  ''In 
consideration  of  L.  T.  Stensgaard  agreeing  to  act  as  agent  for  the 
sale  of  the  property,  "  etc.  ;  but  no  such  agreement  on  the  part  of 
the  plaintiff  was  shown  on  the  trial  to  have  been  actually  made, 
although  it  was  incumbent  upon  him  to  establish  the  existence  of 
a  contract  as  the  basis  of  his  action.  This  instrument  does  not 
contain  an  agreement  on  the  part  of  the  plaintiff,  for  he  is  no  party 
to  its  execution.  It  expresses  no  promise  or  agreement  except 
that  of  the  defendant.  It  may  be  added  that  the  language  of  the 
"  consideration  "  clause  is  not  such  as  naturally  expresses  the  fact 
of  an  agreement  having  been  already  made  on  the  part  of  the  plain- 
tiff. Of  course,  no  consideration  was  necessary  to  support  the 
present,  but  revocable,  authorization  to  sell.  It  is  difficult  to 
give  any  practical  effect  to  this  clause  in  the  construction  of  the 
instrument.  It  seems  probable,  in  the  absence  of  proof  of  such  an 
agreement,  that  this  clause  had  no  reference  to  any  actual  agree- 
ment between  these  parties,  but  was  a  part  of  the  printed  matter 
which  the  plaintiff  had  prepared  for  use  in  his  business,  with  the 
intention  of  making  it  effectual  by  his  own  signature.  If  he  had 
appended  to  this  instriiment  his  agreement  to  accept  the  agency, 
or  even  if  he  had  signed  this  instrument,  this  clause  would  have 
had  an  obvious   meaning. 

This  instrument,  execiit'd  only  by  the  defendant,  was  effectual, 
as  we  have  said,  as  a  present,  but  revocable,  grant  of  authority  to 


28  FORMATION  OF  CONTRACT.  [Part  II. 

sell.  It  involved,  moreover,  an  offer  on  the  part  of  the  defendant 
to  contract  with  the  plaintiff  that  the  latter  should  have,  for  the 
period  of  three  months,  the  exclusive  right  to  sell  the  land.  This 
action  is  based  upon  the  theory  that  such  a  contract  was  entered 
into ;  but,  to  constitute  such  a  contract,  it  was  necessary  that  the 
plaintiff  should  in  some  way  signify  his  acceptance  of  the  offer, 
so  as  to  place  himself  under  the  reciprocal  obligation  to  exert 
himself  during  the  whole  period  named  to  effect  a  sale.  No 
express  agreement  was  shown.  The  mere  receiving  and  retaining 
this  instrument  did  not  import  an  agreement  thus  to  act  for  the 
period  named,  for  the  reason  that,  whether  the  plaintiff  should  be 
willing  to  take  upon  himself  that  obligation  or  not,  he  might 
accept  and  act  upon  the  revocable  authority  to  sell  expressed  in 
the  writing ;  and  if  he  should  succeed  in  effecting  a  sale  before 
the  power  should  be  revoked,  he  would  earn  the  commission 
specified.  In  other  words,  the  instrument  was  presently  effectual 
and  of  advantage  to  him,  whether  he  chose  to  place  himself  under 
contract  obligations  or  not.  For  the  same  reason  the  fact  that  for 
a  day  or  a  month  he  availed  himself  of  the  right  to  sell  conferred 
by  the  defendant,  by  attempting  to  make  a  sale,  does  not  justify 
the  inference,  in  an  action  where  the  burden  is  on  the  plaintiff  to 
prove  a  contract,  that  he  had  accepted  the  offer  of  the  defendant 
to  conclude  a  contract  covering  the  period  of  three  months,  so 
that  he  could  not  have  discontinued  his  efforts  without  rendering 
himself  liable  in  damages.  In  brief,  it  was  in  the  power  of  the 
plaintiff  either  to  convert  the  defendant's  offer  and  authorization 
into  a  complete  contract,  or  to  act  upon  it  as  a  naked  revocable 
power,  or  to  do  nothing  at  all.  He  appears  to  have  simply 
availed  himself,  for  about  a  month,  of  the  naked  present  right  to 
sell  if  he  could  do  so.  He  cannot  now  complain  that  the  land- 
owner then  revoked  the  authority  which  was  still  unexecuted.  It 
may  be  added  that  there  was  no  attempt  at  the  trial  to  show  that 
the  plaintiff  notified  the  defendant  that  he  was  endeavoring  to 
sell  the  land ;  and  there  is  but  little,  if  any,  ground  for  an  infer- 
ence from  the  evidence  that  the  defendant  in  fact  knew  it. 

The  case  is  distinguishable  from  those  where,  under  a  unilat- 
eral promise,  there  has  been  a  performance  by  the  other  party 
of  services,  or  other  thing  to  be  done,  for  which,  by  the  terms  of 


Chap.  I.  § :.]        OFFEK  AND  ACCEPTANCE.  29 

the  promise,  compensation  was  to  be  made.  Such  was  the  case 
of  Oovoard  v.  Waters  (98  Mass.  596),  relied  upon  by  the  appel- 
lant as  being  strictly  analogous  to  this  case.  In  the  case  before 
us,  compensation  was  to  be  paid  only  in  case  of  a  sale  of  the 
land  by  the  plaintiff.  He  can  recover  nothing  for  what  he  did, 
unless'  there  was  a  complete  contract ;  in  which  case,  of  course, 
he  might  have  recovered  damages  for  its  breach. 

Order  a/firmed. 
(A  motion  for  a  reargument  of  this  case  was  denied  April  9, 
1890.) 

Note.  —  Upon  the  question  whether  the  acceptance  of  a  guaranty  must 
be  express  or  may  be  implied  from  the  giving  of  credit,  see  Davis  v.  Wells, 
104  U.  S.  159 ;  Powers  v.  Bumcratz,  12  Oh.  St.  273 ;  Douglass  v.  Howland, 
24  Wend.  35  ;   Union  Bk.  v.  Coster's  Ex'rs,  3  N.  Y.  203. 


§  5.  Acceptance  Is  communicated  -when  it  is  made  In  a  manner 
prescribed,  or  indicated  by  the  offerer. 

TAYLOE  V.  MEECHANTS'  FIRE  INS.   CO. 

9  HOWARD  (U.  S.),  390.  — 1860. 

Nelson,  J.  This  is  an  appeal  from  a  decree  of  the  Circuit 
Court  for  the  District  of  Maryland,  which  was  rendered  for  the 
defendants. 

The  case  in  the  court  below  was  this.  William  H.  Tayloe,  of 
Richmond  County,  Virginia,  applied  to  John  Minor,  the  agent 
of  the  defendants,  residing  at  Fredericksburg  in  that  State,  for 
an  insurance  upon  his  dwelling-house  to  the  amount  of  $8000 
for  one  year,  and,  as  he  was  about  leaving  home  for  the  State 
of  Alabama,  desired  the  agent  to  make  the  application  in  his 
behalf. 

The  application  was  made  accordingly,  under  the  date  of  25th 
November,  1844,  and  an  answer  received  from  the  secretary  of 
the  company,  stating  that  the  risk  would  be  taken  at  seventy 
cents  on  the  thousand  dollars,  the  •premium  amounting  to  the 
sum  of  fifty-six  dollars.  The  agent  stated  in  the  application  to 
the  company  the  reason  why  it  had  not  been  signed  by  Tayloe ; 
th  it  he  had  gone  to  the  State  of  Alabama  on  business,  and  would 


30  FORMATION   OF  CONTRACT.  [Part  U. 

not  return  till  February  following ;  and  that  he  was  desired  to 
communicate  to  him  at  that  place  the  answer  of  the  company. 

On  receiving  the  answer,  the  agent  mailed  a  letter  directed  to 
Tayloe,  under  date  of  the  2d  of  December,  advising  him  of  the 
terms  of  the  insurance,  and  adding,  "  Should  you  desire  to  effect 
the  insurance,  send  me  your  check  payable  to  my  order  for  $57, 
and  the  business  is  concluded."  The  additional  dollar  was  added 
for  the  policy. 

This  letter,  in  consequence  of  a  misdirection,  did  not  reach 
Tayloe  till  the  20th  of  the  month ;  who,  on  the  next  day,  mailed 
a  letter  in  answer  to  the  agent,  expressing  his  assent  to  the 
terms,  and  inclosing  his  check  for  the  premium  as  requested. 
He  also  desired  that  the  policy  should  be  deposited  in  the  bank 
for  safe-keeping.  This  letter  of  acceptance  was  received  on  the 
31st  at  Fredericksburg  by  the  agent,  who  mailed  a  letter  in 
answer  the  next  day,  communicating  to  Tayloe  his  refusal  to 
carry  into  effect  the  insurance,  on  the  ground  that  his  acceptance 
came  too  late,  the  centre  building  of  the  dwelling-house  in  the 
meantime,  on  the  22d  of  the  month,  having  been  consumed  by 
fire. 

The  company,  on  being  advised  of  the  facts,  confirmed  the 
view  taken  of  the  case  by  their  agent,  and  refused  to  issue  the 
policy  or  pay  the  loss. 

A  bill  was  filed  in  the  court  below  by  the  insured  against 
the  company,  setting  forth,  substantially,  the  above  facts,  and 
praying  that  the  defendants  might  be  decreed  to  pay  the  loss,  or 
for  such  other  relief  as  the  complainant  might  be  entitled  to. 

I.  Several  objections  have  been  taken  to  the  right  of  the 
complainant  to  recover,  which  it  will  be  necessary  to  notice; 
but  the  principal  one  is,  that  the  contract  of  insurance  was  not 
complete  at  the  time  the  loss  happened,  and  therefore  that  the 
risk  proposed  to  be  assumed  had  never  attached. 

Two  positions  have  been  taken  by  the  counsel  for  the  com- 
pany for  the  purpose  of  establishing  this  ground  of  defense. 

1.  The  want  of  notice  to  the  agent  of  the  company  of  the 
acceptance  of  the  terms  of  the  insurance ;  and, 

2.  The  non-payment  of  the  premium. 

The  first   position   assumes    that,    where   the   company   have 


Chap.  I.  §  5.]        OFFER  AND  ACCEPTANCE.  81 

made  an  offer  through  the  mail  to  insure  upon  certain  terms,  the 
agreement  is  not  consummated  by  the  mere  acceptance  of  the 
offer  by  the  party  to  whom  it  is  addressed;  that  the  contract 
is  still  open  and  incomplete  until  the  notice  of  acceptance  is 
received ;  and  that  the  company  are  at  liberty  to  withdraw  the 
offer  at  any  time  before  the  arrival  of  the  notice;  and  this  even 
without  communicating  notice  of  the  withdrawal  to  the  appli- 
cant ;  in  other  words,  that  the  assent  of  the  company,  expressed 
or  implied,  after  the  acceptance  of  the  terms  proposed  by  the 
insured,  is  essential  to  a  consummation  of  the  contract. 

The  effect  of  this  construction  is,  to  leave  the  property  of 
the  insured  uncovered  until  his  acceptance  of  the  offer  has 
reached  the  company,  and  has  received  their  assent;  for,  if  the 
contract  is  incomplete  until  notice  of  the  acceptance,  till  then  the 
company  may  retract  the  offer,  as  neither  party  is  bound  until 
the  negotiation  has  resulted  in  a  complete  bargain  between  the 
parties. 

In  our  apprehension,  this  view  of  the  transaction  is  not  in 
accordance  with  the  usages  and  practice  of  these  companies 
in  taking  risks;  nor  with  the  understanding  of  merchants  and 
other  business  men  dealing  with  them ;  nor  with  the  principles 
of  law,  settled  in  analogous  cases,  governing  contracts  entered 
into  by  correspondence  between  parties  residing  at  a  distance. 

On  the  contrary,  we  are  of  opinion  that  an  offer  under  the 
circumstances  stated,  prescribing  the  terms  of  insurance,  is 
intended,  and  is  to  be  deemed,  a  valid  undertaking  on  the  part 
of  the  company,  that  they  will  be  bound,  according  to  the  terms 
tendered,  if  an  answer  is  transmitted  in  due  course  of  mail, 
accepting  them ;  and  that  it  cannot  be  withdrawn,  unless  the 
withdrawal  reaches  the  party  to  whom  it  is  addressed  before  his 
letter  of  reply  announcing  the  acceptance  has  been  transmitted. 

This  view  of  the  effect  of  the  correspondence  seems  to  us  to 
be  but  carrying  out  the  intent  of  the  parties,  as  plainly  mani- 
fested by  their  acts  and  declarations. 

On  the  acceptance  of  the  terms  proposed,  transmitted  by  due 
course  of  mail  to  the  company,  the  minds  of  both  parties  have 
met  on  the  subject,  in  the  mode  contemplated  at  the  time  of 
entering  upon  the  negotiation,   and  the  contract  becomes  com- 


32  FORMATION  OF  CONTRACT,  [Part  H. 

plete.  The  party  to  whom  the  proposal  is  addressed  has  a  right 
to  regard  it  as  intended  as  a  continuing  offer  until  it  shall  have 
reached  him,  and  shall  be  in  due  time  accepted  or  rejected. 

Such  is  the  plain  import  of  the  offer.  And  besides,  upon  an^ 
other  view,  the  proposal  amounts  to  nothing,  as  the  acceptance 
would  be  but  the  adoption  of  the  terms  tendered,  to  be,  in  turn, 
proposed  by  the  applicant  to  the  company  for  their  approval  or 
rejection.  For,  if  the  contract  is  still  open  until  the  company 
is  advised  of  an  acceptance,  it  follows,  of  course,  that  the  accept- 
ance may  be  repudiated  at  any  time  before  the  notice  is  received. 
]N"othing  is  effectually  accomplished  by  an  act  of  acceptance. 

It  is  apparent,  therefore,  that  such  an  interpretation  of  the 
acts  of  the  parties  would  defeat  the  object  which  both  had  in 
view  in  entering  upon  the  correspondence. 

The  fallacy  of  the  argument,  in  our  judgment,  consists  in  the 
assumption,  that  the  contract  cannot  be  consummated  without 
a  knowledge  on  the  part  of  the  company  that  the  offer  has  been 
accepted.  This  is  the  point  of  the  objection.  But  a  little  re- 
flection will  show,  that  in  all  cases  of  contracts  entered  into 
between  parties  at  a  distance  by  correspondence,  it  is  impossible 
that  both  should  have  a  knowledge  of  it  the  moment  it  becomes 
complete.    This  can  only  exist  where  both  parties  are  present. 

The  position  may  be  illustrated  by  the  case  before  us.  If 
the  contract  became  complete,  as  we  think  it  did,  on  the  accept- 
ance of  the  offer  by  the  applicant,  on  the  21st  December,  1844, 
the  company,  of  course,  could  have  no  knowledge  of  it  until  the 
letter  of  acceptance  reached  the  agent,  on  the  31st  of  the  month ; 
and,  on  the  other  hand,  upon  the  hypothesis  it  was  not  complete 
until  notice  of  the  acceptance,  and  then  became  so,  the  applicant 
could  have  no  knowledge  of  it  at  the  time  it  took  effect.  In 
either  aspect,  and,  indeed,  in  any  aspect  in  which  the  case  can 
be  presented,  one  of  the  parties  must  be  unadvised  of  the  time 
when  the  contract  takes  effect,  as  its  consummation  must  depend 
upon  the  act  of  one  of  them  in  the  absence  of  the  other. 

The  negotiation  being  carried  on  through  the  mail,  the  offer  and 
acceptance  cannot  occur  at  the  same  moment  of  time ;  nor,  for 
the  same  reason,  can  the  meeting  of  the  minds  of  the  parties  on 
the  subject  be  known  by  each  at  the  moment  of  concurrence ;  the 


Chap.  I.  §  5.]        OFFER  AND  ACCEPTANCE.  83 

acceptance  must  succeed  the  offer  after  the  lapse  of  some  interval 
of  time ;  and  if  the  process  is  to  be  carried  farther  in  order  to 
complete  the  bargain,  and  notice  of  the  acceptance  must  be  re- 
ceived, the  only  effect  is  to  reverse  the  position  of  the  parties, 
changing  the  knowledge  of  the  completion  from  the  one  party  to 
the  other. 

It  is  obviously  impossible,  therefore,  under  the  circumstances 
stated,  ever  to  perfect  a  contract  by  correspondence,  if  a  knowl- 
edge of  both  parties  at  the  moment  they  become  bound  is  an 
essential  element  in  making  out  the  obligation.  And  as  it  must 
take  effect,  if  effect  is  given  at  all  to  an  endeavor  to  enter  into  a 
contract  by  correspondence,  in  the  absence  of  the  knowledge  of 
one  of  the  parties  at  the  time  of  its  consummation,  it  seems  to  us 
more  consistent  with  the  acts  and  declarations  of  the  parties,  to 
consider  it  complete  on  the  transmission  of  the  acceptance  of  the 
offer  in  the  way  they  themselves  contemplated ;  instead  of  post- 
poning its  completion  till  notice  of  such  acceptance  has  been 
received  and  assented  to  by  the  company. 

For  why  make  the  offer,  unless  intended  that  an  assent  to  its 
terms  should  bind  them?  And  why  require  any  further  assent 
on  their  part,  after  an  unconditional  acceptance  by  the  party  to 
whom  it  is  addressed  ? 

We  have  said  that  this  view  is  in  accordance  with  the  usages 
and  practice  of  these  companies,  as  well  as  with  the  general  prin- 
ciples of  law  governing  contracts  entered  into  by  absent  parties. 

In  the  instructions  of  this  company  to  their  agent  at  Fred- 
ericksburg, he  is  advised  to  transmit  all  applications  for  insurance 
to  the  office  for  consideration ;  and  that,  upon  the  receipt  of  an 
answer,  if  the  applicant  accepts  the  terms,  the  contract  is  con- 
sidered complete  without  waiting  to  communicate  the  acceptance 
to  the  company ;  and  the  policy  to  be  thereafter  issued  is  to  bear 
date  from  the  time  of  the  acceptance. 

The  company  desire  no  further  communication  on  the  subject, 
after  they  have  settled  upon  the  terms  of  the  risk,  and  sent  them 
for  the  inspection  of  the  applicant,  in  order  to  the  consummation 
of  the  bargain.  The  communication  of  the  acceptance  by  the 
agent  afterwards  is  to  enable  them  to  make  out  the  policy.  The 
contract  is  regarded  as  complete  on  the  acceptance  of  the  terms. 


84  FORMATION  OF  CONTRACT.  [Part  II. 

This  appears,  also,  to  h  ive  been  the  understanding  of  the  agent ; 
for,  on  communicating  to  the  insured  the  terras  received  from  the 
company,  he  observes,  "Should  you  desire  to  effect  the  above 
insurance,  send  me  your  check  payable  to  my  order  for  fifty-seven 
dollars,  and  the  business  is  concluded"  ;  obviously  enough  import- 
ing, that  no  other  step  would  be  necessary  to  give  effect  to  the 
insurance  of  the  property  upon  the  terms  stated. 

The  cases  of  Adams  v.  Lindsell  (1  Barn.  &  Aid.  681)  and 
Mactier's  AdmWs  v.  Frith  (G  Wend.  104)  are  authorities  to 
show  that  the  above  view  is  in  conformity  with  the  general 
principles  of  law  governing  the  formation  of  all  contracts  entered 
into  between  parties  residing  at  a  distance  by  means  of  corre- 
spondence. 

The  unqualified  acceptance  by  the  one  of  the  terms  proposed 
by  the  other,  transmitted  by  due  course  of  mail,  is  regarded  as 
closing  the  bargain  from  the  time  of  the  transmission  of  the 
acceptance. 

This  is  also  the  effect  of  the  case  of  Eliason  v.  Henshaw  (4 
Wheat.  228)  in  this  court,  though  the  point  was  not  necessarily 
involved  in  the  decision  of  the  case.  The  acceptance  there  had 
not  been  according  to  the  terms  of  the  bargain  proposed,  for 
which  reason  the  plaintiff  failed. 

2.  The  next  position  against  the  claim  is  the  non-payment  of 
the  premium. 

One  of  the  conditions  annexed  to  the  policies  of  the  company 
is,  that  no  insurance  will  be  considered  as  made  or  binding  until 
the  premium  be  actually  paid ;  and  one  of  the  instructions  to  the 
agent  was,  that  no  credit  should  be  given  for  premiums  under  any 
circumstances. 

But  the  answer  to  this  objection  is,  that  the  premium,  in  judg- 
ment of  law,  was  actually  paid  at  the  time  the  contract  became 
complete.  The  mode  of  payment  had  not  been  prescribed  by  the 
company,  whether  in  specie,  bills  of  a  particular  bank,  or  other- 
wise ;  the  agent,  therefore,  was  at  liberty  to  exercise  a  discretion 
in  the  matter,  and  prescribe  the  mode  of  payment ;  and,  accord- 
ingly, we  find  him  directing,  in  this  case,  that  it  may  be  paid  by 
a  check  payable  to  his  order  for  the  amount.  It  is  admitted  that 
the  insured  had  funds  in  the  bank  upon  which  it  was  drawn,  at 


Chap.  I.  §  6.]        OFFER  AND  ACCEPTANCE.  86 

all  times  from  the  date  of  the  check  till  it  was  received  by  the 
agent,  sufficient  to  meet  it ;  and  that  it  would  have  been  paid  on 
presentment. 

It  is  not  doubted  that,  if  the  check  for  the  premium  had  been 
received  by  the  agent  from  the  hands  of  the  insured,  it  would 
have  been  sufficient ;  and  in  the  view  we  have  taken  of  the  case, 
the  transmission  of  it  by  mail,  according  to  the  directions  given, 
amounts,  in  judgment  of  law,  to  the  same  thing.  Doubtless,  if 
the  check  had  been  lost  or  destroyed  in  the  transmission,  the 
insured  would  have  been  bound  to  make  it  good ;  but  the  agent, 
in  this  respect,  trusted  to  his  responsibility,  having  full  confi- 
dence in  his  ability  and  good  faith  in  the  transaction, 
•  *  #  *  # 

Decree  reversed.* 


§  6.  Offer  creates  no  legal  rights  iintil  acceptance,  but  may  lapse 
or  be  revoked. 

(t.)  Lapse. 

a.  Lapse  by  death. 

PRATT  V.  TRUSTEES. 

93  ILLINOIS,  475.  — 1879. 

Action  on  notes.     Plaintiff  had  judgment  below. 

ScHOLFiELD,  J.  Appcllces  obtained  judgment  in  the  county 
court  of  Kane  County  against  Mary  L.  Pratt,  as  administratrix  of 
the  estate  of  Philemon  B.  Pratt,  deceased,  on  two  promissory  notes, 
executed  by  the  deceased  to  the  appellees  on  the  6th  of  July,  1871, 
—  one  for  $300,  payable  one  year  after  date,  and  the  other  for  the 
sum  of  $327.50,  payable  two  years  after  date,  and  both  bearing  in- 
terest at  the  rate  of  ten  per  cent  per  annum.  Appeal  was  taken 
from  that  judgment  to  the  Circuit  Court  of  Kane  County,  where 
the  cause  was  again  tried  at  its  October  term,  1876,  resulting,  as 

^AccMrd:  Mactier  v.  Frith,  6  Wend.  103;  Vassar  v.  Camp,  11  N.  Y. 
441 ;  Trevor  v.  Wood,  36  N.  Y.  307  ;  Wheat  v.  Cross,  31  Md.  99  ;  Pat- 
rick V.  Bowman,  149  U.  S.  411  ;  Perry  v.  Mount  Hope  Iron  Co.,  16  R.  I. 
380.  In  Vassar  v.  Camp  it  is  held  to  be  no  defense  to  an  action  for 
breach  of  contract  that  the  letter  of  acceptance  was  never  received.  Contra : 
N'CuUnch  V.  Eagle  Ins.  Co.,  1  Pick. 278  ;  Lewis  v.  Browning,  130  Mass.  173. 


36  FORMATION  OF  CONTRACT.  [Pabt  U. 

before,  in  a  judgment  in  favor  of  appellees  for  the  amount  of  the 
notes,  principal  and  interest.  Mary  L.  Pratt,  administratrix, 
appeals  from  that  judgment,  and  brings  the  rulings  of  the  Circuit 
Court  before  us  for  review. 

The  defense  interposed  to  the  notes  is,  that  they  were  executed 
without  any  valid  consideration. 

*  *  *  *  * 

The  question  to  be  considered  is,  did  Pratt's  death  revoke  the 
promise  expressed  in  the  notes,  no  money  having  been  expended, 
or  labor  bestowed,  or  liability  of  any  kind  incurred,  prior  to  his 
death,  upon  the  faith  of  that  promise  ? 

The  purpose  in  giving  the  notes  was  to  enable  the  church  repre- 
sented by  appellees  to  purchase  a  bell.  The  cost  of  a  bell  of  a 
particular  size,  etc.,  was  estimated  by  Pratt,  and  he  gave  his 
notes  for  the  amount  of  the  estimate,  intending  that  when  the 
notes  were  paid  the  money  should  be  devoted  to  paying  for  such 
a  bell  J  and  when  the  notes  matured,  at  Pratt's  suggestion  to  let 
them  stand,  because,  as  he  alleged,  bell  metal  was  getting  cheaper, 
and  they  would  thereby  be  enabled  to  procure  a  larger  bell,  no 
effort  was  made  to  collect  the  notes,  and  they  were  permitted  to 
lemain  just  as  they  were  -^  but  there  was  no  undertaking  on  the 
part  of  appellees  nor  the  church  which  they  represent  to  procure 
a  bell,  and  there  is  no  proof  of  any  act  done,  or  liability  incurred 
by  appellees,  or  any  one  else,  in  reliance  upon  these  notes,  before 
the  death  of  Pratt.  It  is  shown  that  the  bell  has  been  procured, 
and  probably  there  is  evidence  sufficient  to  show  that  this  has 
been  done  on  the  faith  of  those  notes,  but  it  appears  with  a 
reasonable  certainty  that  this  has  been  since  Pratt's  death.  If  a 
contract  therefor  was  made  in  Pratt's  life-time,  the  record  unfor- 
tunately does  not  show  it.  Collection  of  the  notes  cannot  be 
enforced  as  a  promise  to  make  a  gift.  Pope  v.  Dodson,  58  111. 
360;  Blanchard  v.  Williamsoyi,  70  Id.  652.  Where  notes  are 
given  by  way  of  voluntary  subscription,  to  raise  a  fund  or  pro- 
mote an  object,  they  are  open  to  the  defense  of  a  want  of  consider- 
ation, unless  money  has  been  expended,  or  liabilities  incurred, 
which,  by  a  legal  necessity,  must  cause  loss  or  injury  to  the 
person  so  expending  money,  or  incurring  liability,  if  the  notes 
are  not  paid,  i  Pars,  on  Bills  and  Notes,  202;  1  Pars,  on  Oont. 
377,  et  seq. 


Chap.  I.  §  6.]        OFFER  AND  ACCEPTANCE.  37 

And  so  it  has  been  held  that  the  payee  of  a  promissory  note 
given  to  him  in  the  expectation  of  his  performing  service,  but  with- 
out any  contract  binding  him  to  serve,  cannot  maintain  an  action 
upon  it.     Hulse  v.  Hulse,  17  C.  B.  711 ;  84  Eng.  Com.  Law,  709. 

In  the  absence  of  any  one  claiming  rights  as  a  bona  fide  assignee 
before  maturity,  it  is  not  perceived  that  promissory  notes,  executed 
as  these  were,  are,  in  any  material  respect,  different  from  an 
ordinary  subscription  whereby  the  subscriber  agrees  under  his 
hand,  to  pay  so  much  in  aid  of  a  church,  school,  etc.,  where  there 
is  no  corresponding  undertaking  by  the  payee. 

The  promise  stands  as  a  mere  offer,  and  may,  by  necessary  con- 
sequence, be  revoked  any  time  before  it  is  acted  upon.  It  is  the 
expending  of  money,  etc.,  or  incurring  of  legal  liability,  on  the 
faith  of  the  promise,  which  gives  the  right  of  action,  and  without 
this  there  is  no  right  of  action.  McClnre  v.  Wilson,  43  111.  356, 
and  cases  there  cited ;  Trustees  v.  Garvey,  53  Id.  401 ;  S.  C.,5  Am. 
Hep.  51;  Baptist  Education  Soc.  v.  Carter,  72  Id.  247. 

Being  but  an  offer,  and  susceptible  of  revocation  at  any  time 
before  being  acted  upon,  it  must  follow  that  the  death  of  the 
promisor,  before  the  offer  is  acted  upon,  is  a  revocation  of  the 
offer.  This  is  clearly  so  upon  principle.  The  subscription  or 
note  is  held  to  be  a  mere  offer  until  acted  upon,  because  until 
then  there  is  no  mutuality.  The  continuance  of  an  offer  is  in 
the  nature  of  its  constant  repetition,  which  necessarily  requires 
some  one  capable  of  making  a  repetition.  Obviously  this  can  no 
more  be  done  by  a  dead  man  than  a  contract  can,  in  the  first 
instance,  be  made  by  a  dead  man. 

If  the  payees  named  in  the  notes  may  be  held  agents  of  the 
promisor,  with  power  to  contract  for  work  to  be  done  and  money 
expended  upon  the  faith  of  the  notes,  the  case  of  Campanari  v. 
Woodburn  (15  C.  B.  400 ;  80  Eng.  Com.  Law,  400)  is  directly  in 
point,  and  holds  that  the  death  of  the  promisor  was  a  revocation 
of  the  agency.  In  that  case  the  plaintiff  alleged  that  it  was 
agreed  between  him  and  the  defendant's  intestate  that  he  should 
endeavor  to  sell  a  certain  picture,  and  that  if  he  -succeeded  the 
intestate  should  pay  him  100  pounds ;  that  he  did  so  endeavor 
while  the  testator  was  alive,  and  through  the  efforts  then  made 
was  enabled^to  effect  a  sale  after  the  testator's  death,  but  that 


38  FORMATION  OF  CONTRACT.  [Paet  n. 

the  defendant  had  refused  to  pay  100  pounds.  The  count  was 
held  not  to  show  a  cause  of  action.  Jervis,  C.  J.,  said  that  if  the 
testator  had  countermanded  the  sale,  he  clearly  would  not  have 
been  liable  for  commissions,  although  the  plaintiff  might  have 
recovered  for  services  already  rendered  and  charges  and  expenses 
previously  incurred.  A  fortiori  the  defendant  Avas  not  responsible 
when  the  revocation  proceeded  from  the  act  of  God. 

An  analogous  case  is  Michigan  State  Bank  v.  Leavenworth  (2 
Williams  [Vt.],  209),  where  it  was  held  that  the  operation  of  a 
letter  of  credit  was  confined  to  the  life  of  the  writer,  and  that  no 
recovery  can  be  had  upon  it  for  goods  sold  or  advances  made 
after  his  death. 

The  question  that  has  been  raised,  in  some  cases,  whether  a  party 
acting  in  good  faith  upon  the  belief  that  the  principal  is  alive, 
may  recover,  does  not  arise  here,  as  there  is  nothing  in  the  evi- 
dence to  authorize  the  inference  that  the  bt^U  here  was  purchased 
under  the  belief  that  Pratt  was  still  alive. 

We  are  of  the  opinion,  on  the  record  before  us,  the  judgment 
below  was  unauthorized.  It  must  therefore  be  reversed  and  the 
cause  remanded.  Judgment  reversed.* 


b.  Lapse  by  failure  to  accept  in  manner  prescribed. 
ELIASON  et  al.  v.  HENSHAW. 

4  WHEATON  (U.  S.) ,  225.  — 1819. 

Error  to  the  Circuit  Court  for  the  District  of  Columbia. 

Washington,  J.  This  is  an  action,  brought  by  the  defendant 
in  error,  to  recover  damages  for  the  non-performance  of  an 
agreement,  alleged  to  have  been  entered  into  by  the  plaintiffs  in 
error,  for  the  purchase  of  a  quantity  of  flour,  at  a  stipulated 
price.  The  evidence  of  this  contract,  given  in  the  court  below,  is 
stated  in  a  bill  of  exceptions,  and  is  to  the  following  effect : 

A  letter  from  the  plaintiffs  to  the  defendant,  dated  the  10th  of 
February,  1813,  in  which  they  say :  "  Capt.  Conn  informs  us  that 

^Accord:  Twenty-Third  St.  Bap.  Ch.  v.  Cornell,  117  N.  Y.  601.  Cf.  Cot- 
tage Street  Church  v.  Kendall,  121  Mass.  528.  For  a  similar  case  of  revoca- 
tion by  insanity,  see  Beach  v.  First  M.  E.  Church,  96  111.  177. 


Chap.  I.  §  6.]        OFFER  AND  ACCEPTANCE.  39 

you  have  a  quantity  of  flour  to  dispose  of.  We  are  in  the  prac- 
tice of  purchasing  flour  at  all  times,  in  Georgetown,  and  will  be 
glad  to  serve  you,  either  in  receiving  your  flour  in  store,  when 
the  markets  are  dull,  and  disposing  of  it,  when  the  markets  will 
answer  to  advantage,  or  we  will  purchase  at  market  price,  when 
delivered;  if  you  are  disposed  to  engage  two  or  three  hundred 
barrels  at  present,  we  will  give  you  $9.50  per  barrel,  deliverable 
the  first  water,  in  Georgetown,  or  any  service  we  can.  If  you 
should  want  an  advance,  please  write  us  by  mail,  and  will  send 
you  part  of  the  money  in  advance."  In  a  postscript  they  add, 
"Please  write  by  return  of  wagon,  whether  you  accept  our  offer." 
This  letter  was  sent  from  the  house  at  which  the  writer  then  was, 
about  two  miles  from  Harper's  Ferry,  to  the  defendant,  at  his 
mill,  at  Mill  Creek,  distant  about  twenty  miles  from  Harper's 
Ferry,  by  a  wagoner  then  employed  by  the  defendant  to  haul  flour 
from  his  mill  to  Harper's  Ferry,  and  then  about  to  return  home 
with  his  wagon.  He  delivered  the  letter  to  the  defendant,  on  the 
14th  of  the  same  month,  to  which  an  answer,  dated  the  succeeding 
day,  was  written  by  the  defendant,  addressed  to  the  plaintiffs,  at 
Georgetown,  and  dispatched  by  a  mail  which  left  Mill  Creek  on 
the  19th,  being  the  first  regular  mail  from  that  place  to  George- 
town. In  this  letter  the  writer  says :  "  Your  favor  of  the  10th 
inst.  was  handed  me  by  Mr.  Chenoweth  last  evening.  I  take  the 
earliest  opportunity  to  answer  it  by  post.  Your  proposal  to 
engage  300  barrels  of  flour,  delivered  in  Georgetown,  by  the  first 
water,  at  $9.50  per  barrel,  I  accept;  shall  send  on  the  flour  by 
the  first  boats  that  pass  down  from  where  my  flour  is  stored  on 
the  river;  as  to  any  advance,  will  be  unnecessary  —  payment  on 
delivery  is  all  that  is  required." 

On  the  25th  of  the  same  month,  the  plaintiffs  addressed  to  the 
defendant  an  answer  to  the  above,  dated  at  Georgetown,  in  which 
they  acknowledge  the  receipt  of  it,  and  add:  "Not  having  heard 
from  you  before,  had  quite  given  over  the  expectation  of  getting 
your  flour;  more  particularly,  as  we  requested  an  answer  by  return 
of  wagon  the  next  day,  and  as  we  did  not  get  it,  had  bought  all 
we  wanted."  The  wagoner,  by  whom  the  plaintiffs'  first  letter 
was  sent,  informed  them,  when  he  received  it,  that  he  should  not 
probably  return  to  Harper's  Ferry,  and  he  did  not,  in  fact,  return 


40  FORMATION  OF  CONTRACr,  [Part  II. 

in  the  defendant's  employ.  The  flour  was  sent  down  to  George- 
town some  time  in  March,  and  the  delivery  of  it  to  the  plaintiffs 
was  regularly  tendered  and  refused. 

Upon  this  evidence,  the  defendants  in  the  court  below,  the 
plaintiffs  in  error,  moved  that  court  to  instruct  the  jury,  that  if 
they  believed  the  said  evidence  to  be  true,  as  stated,  the  plaintiff 
in  this  action  was  not  entitled  to  recover  the  amount  of  the  price 
of  the  300  barrels  of  flour,  at  the  rate  of  $9.50  per  barrel.  The 
court  being  divided  in  opinion,  the  instruction  prayed  for  was  not 
given.  The  question  is,  whether  the  court  below  ought  to  have 
given  the  instruction  to  the  jury,  as  the  same  was  prayed  for?  If 
they  ought,  the  judgment,  which  was  in  favor  of  the  plaintiff  in 
that  court,  must  be  reversed. 

It  is  an  undeniable  principle  of  the  law  of  contracts,  that  an 
offer  of  a  bargain  by  one  person  to  another,  imposes  no  obliga- 
tion upon  the  former  until  it  is  accepted  by  the  latter,  according 
to  the  terms  in  which  the  offer  was  made.  Any  qualification  of, 
or  departure  from,  those  terms  invalidates  the  offer,  unless  the 
same  be  agreed  to  by  the  person  who  made  it.  Until  the  terms 
of  the  agreement  have  received  the  assent  of  both  parties,  the 
negotiation  is  open,  and  imposes  no  obligation  upon  either. 

In  this  case,  the  plaintiffs  in  error  offered  to  purchase  from  the 
defendant  two  or  three  hundred  barrels  of  flour,  to  be  delivered 
at  Georgetown,  by  the  first  water,  and  to  pay  for  the  same  $9.50 
per  barrel.  To  the  letter  containing  this  offer,  they  required  an 
answer  by  the  return  of  the  wagon,  by  which  the  letter  was  dis- 
patched. This  wagon  was  at  that  time  in  the  service  of  the 
defendant,  and  employed  by  him  in  hauling  flour  from  his  mill  to 
Harper's  Ferry,  near  to  which  place  the  plaintiffs  then  were. 
The  meaning  of  the  writers  was  obvious.  They  could  easily  cal- 
culate, by  the  usual  length  of  time  which  was  employed  by  this 
wagon  in  traveling  from  Harper's  Ferry  to  Mill  Creek  and  back 
again  with  a  load  of  flour,  about  what  time  they  should  receive 
the  desired  answer,  and  therefore  it  was  entirely  unimportant 
whether  it  was  sent  by  that  or  another  wagon,  or  in  any  other 
manner,  provided  it  was  sent  to  Harper's  Ferry,  and  was  not 
delayed  beyond  the  time  which  was  ordinarily  employed  by 
wagons  engaged  in  hauling  flour  from  the  defendant's  mill  to 


CJhap.  I.  §  6.]  OFFER  AND  ACCEPTANCE.  41 

Harper's  Ferry.  Whatever  uncertainty  there  might  have  been  as 
to  the  time  when  the  answer  would  be  received,  there  was  none 
as  to  the  place  to  which  it  was  to  be  sent;  this  was  distinctly 
indicated  by  the  mode  pointed  out  for  the  conveyance  of  the 
answer.  The  place,  therefore,  to  which  the  answer  was  to  be 
sent,  constituted  an  essential  part  of  the  plaintiffs'  offer. 

It  appears,  however,  from  the  bill  of  exceptions,  that  no  answer 
to  this  letter  was  at  any  time  sent  to  the  plaintiffs  at  Harper's 
Ferry.  Their  offer,  it  is  true,  was  accepted  by  the  terms  of  a 
letter  addressed  Georgetown,  and  received  by  the  plaintiffs  at 
that  place ;  but  an  acceptance  communicated  at  a  place  different 
from  that  pointed  out  by  the  plaintiffs,  and  forming  a  part  of 
their  proposal,  imposed  no  obligation  binding  upon  them,  unless 
they  had  acquiesced  in  it,  which  they  declined  doing.  It  is  no 
argument,  that  an  answer  was  received  at  Georgetown ;  the  plain- 
tiffs in  error  had  a  right  to  dictate  the  terms  upon  which  they 
would  purchase  the  flour,  and  unless  they  were  complied  with, 
they  were  not  bound  by  them.  All  their  arrangements  may  have 
been  made  with  a  view  to  the  circumstance  of  place,  and  they 
were  the  only  judges  of  its  importance.  There  was,  therefore,  no 
contract  concluded  between  these  parties,  and  the  court  ought, 
therefore,  to  have  given  the  instruction  to  the  jury,  which  was 
asked  for. 

Judgment  reversed,  and  cause  remanded,  with  directions  to 
award  a  venire  facias  de  novo.^ 


c.  Lapse  by  expiration  of  time. 
MACLAY  V.   HARVEY. 

90  ILLINOIS,  625.  — 1878. 

ScHOLFiELD,  J.  Appellant  brought  assumpsit  against  appellee 
in  the  court  below,  on  an  alleged  contract  whereby  the  latter 
employed  the  former  to  take  charge  of  the  millinery  department 
of  his  store  in  Monmouth,  in  this  State,  for  the  season  commenc- 
ing in  April  and  ending  in  July,  in  the  year  1876,  and  to  pay  her 
therefor  $15  per  week. 

^  For  lapse  by  conditional  acceptance,  see  Minneapolis  etc.  By.  v.  Colum- 
bus Soiling  Mill,  119  U.  S.  149,  post,  p.  74. 


42  FORMATIOIs    O:*'  CO^■TKACi^  [Part  H. 

Thxi  judgment  was  in  favor  of  the  appellee,  and  appellant  now 
assigns  numerous  errors  as  grounds  for  its  reversal. 

In  our  opinion,  the  case  may  be  properly  disposed  of  by  the 
consideration  of  a  single  question.  Appellant's  right  of  recovery 
is  based  entirely  upon  an  alleged  special  contract,  and  unless  there 
was  such  a  contract  the  judgment  below  is  right,  however  errone- 
ous may  have  been  the  rulings  under  which  it  was  obtained. 

After  some  preliminary  correspondence,  which  is  not  before  us, 
appellant,  who  was  then  residing  in  Peoria,  received  from  appellee 
the  following,  by  mail: 

"  Monmouth,  III.,  March  9,  1876. 

"  Miss  L.  Maclay,  Peoria,  III. :  I  have  been  trying  to  find  your  address 
for  some  time,  and  was  informed  last  evening  that  you  were  in  Peoria. 
I  write  to  inquire  if  you  intend  to  work  at  millinery  this  season,  and  if 
you  have  made  any  arrangements  or  not.  If  you  have  not,  can  you  take 
charge  of  my  stock  this  season  ?  And  if  we  can  agree,  I  would  want  you 
for  a  permanent  trimmer. 

"  Please  notify  me  by  return  mail,  and  terms,  and  we  can  confer  further. 

"  Yours  in  haste, 

"John  Harvey." 

"Formerly  Jno.  Harvey  &  Co.,  when  you  trimmed  for  me." 

Appellant's  reply  to  this  is  not  before  us.  She  says  she  stated 
her  terms  in  it,  and  thereafter  appellee  wrote  her  the  following, 
which  she  also  received  by  mail : 

"  Monmouth,  III.,  March  21,  1876. 

"  Miss  L.  Maclay,  Peoria,  111. :  Your  favor  was  received  in  due  time, 
and  contents  noted.  You  spoke  of  wages  at  $15  per  week,  and  fare  one 
way.  You  will  want  to  go  to  Chicago,  I  presume,  and  trim  a  week  or 
ten  days. 

"  I  would  like  for  you  to  trim  at  H.  W.  Wetherell's  or  at  Keith  Bros.  I 
will  give  you  $15  per  week  and  pay  your  fare  from  Chicago  to  Mon- 
mouth, and  pay  you  the  above  wages  for  your  actual  time  here  in  the 
house  at  that  rate  per  season. 

"  I  presume  that  the  wholesale  men  will  allow  you  for  your  time  in  the 

house.    You  wiU  confer  a  favor  by  giving  me  your  answer  by  return  mail. 

"  Yours, 

"John  Harvey." 

Appellant  says  she  received  this  in  the  afternoon,  and  replied 
"the  next  day  by  postal  card,  addressed  to  appellee,  at  Monmouth, 
as  follows: 


Chap.  I.  §  6.]        OFFER  AND  ACCEPTANCE.  43 

"  Peoria,  March  23. 
"Mr.  Harvey:  Yours  was  promptly  received,  aud  I  will  go  up  to 
Chicago  next  week,   and  when   my  services  are  required  you  will  let 
me  know. 

"  Very  respectfully, 

"L.  Maclay." 

Appellant  did  not  place  this  in  the  post-office  herself,  but  she 
says  she  gave  it  to  a  boy  who  did  errands  about  the  house  of  her 
sister,  with  whom  she  was  then  staying,  directing  him  to  place  it 
in  the  office.  The  postmark  on  the  card,  which  is  shown  to  be 
always  placed  on  mail  matter  the  same  day  it  is  put  in  the  office, 
shows  that  the  card  was  not  mailed  until  the  25th  of  March. 

Appellee  receiving  no  reply  from  appellant,  on  Monday  morn- 
ing, March  27,  went  to  Peoria  and  endeavored  to  engage  another 
milliner,  and  failing  in  this,  endeavored  to  find  appellant,  but 
was  unable  to  do  so,  and  then  returned  to  Monmouth,  when  he 
received  the  appellant's  postal  card,  which  had  come  to  the  office 
there  during  his  absence.  On  Wednesday  night  of  the  same 
week  appellee  left  Monmouth  for  Chicago,  arriving  at  the  last- 
named  place  on  the  following  Thursday,  March  30.  Finding  that 
the  appellant  was  neither  at  Keith  Bros,  nor  at  Wetherell's,  he 
proceeded  to  employ  another  milliner,  and  on  the  same  day,  and 
before  leaving  Chicago,  wrote  and  mailed  a  letter  directed  to 
appellant's  address  at  Peoria,  notifying  her  of  that  fact,  but  this 
letter,  in  consequence  of  appellant's  absence  from  Peoria,  she  did 
not  receive  for  some  time  afterward. 

The  millinery  season  commences  from  the  5th  to  the  10th  of 
April  and  ends  from  the  20th  of  June  to  the  4th  of  July,  as 
shown  by  the  evidence.  Appellee  had  not  laid  in  his  spring 
stock  when  he  was  corresponding  with  appellant,  and  he  started 
to  New  York,  from  Chicago,  for  that  purpose,  on  the  evening  of 
the  day  on  which  he  addressed  the  letter  to  appellant  notifying 
appellant  of  his  employment  of  another  milliner,  the  evening  of 
the  30th  of  March.  Appellant  says  she  left  Peoria  for  Chicago 
on  Friday,  which  must  have  been  the  31st  of  March.  On  arriving 
at  Chicago  she  went  to  Wetherell's,  and  failing  to  get  employ- 
ment there,  did  not  go  to  Keith  Bros.,  but  went  to  another  house 
in  the  same  line  of  business^  where  she  remained  some  days,  and 


44  FORMATION  OF  CONTRACT.  [Part  II. 

on  the  8th  of  April  she  notified  appellee,  by  letter,  that  she  was 
sufficiently  informed  as  to  the  "  new  ideas  of  trimming  "  and  was 
ready  to  enter  his  service.  Appellee  replied  to  this,  reciting  the 
disappointments  he  claimed  to  have  met  with  on  her  account,  and 
again  notifying  her  that  he  did  not  require  her  services. 

If  a  contract  was  consummated  between  the  parties,  it  was  by 
the  mailing  of  appellant's  postal  card  on  the  25th  of  March. 
Appellee's  letter  of  the  21st  cannot  be  regarded  as  the  consumma- 
tion of  a  contract,  because  it  restates  the  terms  with  some  varia- 
tion, though  it  may  be  but  slight,  and  requires  an  acceptance 
upon  the  terms  thus  stated.  This,  until  unequivocally  accepted, 
was  only  a  mere  proposition  or  offer.  Hough  v.  Brown,  19  N.  Y. 
111. 

It  was  said  by  the  Lord  Chancellor  in  Dunlop  v.  Higgins  (1  H. 
L.  Cas.  387) : 

"  Where  an  individual  makes  an  offer  by  post,  stipulating  for,  or  by  the 
nature  of  the  business  having  the  right  to  expect,  an  answer  by  return  of 
post,  the  offer  can  only  endure  for  a  limited  time,  and  the  making  of  it  is 
accompanied  by  an  implied  stipulation  that  the  answer  shall  be  sent  by 
return  of  post.  If  that  implied  stipulation  is  not  satisfied,  the  person 
making  the  offer  is  released  from  it.  When  a  person  seeks  to  acquire  a 
right,  he  is  bound  to  act  with  a  degree  of  strictness,  such  as  may  not  be 
required  where  he  is  only  endeavoring  to  excuse  himself  from  a  liability." 

This  is  regarded  as  a  leading  case  on  the  question  of  acceptance 
of  contract  by  letter,  and  the  language  quoted  we  regard  as  a  clear 
and  accurate  statement  of  the  law,  as  applicable  to  the  present 
case.  It  is  clear  here  that  the  nature  of  the  business  demanded  a 
prompt  answer,  and  the  words,  "you  will  confer  a  favor  by  giving 
me  your  answer  by  return  mail, "  do,  in  effect,  "  stipulate  "  for  an 
answer  by  return  mail.  Taylor  v.  Rennie,  35  Barb.  272.  The 
evidence  shows  that  there  were  two  daily  mails  between  Peoria 
and  Monmouth,  one  arriving  at  Monmouth  at  11  o'clock  a.m., 
and  the  other  at  6  o'clock  p.m.,  and  it  did  not  require  more  than 
one  day's  time  between  the  points.  Appellee's  letter  to  appellant 
making  the  offers,  it  will  be  remembered,  bears  date  March  21st. 
Assuming  the  date  of  the  appellant's  postal  card  (which,  she 
says,  was  written  on  the  morning  after  she  received  appellee's 
letter)  to  be  correct,  she  received  appellant's  letter  on  the  eren- 


Chap.  I.  §  6.]         OFFER  AND  ACCEPTANCE.  45 

ing  of  the  22d.  Appellee  was,  therefore,  entitled  to  expect  a 
reply  mailed  on  the  23d,  which  he  ought  to  have  received  on  that 
day,  or  at  farthest,  by  the  morning  of  the  24th  ;  but  appel- 
lant's reply  was  not  mailed  until  the  25th.  It  does  not  relieve 
appellant  of  fault  that  she  gave  the  postal  card  to  a  boy  on  the 
23d,  to  have  him  mail  it.  Her  duty  was  not  to  place  an  answer  I 
in  private  hands,  but  in  the  post-office.  The  boy  was  her  agent,  I 
not  that  of  the  appellee,  and  his  negligence  in  mailing  the  postal 
card  was  her  negligence. 

The  question  whether  it  would  not  have  equally  subserved 
appellee's  object  had  he  treated  the  postal  card  of  appellant  as  the 
consummation  of  a  contract  is  irrelevant.  Appellant  seeks  to 
recover  upon  the  strict  letter  of  a  special  contract,  and  it  is  there- 
fore incumbent  upon  her  to  prove  such  contract.  It  is  required 
of  her,  as  we  have  seen,  to  prove  an  acceptance  of  appellee's  offer 
within  the  time  to  which  it  was  limited  —  that  is  to  say,  by  the 
placing  in  the  post-office  of  an  answer  unequivocally  accepting 
the  offer  in  time  for  the  return  mail,  which  she  did  not  do. 
Appellee  was  therefore  under  no  obligation  to  regard  the  contract 
as  closed.  He  might,  it  is  true,  have  done  so,  but  he  was  not 
legally  bound  in  that  respect,  nor  was  he  legally  bound  to  notify 
appellant  that  her  acceptance  had  not  been  signified  within  the 
time  to  which  his  offer  was  limited.  She  is  legally  chargeable 
with  knowledge  that  her  acceptance  was  not  in  time,  and  in 
order  to  fix  a  liability  thereby  upon  the  appellee,  it  was  incum- 
bent upon  her,  before  assuming  that  appellee  waived  this  objec- 
tion, to  ascertain  that  he  in  fact  did  so. 

Appellee  was  led  by  the  postal  card  of  appellant  to  believe  that 
he  would,  when  he  arrived  at  Chicago  on  Thursday,  find  her  either 
at  Wetherell's  or  at  Keith  Bros.  Had  he  done  so,  it  was  his 
intention  to  treat  the  contract  as  closed;  but  she  was  not  there, 
and  this  intention  was  not  acted  upon,  and  so  it  is  to  be  consid- 
ered as  if  it  had  never  existed.  Appellee,  not  finding  appellant 
at  Wetherell's  or  Keith  Bros.,  as  she  had  led  him  to  believe  he 
would,  had  no  reason  to  assume  that  she  was,  in  good  faith, 
acting  upon  the  assumption  that  her  postal  card  had  closed  the 
contract,  and  he  cannot  therefore  be  held  estopped  from  denying 
that  it  was  not  posted  in  time.     In  view  of  the  lateness  of  the 


46  FORMATION  OF  CONTRACT.  [Part  II. 

season  and  the  danger  to  appellee's  business  from  delay,  of  all 

■which  appellant  was  aware,  it  cannot  be  said  appellee  acted  with 

undue  haste  in  engaging  another  milliner.     The   judgment   is 

affirmed. 

Judgment  affirmed. 

Dickey,  J.,  dissented. 


MINI^ESOTA  OIL  CO.   v.   COLLIER  &c.  CO. 

4  DILLON  (U.  S.  C.  C),  431.— 1876. 

Action  for  oil  sold  by  plaintiff  to  defendant.  Defendant  sets 
up  counter-claim  for  damages  for  non-delivery  of  oil  bought  of 
plaintiff. 

Defendant's  counter-claim  rests  on  these  facts.  On  July  31st, 
plaintiff  offered  defendant  by  telegraph  a  quantity  of  oil  at  fifty- 
eight  cents.  The  telegram  was  sent  on  Saturday,  but  was  not 
delivered  to  defendant  until  Monday,  August  2d,  between  eight 
and  nine  o'clock.  On  Tuesday,  August  3d,  about  nine  o'clock, 
defendant  deposited  a  telegram  accepting  the  offer.  Later  in 
the  day,  plaintiff  sent  defendant  a  telegram  withdrawing  the 
offer  of  July  31st,  but  defendant  replied  that  sale  was  effected, 
and  inquired  when  shipment  would  follow. 

It  appeared  that  the  market  was  very  much  unsettled,  and  that 
the  price  of  oil  was  subject  to  sudden  fluctuations  during  the 
month  previous,  and  at  the  time  of  this  negotiation,  varying 
from  day  to  day,  and  ranging  between  fifty-five  and  seventy-five 
cents  per  gallon. 

It  is  urged  by  the  defendant  that  the  dispatch  of  Tuesday, 
August  3,  1875,  accepting  the  offer  of  the  plaintiff  transmitted 
July  31st,  and  delivered  Monday  morning,  August  2d,  concluded 
a  contract  for  the  sale  of  the  twelve  thousand  four  hundred  and 
fifty  gallons  of  oil. 

The  plaintiff,  on  the  contrary,  claims,  first,  that  the  dispatch 
accepting  the  proposition  made  July  31st  was  not  received  until 
after  the  offer  had  been  withdrawn;  second,  that  the  acceptance 
of  the  offer  was  not  in  due  time,  that  the  delay  was  unreasona- 
ble, and  therefore  no  contract  was  completed. 


Chap.  I.  §  6.]         OFFER  AND  ACCEPTANCE.  47 

Nelson,  J.  It  is  well  settled  by  the  authorities  in  this  coun- 
try, and  sustained  by  the  later  English  decisions,  that  there  is 
no  difference  in  the  rules  governing  the  negotiation  of  contracts 
by  correspondence  through  the  post-office  and  by  telegraph,  and 
a  contract  is  concluded  when  an  acceptance  of  a  proposition  is 
deposited  in  the  telegraph-office  for  transmission.  See  Am. 
Law  Reg.  Vol.  14,  No.  7,  401,  "Contracts  by  Telegraph,"  article  ' 
by  Judge  Redfield,  and  authorities  cited;  also  Trevor  v.  Wood, 
36  N.  Y.  307. 

The  reason  for  this  rule  is  well  stated  in  Adams  v.  Lindsell  (1 
Barn.  &  Aid.  681).  The  negotiation  in  that  case  was  by  post. 
The  court  said,  "  that  if  a  bargain  could  not  be  closed  by  letter 
before  the  answer  was  received,  no  contract  could  be  completed 
through  the  medium  of  the  post-office;  that  if  the  one  party  was 
not  bound  by  his  offer  when  it  was  accepted  (that  is,  at  the  time 
the  letter  of  acceptance  is  deposited  in  the  mail),  then  the  other 
party  ought  not  to  be  bound  until  after  they  had  received  a  noti- 
fication that  the  answer  had  been  received  and  assented  to,  and 
that  it  might  so  go  on  ad  infinitum."  See  also  5  Pa.  St.  339; 
11  N.  Y.  441;  Mactier  v.  Frith,  6  Wend.  103;  48  N.  H.  14;  8 
English  Common  Bench,  225.  In  the  case  at  bar  the  delivery 
of  the  message  at  the  telegraph-office  signified  the  acceptance  of 
the  offer.  If  any  contract  was  entered  into,  the  meeting  of  minds 
was  at  8.53  of  the  clock  on  Tuesday  morning,  August  3d,  and 
the  subsequent  dispatches  are  out  of  the  case.  1  Parsons  on 
Contracts,  482,  483. 

This  rule  is  not  strenuously  dissented  from  on  the  argument, 
and  it  is  substantially  admitted  that  the  acceptance  of  an  offer  by 
letter  or  by  telegraph  completes  the  contract,  when  such  accept- 
ance is  put  in  the  proper  and  usual  way  of  being  communicated 
by  the  agency  employed  to  carry  it;  and  that  when  an  offer  is 
made  by  telegraph,  an  acceptance  by  telegraph  takes  effect  when 
the  dispatch  containing  the  acceptance  is  deposited  for  transmis- 
sion in  the  telegraph-office,  and  not  when  it  is  received  by  the 
other  party.  Conceding  this,  there  remains  only  one  question 
to  decide,  which  will  determine  the  issues :  "Was  the  acceptance  of 
defendant  deposited  in  the  telegraph-office  Tuesday,  August  3d, 
within  a  reasonable  time,  so  as  to  consummate  a  contract  binding 
upon  the  plaintiff? 


48  FORMATION  OF  CONTRACT.  [Pabt  H. 

It  is  undoubtedly  the  rule  that  when  a  proposition  is  made 
under  the  circumstances  in  this  case,  an  acceptance   concludes 
the  contract  if  the  offer  is  still  open,  and  the  mutual  consent 
necessary  to  convert  the  offer  of  one  party  into  a  binding  con- 
tract by  the  acceptance  of  the  other  is  established  if  such  accept- 
ance is  within  a  reasonable  time  after  the  offer  was  received. 
I    The  better  opinion  is,  that  what  is,  or  is  not,  a  reasonable 
ftime,  must  depend  upon  the  circumstances  attending  the  negotia- 
/tion,  and  the  character  of  the  subject-matter  of  the  contract,  and 
/  in  no  better  way  can  the  intention  of  the  parties  be  determined. 
If  the  negotiation  is  in  respect  to  an  article  stable  in  price, 
there  is  not  so  much  reason  for  an  immediate  acceptance  of  the 
offer,  and  the  same  rule  would  not  apply  as  in  a  case  where  the 
negotiation  related  to  an  article  subject  to   sudden  and  great 
fluctuations  in  the  market. 

The  rule  in  regard  to  the  length  of  the  time  an  offer  shall  con- 
tinue, and  when  an  acceptance  completes  the  contract,  is  laid 
down  in  Parsons  on  Contracts  (Vol.  1,  p.  482).  He  says:  "It  may 
be  said  that  whether  the  offer  be  made  for  a  time  certain  or  not, 
the  intention  or  understanding  of  the  parties  is  to  govern.  If 
no  definite  time  is  stated,  then  the  inquiry  as  to  a  reasonable 
time  resolves  itself  into  an  inquiry  as  to  what  time  it  is  rational 
to  suppose  the  parties  contemplated;  and  the  law  will  decide 
this  to  be  that  time  which,  as  rational  men,  they  ought  to  have 
understood  each  other  to  have  had  in  mind."  Applying  this 
rule,  it  seems  clear  that  the  intention  of  the  plaintiff,  in  making 
the  offer  by  telegraph,  to  sell  an  article  which  fluctuates  so  much 
in  price,  must  have  been  upon  the  understanding  that  the  accept- 
ance, if  at  all,  should  be  immediate,  and  as  soon  after  the  receipt 
of  the  offer  as  would  give  a  fair  opportunity  for  consideration. 
The  delay  here  was  too  long,  and  manifestly  unjust  to  the  plain- 
tiff, for  it  afforded  the  defendant  an  opportunity  to  take  advan- 
tage of  a  change  in  the  market,  and  accept  or  refuse  the  offer  as 
would  best  subserve  its  interests. 

Judgment  will  be  entered  in  favor  of  the  plaintiff  for  the 
amount  claimed.     The  counter-claim  is  denied. 

Judgment  accordingly. 


Chap.  I.  §  6.]        OFFER  AND  ACCEFTANCE.  49 

(ii.)  Revocation. 

a.  An  offer  may  be  revoked  at  any  time  before  acceptance. 

FISHER  V.    SELTZER. 
23  PENNSYLVANIA  STATE,  308.  — 1854. 

Action  by  Fisher,  late  sheriff,  to  recover  from  Seltzer  the 
difference  between  the  amount  bid  at  a  sale  of  property  and  the 
amount  realized  at  a  second  sale,  with  costs,  etc.  The  sheriff, 
before  the  sale,  had  prescribed  certain  rules  or  conditions,  among 
which  were  that  "no  person  shall  retract  his  or  her  bid,"  and 
that  if  a  bidder  failed  to  comply  with  all  conditions  of  the  sale, 
"he  shall  pay  all  costs  and  charges."  At  the  sale  Seltzer  bid 
seven  thousand  dollars,  under  the  belief  that  the  property  was 
to  be  sold  free  of  a  certain  mortgage  for  six  thousand  dollars. 
Discovering  his  error,  he  retracted  his  bid  before  it  was  accepted, 
but  the  sheriff,  denying  this  right  of  retraction,  knocked  down 
the  property  to  him.  He  refused  to  take  it.  On  a  resale  it 
brought  only  one  thousand  five  hundred  dollars.  Judgment  was 
entered  for  plaintiff  for  the  costs  of  the  second  sale  only.  Plain- 
tiff prosecuted  a  writ  of  error. 

By  court,  Lewis,  J.  Mutuality  is  so  essential  to  the  validity 
of  contracts  not  under  seal,  that  they  cannot  exist  without  it. 
A  bid  at  auction,  before  the  hammer  falls,  is  like  an  offer  before 
acceptance.  In  such  a  case  there  is  no  contract,  and  the  bid  may 
be  withdrawn  without  liability  or  injury  to  any  one.  The  brief 
interval  between  the  bid  and  its  acceptance  is  the  reasonable 
time  which  the  law  allows  for  inquiry,  consideration,  correction 
of  mistakes,  and  retraction.  This  privilege  is  of  vital  impor- 
tance in  sheriffs'  sales,  where  the  rule  of  caveat  emptor  operates 
with  all  its  vigor.  It  is  necessary,  in  order  that  bidders  may 
not  be  entrapped  into  liabilities  never  intended.  Without  it, 
prudent  persons  would  be  discouraged  from  attending  these  sales. 
It  is  the  policy  of  the  law  to  promote  competition,  and  thus  to 
produce  the  highest  and  best  price  which  can  be  obtained.  The 
interests  of  debtors  and  creditors  are  thus  promoted.  By  the 
opposite  course,  a  creditor  might  occasionally  gain  an  advantage, 
but  an  innocent  man  would  suffer  unjustly,  and  the  general  result 


50  FORMATION  OF  CONTRACT.  [Pabt  II. 

would  be  disastrous.  A  bidder  at  sheriff's  sale  has  a  right  to 
withdraw  his  bid  at  any  time  before  the  property  is  struck  down 
to  him,  and  the  sheriff  has  no  authority  to  prescribe  conditions 
which  deprive  him  of  that  right.  Where  ihe  bid  is  thus  with- 
drawn before  acceptance,  there  is  no  ,€(5ntract,  and  such  a  bidder 
cannot,  in  any  sense,  be  regarded  as  a  "purchaser."  He  is,  there- 
fore, not  liable  for  "  the  costs  and  charges  "  of  a  second  sale. 
Where  there  has  been  no  sale,  there  can  be  no  resale. 

The  judgment  ought  not  to  have  been  in  favor  of  the  plain- 
tiff, even  for  "  the  costs  and  charges  "  of  the  second  sale ;  but  as 
the  defendant  does  not  complain,  we  do  not  disturb  it. 

Judgment  affirmed. 

WHITE  V.  CORLIES. 

46  NEW  YORK,  467.  — 1871. 
[Reported  herein  at  p.  7.] 


6.    An  offer  is  made  irrevocable  by  acceptance. 
COOPER  V.    LANSING  WHEEL  COMPANY. 

94  MICHIGAN,  272.— 1892. 

Assumpsit.  Defendant  demurred  to  the  declaration  and  the 
demurrer  was  sustained.     Plaintiffs  bring  error. 

Montgomery,  J.  This  is  an  appeal  from  a  judgment  sustain- 
ing a  demurrer  to  plaintiffs'  declaration. 

The  first  count  of  the  declaration  alleges  an  agreement  "  where- 
by the  said  defendant  did  undertake,  promise,  and  agree,  to  and 
with  the  plaintiffs,  to  furnish,  sell,  and  deliver  to  said  plaintiffs 
all  such  number  or  quantity  of  wheels,  at  and  for  an  agreed 
price,  as  said  plaintiffs  should  or  might  require  or  want,  during 
the  season  of  the  year  1890,  in  their  said  business  of  manufactur- 
ing;" that  during  the  season  of  1890  plaintiffs  agreed  to  order, 
and  did  order,  of  defendant,  all  of  such  wheels  as  they  might  or 
should  want  or  require  in  their  said  business ;  that  certain  orders 
so  given  were  filled,  and  that  certain  other  orders  given  in 
November  and  December,  1890,  defendant  refused  to  fill. 


Chap.  I.  §  6.]        OFFER  AND  ACCEPTANCE.  61 

The  second  count  sets  forth  a  written  agreement,  which  is  as 
follows : 

« Owosso,  Mich.,  Dec.  16,  1889. 
"Mess.  Lansing  Wheel  Co., 

Lansing,  Mich. 
"  Gentlemen :  Please  enter  our  order  for  what  wheels  we  may  want 
during  the  season  of  1890,  at  following  prices  and  terms  :  B,  $6 ;  C,  $5; 
D,  $4  per  set,  f.  o.  b.  Owosso,  thirty  days.  All  the  wheels  to  be  good 
stock,  and  smooth.  Should  we  want  a  few  D  wheels  to  be  extra  nice 
stock,  all  selected  white,  they  are  to  be  furnished  at  same  price,  not  to 
exceed  10  set  in  a  100. 

"  Very  respectfully  yours, 

"Owosso  Cart  Co." 

Upon  receipt  of  this  instrument,  defendant  indorsed  thereon 
the  following:  "Accepted.  Lansing  Wheel  Co."  Then  follow 
the  allegations  as  to  the  giving  and  filling  of  certain  orders,  and 
the  refusal  to  fill  certain  other  orders  which  were  given. 

The  defendant  demurred  to  this  declaration,  the  substantial 
ground  of  demurrer  being  that  there  was  no  mutuality  of  contract 
between  the  parties. 

It  was  early  held  in  England  that  a  proposition  to  sell  goods  / 
at  a  certain  specified  price,  and  to  give  the  offeree  a  stated  time 
in  which  to  accept  or  reject  the  offer,  did  not  make  a  binding  con- 
tract which  could  not  be  withdrawn  before  acceptance.  See 
Cooke  V.  Oxley,  3  Term  R.  653,  The  doctrine  of  this  case  has  not, 
however,  remained  unchallenged.  Mr.  Story,  in  his  work  on 
Sales,  expresses  the  opinion  that  the  rule  is  unjust  and  inequita- 
ble. Section  127.  He  contends  that  the  grant  of  time  to  accept 
the  offer  is  not  made  without  consideration.  He  suggests  as 
one  sufficient  legal  consideration  the  expectation  or  hope  of  the 
offerer,  and  further  suggests  that  the  making  of  such  an  offer 
might  betray  the  other  party  into  a  loss  of  time  and  money,  by 
inducing  him  to  make  examination,  and  to  inquire  into  the  value 
of  the  goods  offered,  and  this  inconvenience  assumed  by  him  is 
a  sufficient  consideration  for  the  offer. 

There  is  much  force  in  this  reasoning,  but  it  has  not  prevailed 
to  abate  the  doctrine  of  Cooke  v.  Oxley  further  than  this :  That 
it  is  now  generally  held  that  if  a  proposition  be  made,  to  be 


52  FORMATION  OF  CONTRACT.  [Pakt  H. 

accepted  within  a  given  time,  it  constitutes  a  continuing  offer, 
which,  however,  may  be  retracted  at  any  time.  But  if,  at  any 
time  before  it  is  retracted,  it  is  accepted,  such  offer  and  accept- 
ance constitute  a  valid  contract.  It  was  therefore  within  the 
power  of  defendant,  in  the  present  case,  on  the  authority  of  the 
cases  cited,  to  withdraw  the  offer  made  at  any  time  before  the 
plaintiffs  had  acted  upon  it. 

Authorities  may  be  found  which  go  further  than  this.  The 
case  of  Bailey  v.  Austrian  (19  Minn.  535)  holds  that  a  contract 
by  which  defendant  agreed  to  supply  plaintiffs  with  all  the  pig 
iron  wanted  by  them  in  their  business  until  December  31  next 
ensuing,  at  specified  prices,  and  the  plaintiffs  simultaneously 
promised  to  purchase  of  defendant  all  of  the  iron  which  they 
might  want  in  their  said  business  during  the  time  mentioned,  at 
said  prices,  is  not  a  mutual  contract  which  can  be  enforced,  on 
the  ground  that  the  plaintiffs  did  not  engage  to  want  any  quan- 
tity whatever.  The  same  court,  in  Tarbox  v.  Gotzian  (20  Minn. 
139)  reaffirm  this  doctrine. 

In  Keller  v.  Ybarru  (3  Cal.  147)  plaintiff  counted  upon  an  agree- 
ment by  the  defendant,  whereby  he  undertook  to  sell  and  deliver 
"to  the  plaintiff  so  many  of  the  grapes  then  growing  in  his  vine- 
yard as  the  plaintiff  should  wish  to  take,  for  which  the  plaintiff 
agreed  to  pay  the  defendant  10  cents  per  pound  on  delivery. 
The  plaintiff  averred  that  he  subsequently  notified  the  defendant 
that  he  wished  to  take  1900  pounds  of  grapes,  and  tendered  the 
$190  in  payment  therefor,  and  requested  the  defendant  to  deliver 
such  grapes  to  the  plaintiff,  but  defendant  refused  to  deliver  the 
same,  or  any  part  thereof.  The  court  held  that  this  agreement, 
when  first  entered  into,  amounted  to  an  offer  upon  the  part  of 
defendant,  which  the  plaintiff  had  a  right  to  accept  or  reject, 
and  the  defendant  to  retract  at  any  time  before  acceptance ;  but 
that,  when  the  plaintiff  named  the  quantity  of  grapes  which  he 
desired  to  take  under  the  offer  of  defendant,  the  contract  was 
complete,  and  both  parties  were  bound  by  it.  Substantially  the 
same  doctrine  was  held  in  Smith  y.  Morse,  20  La.  Ann.  220. 

In  Railroad  Co.  v.  Bartlett  (3  Cush.  224)  it  was  held  that  a 
proposition  in  writing  to  sell  land  at  a  certain  price,  if  taken  with- 
in 30  days,  is  a  continuing  offer,  which  may  be  retracted  at  any 


Chap.  I.  §  6.]  OFFER  AND  ACCEPTANCE.  68 

time ;  but  if,  not  being  retracted,  it  is  accepted  within  the  time, 
such  offer  and  acceptance  constitute  a  valid  contract. 

So  it  is  generally  held  that  in  suits  upon  unilateral  contracts, 
if  the  defendant  has  had  the  benefit  of  the  consideration  for  which 
he  bargained,  he  can  be  held  bound.  Jones  v.  Robinson,  17  Law 
J.  Exch.  36;  Mills  v.  Blackall,  11  Q.  B.  358;  Morton  v.  Burn, 
7  Adol.  &  E.  19;  Kennaway  v.  Treleavan,  5  Mees.  &  W.  498; 
Richardson  v.  Hardwick,  106  U.  S.  255. 

If  it  be  held,  as  we  think  the  correct  doctrine  is,  that  an  offer 
to  furnish  such  goods  as  the  plaintiff  may  want  within  a  stated 
time  may,  upon  acceptance  by  the  offeree  before  withdrawal, 
constitute  a  valid  contract,  it  is  difficult  to  see  why,  if  the  offeree 
orders  any  portion  of  the  goods,  and  the  offerer  has  the  benefit 
of  the  sale,  the  entire  contract  may  not  become  valid  and  bind-  j 
ing.  This  certainly  would  constitute  a  sufficient  consideration. 
If  in  the  present  case  the  defendant  had,  in  consideration  of  the 
present  sale  and  delivery  to  the  plaintiffs  of  one  lot  of  wheels  at 
a  stated  price,  and  for  which  the  defendant  received  its  pay, 
further  agreed  to  furnish  such  further  quantity  of  wheels  as  the 
plaintiffs  might  desire  during  the  season,  it  would  seem  that  a 
purchase  of  the  one  lot,  as  offered,  would  afford  a  sufficient  con- 
sideration for  defendant's  undertaking.  This  view  is  adopted  in 
England. 

In  Bishop  on  Contracts,  section  78,  it  is  said : 

"  Where  it  is  admitted  that  there  is  nothing  for  A's  promise  to  rest  on 
but  B's  promise,  if  B  has  not  promised,  A's  promise  rests  on  nothing,  and 
is  void.  There  may  be  cases  in  seeming  contradiction  to  this.  If  there 
are  any  really  so,  they  are  not  to  be  followed.  In  one  case,  parties 
agreed  that  one  of  them  should  supply  the  other  during  a  designated 
period  with  certain  stores,  as  the  latter  might  order.  He  made  an  order, 
which  was  filled;  then  made  another,  which  was  declined;  and,  on  suit 
brought,  the  defendant  rested  his  case  on  the  lack  of  mutuality  in  the 
contract,  which,  he  contended,  rendered  it  void.  Plainly  it  stood  in  law 
as  a  mere  continuing  offer  by  the  defendant;  but  when  the  plaintiff 
made  an  order,  he  thereby  accepted  the  offer  to  the  extent  of  the  order, 
and  it  was  too  late  for  the  other  to  recede.  So  judgment  went  for  the 
plaintiff." 

See  Railway  Co.  v.  Witham,  L.  R.  9  C  P.  16.  We  think  the 
doctrine  of  this  case  is  sound,  and  that  it  should  control  the 
present  case. 


54  FORMATION  OF  CONTRACT.  [Pabt  H. 

Judgment  should  be  reversed,  with  costs,  and  defendant  given 

leave  to  plead  over. 

The  other  Justices  concurred.* 


c.  An  offer  under  seal  is  irrevocable. 

McMillan  v.  ames. 

33  MINNESOTA,  257.  — 1885. 

Vanderburgh,  J.  On  the  day  it  bears  date  the  defendant 
executed  and  delivered  to  James  McMillan  &  Co.  the  following 
covenant  or  agreement  under  seal,  which  was  subsequently  as- 
signed to  the  plaintiif : 

[Here  follows  a  copy  of  the  instrument.] 

By  the  terms  of  this  instrument,  which  is  admitted  to  have 
been  sealed  by  defendant,  he  covenanted  to  convey  the  premises 
upon  the  consideration  and  condition  of  the  payment  by  the 
covenantees  of  the  sum  named,  on  or  before  the  date  fixed  in 
the  writing.  Before  performance  on  their  part,  the  defendant 
notified  them  of  his  withdrawal  and  rescission  of  the  promise 
and  obligation  embraced  in  such  written  instrument,  and  there- 
after refused  the  tender  of  payment  and  offer  of  performance  by 
the  plaintiff  in  conformity  therewith,  as  alleged  in  the  complaint, 
and  within  the  time  limited.  On  the  trial,  it  appearing  that 
such  notice  of  rescission  had  been  given,  the  court  rejected  plain- 
tiff's offer  to  introduce  the  writing  in  evidence,  and  dismissed 
the  action. 

The  only  question  presented  on  this  appeal  is  whether  defend- 
ant's promise  or  obligation  was  nudum  pactum  and  presumptively 
invalid  for  want  of  a  consideration,  or  whether,  being  in  the 
nature  of  a  covenant,  the  defendant  was  bound  thereby,  subject 
to  the  performance  of  the  conditions  by  the  covenantees. 

Apart  from  the  effect  of  the  seal  as  evidencing  a  consideration 
binding  the  defendant  to  hold  open  his  proposition,  or  rather 
validating  his  promise  subject  to  the  conditions  expressed  in  the 
writing,  it  is  clear  that  such  promise,  made  for  a  consideration 

1  Accord:  Wells  v.  Alexandre,  130  N.Y.  642  ;  National  Furnace  Co.  v. 
Keystone  Mfg.  Co..,  110  111.  427.     Cf.  Moulton  v.  Kershaw, post,  p.  67. 


Chap.  I.  §  C]  OFFER  AND  ACCEPTANCE.  65 

thereafter  to  be  performed  by  the  plaintiff  at  his  election,  would 
take  effect  as  an  offer  or  proposition  merely,  but  would  become 
binding  as  a  promise  as  soon  as  accepted  by  the  performance  of 
the  consideration,  unless  previously  revoked  or  it  had  otherwise 
ceased  to  exist.  Langdell  on  Cont.  70 ;  Boston  &  M.  R.  R.  v. 
Bartlett,  3  Cush.  224,  228.  In  the  case  cited  there  was  a  propo- 
sition to  sell  land  by  writing  not  under  seal.  The  court  held 
the  party  at  liberty  to  withdraw  his  offer  at  any  time  before 
acceptance,  but  not  after,  within  the  appointed  time,  because 
until  acceptance  it  was  a  mere  offer,  without  a  consideration 
or  a  corresponding  promise  to  support  it,  and  the  court  say : 
■"Whether  wisely  or  not,  the  common  law  unyieldingly  insists 
upon  a  consideration,  or  a  paper  with  a  seal  attached." 

If,  however,  his  promise  is  binding  upon  the  defendant,  be- 
cause contained  in  an  instrument  under  seal,  then  it  is  not  a  mere 
offer,  but  a  valid  promise  to  convey  the  land  upon  the  condition 
of  payment.  All  that  remained  was  performance  by  plaintiff 
within  the  time  specified  to  entitle  him  to  a  fulfilment  of  the 
covenant  to  convey.  Langdell  on  Cont.  178,  179.  As  respects 
the  validity  or  obligation  of  such  unilateral  contracts,  the  dis- 
tinction between  covenants  and  simple  contracts  is  well  defined 
and  established.  Anson,  Cont.  12 ;  Chit.  Cont.  5 ;  Leake,  Cont. 
146;  1  Smith,  Lead  Cas.  (7th  ed.)  698;  Wing  v.  Chase,  35  Me. 
260 ;    Willard  v.  Tayloe,  8  Wall.  557. 

In  Pitman  v.  Woodbury  (3  Exch.  4, 11)  Parke,  B.,  says :  "  The 
cases  establish  that  a  covenantee  in  an  ordinary  indenture,  who  is 
a  party  to  it,  may  sue  the  covenantor,  who  executed  it,  although 
he  himself  never  did ;  for  he  is  a  party,  although  he  did  not  exe- 
cute, and  it  makes  no  difference  that  the  covenants  of  the  defend- 
ant are  therein  stated  to  be  in  consideration  of  those  of  the 
covenantee.  Of  this  there  is  no  doubt,  nor  that  a  covenant  binds 
without  consideration."  Morgan  v.  Pike,  14  C.  B.  473,  484 ; 
Leake,  Cont.  141.  The  covenantee  in  such  cases  may  have  the 
benefit  of  the  contract,  but  subject  to  the  conditions  and  provisos 
in  the  deed.  The  obligations  frequently  take  the  form  of  bonds, 
which  is  only  another  method  of  forming  a  contract,  in  which  a 
party  binds  himself  as  if  he  had  made  a  contract  to  perform ;  a 
consideration  being  necessarily  implied  from  the  solemnity  of  the 


56  FORMATION  OF  CONTRACT.  [Pabt  U. 

instrument.  The  consideration  of  a  sealed  instrument  may  be  in- 
quired into ;  it  may  be  shown  not  to  have  been  paid  (Bowen  v. 
Bell,  20  John.  338),  or  to  be  different  from  that  expressed  (Jor- 
dan V.  White,  20  Minn.  77  [91]  ;  McCrea  v.  Purmort,  16  Wend. 
460),  or  as  to  a  mortgage  that  there  is  no  debt  to  secure  (  Wearse 
V.  Peirce,  24  Pick.  141),  etc. ;  but,  except  for  fraud  or  illegality, 
the  consideration  implied  from  the  seal  cannot  be  impeached  for 
the  purpose  of  invalidating  the  instrument  or  destroying  its  char- 
acter as  a  specialty. 

It  is  true  that  equity  will  not  lend  its  auxiliary  remedies  to  aid 
in  the  enforcement  of  a  contract  which  is  inequitable,  or  is  not 
supported  by  a  substantial  consideration,  but  at  the  same  time  it 
will  not  on  such  grounds  interfere  to  set  it  aside.  But  no  reason 
appears  why  equity  might  not  have  decreed  specific  performance 
in  this  case  (had  the  land  not  been  sold),  because  the  substan- 
tial and  meritorious  consideration  required  by  the  court  in  such 
case  would  consistin  that  stipulated  in  the  instrument  as  the  con- 
dition of  a  conveyance,  performance  of  which  by  the  plaintiff 
would  have  been  exacted  as  a  prerequisite  to  relief,  so  as  to  secure 
to  defendant  mutuality  in  the  remedy,  and  all  his  rights  under  the 
contract.  The  inquiry  would  not,  in  such  case,  be  directed  to  the 
constructive  consideration  evidenced  by  the  seal,  for  a  mere 
nominal  consideration  would  have  supported  the  defendant's  offer 
or  promise  upon  the  prescribed  conditions.  Leake,  Cont.  17,  18 ; 
Western  R.  Co.  v.  Babcock,  6  Met.  346 ;  Yard  v.  Patton,  13  Pa. 
St.  278,  285  ;  Candor's  Appeal,  27  Pa.  St.  119. 

If,  then,  defendant's  promise  was  irrevocable  within  the  time 
limited,  plaintiff  might  certainly  seek  his  remedy  for  damages, 
upon  the  facts  alleged  in  the  pleadings,  upon  showing  perform- 
ance or  tender  thereof  on  his  part. 

There  is  a  growing  tendency  to  abrogate  the  distinction 
between  sealed  and  unsealed  instruments;  in  some  States  by 
legislation,  in  others  to  a  limited  extent  by  usage  or  judicial 
recognition.  State  v.  Young,  23  Minn.  551;  1  Pars.  Cont.  429. 
But  the  significance  of  the  seal  as  importing  a  consideration  is 
everywhere  still  recognized,  except  as  affected  by  legislation  on 
the  subject.  It  has  certainly  never  been  questioned  by  this 
court.     In  Pennsylvania  the  courts  allow  a  party,  as  an  equitable 


Chap.  I.  §  6.]  OFFER  AND  ACCEPTANCE.  57 

defense  in  actions  upon  sealed  instruments,  to  show  a  failure  to 
receive  the  consideration  contracted  for,  where  an  actual  valua- 
ble consideration  was  intended  to  pass,  and  furnished  the  motive 
for  entering  into  the  contract.  Candor's  Appeal,  27  Pa.  St.  119 ; 
Yard  v.  Patton,  supra.  But  whatever  the  rule  as  to  equitable 
defenses  and  counter-claims  under  our  system  of  practice  may 
properly  be  held  to  be  in  the  case  of  sealed  instruments,  it  has  no 
application,  we  think,  to  a  case  like  this,  where  full  effect  must 
be  given  to  the  seal.  Under  the  civil  law  the  rule  is  that  a  party 
making  an  offer,  and  granting  time  to  another  in  which  to  accept 
it,  is  not  at  liberty  to  withdraw  it  within  the  appointed  time,  it 
being  deemed  inequitable  to  disappoint  expectations  raised  by 
such  offer,  and  leave  the  party  without  remedy.  The  common 
law,  as  we  have  seen,  though  requiring  a  consideration,  is  satis- 
fied with  the  evidence  thereof  signified  by  a  seal.  Boston  &  M. 
R.  R.  V.  Bartlett,  supra.  The  same  principle  applies  to  a  release 
under  seal,  which  is  conclusive  though  disclosing  on  its  face  a 
consideration  otherwise  insufficient.  Staples  v.  Wellington,  62 
Me.  9 ;    Wing  v.  Chase,  35  Me.  260. 

These  considerations  are  decisive  of  the  case,  and  the  order 
denying  a  new  trial  must  be  reversed. 


d.  Must  the  revocation  be  communicated  f 
COLEMAN  V.   APPLEGARTH. 

68  MARYLAND,  21 .  — 1887. 

Alvey,  C.  J.  Coleman,  the  appellant,  filed  his  bill  against 
Applegarth  and  Bradley,  the  appellees,  for  a  specific  perform- 
ance of  what  is  alleged  to  be  a  contract  made  by  Applegarth  with 
Coleman  for  the  sale  of  a  lot  of  ^ground  in  the  city  of  Baltimore. 
The  contract  upon  which  the  application  is  made,  and  which  is 
sought  to  be  specifically  enforced,  reads  thus : 

"  For  and  in  consideration  of  the  sum  of  five  dollars  paid  me,  I  do 
hereby  give  to  Charles  Coleman  the  option  of  purchasing  my  lot  of 
ground,  northwest  corner,  etc.,  assigned  to  me  by  Wright  and  McDermot, 
by  deed  dated,  etc.,  subject  to  the  ground  rent  therein  mentioned,  at  and 
for  the  sum  of  $645  cash,  at  any  time  on  or  before  the  first  day  of 
November,  1886." 


58  FORMATION  OF  CONTRACT.  [Part  II. 

It  was  dated  the  3d  of  September,  1886,  and  signed  by  Apple- 
garth  alone. 

The  plaintiff,  Coleman,  did  not  exercise  his  option  to  purchase 
within  the  time  specified  in  the  contract ;  but  he  alleges  in  his 
bill  that  Applegarth,  after  making  the  contract  of  the  3d  of  Sep- 
tember, 1886,  and  before  the  expiration  of  the  time  limited  for 
the  exercise  of  the  option,  verbally  agreed  with  the  plaintiff  to 
extend  the  time  for  the  exercise  of  such  option  to  the  1st  of 
December,  1886.  It  is  further  alleged  that,  about  the  9th  of 
November,  1886,  without  notice  to  the  plaintiff,  Applegarth  sold, 
and  assigned  by  deed,  the  lot  of  ground  to  Bradley,  for  the  con- 
sideration of  3700 ;  and  that  subsequently,  but  prior  to  the  1st  of 
December,  1886,  the  plaintiff  tendered  to  Applegarth,  in  lawful 
money,  the  sum  of  $645,  and  demanded  a  deed  of  assignment 
of  the  lot  of  ground,  but  which  was  refused.  It  is  also  charged 
that  Bradley  had  notice  of  the  optional  right  of  the  plaintiff  at 
the  time  of  taking  the  deed  of  assignment  from  Applegarth,  and 
that  such  deed  was  made  in  fraud  of  the  rights  of  the  plaintiff 
under  the  contract  of  September  3,  1886.  The  relief  prayed  is, 
that  the  deed  to  Bradley  may  be  declared  void,  and  that  Applegarth 
may  be  decreed  to  convey  the  lot  of  ground  to  the  plaintiff  upon 
payment  by  the  latter  of  the  $645,  and  for  general  relief. 

The  defendants,  both  Applegarth  and  Bradley,  by  their  answers, 
deny  that  there  was  any  binding  contract,  or  optional  right  ex- 
isting in  regard  to  the  sale  of  the  lot,  as  between  Applegarth 
and  the  plaintiff,  at  the  time  of  the  sale  and  transfer  of  the 
lot  to  Bradley;  and  the  latter  denies  all  notice  of  the  alleged 
agreement  for  the  extension  of  time  for  the  exercise  of  the  option 
by  the  plaintiff ;  and  both  defendants  rely  upon  the  statute  of 
frauds  as  a  defense  to  the  relief  prayed. 

The  plaintiff  was  examined  as  a  witness  in  his  own  behalf  and 
ie  also  called  and  examined  both  of  the  defendants  as  Avitnesses 
in  support  of  the  allegation  of  his  bill.  But  without  special  ref- 
erence to  the  proof  taken,  the  questions  that  are  decisive  of  the 
case  may  be  determined  upon  the  facts  as  alleged  by  the  bill 
alone,  in  connection  with  the  contract  exhibited,  as  upon  de- 
murrer ;  such  facts  being  considered  in  reference  to  the  grounds 
of  defense  interposed  by  the  defendants. 


•Chap.  I.  §  6.]  OFFER  AND  ACCEPTANCE.  69 

The  contract  set  up  is  not  one  of  sale  and  purchase,  but  simply 
for  the  option  to  purchase  within  a  specified  time,  and  for  a 
given  price.  It  was  unilateral  and  binding  upon  one  party  only. 
There  was  no  mutuality  in  it,  and  it  was  binding  upon  Apple- 
garth  only  for  the  time  stipulated  for  the  exercise  of  the  option. 
After  the  lapse  of  the  time  given,  there  was  nothing  to  bind  him 
to  accept  the  price  and  convey  the  property ;  and  the  fact  that 
this  unilateral  agreement  was  reduced  to  writing  added  nothing 
to  give  it  force  or  operative  effect  beyond  the  time  therein 
limited  for  the  exercise  of  the  option  by  the  plaintiff.  It  is 
quite  true,  as  contended  by  the  plaintiff,  that,  as  a  general  prop- 
osition, time  is  not  deemed  by  courts  of  equity  as  being  of  the 
essence  of  contracts ;  and  that,  in  perfected  contracts,  ordinarily, 
the  fact  that  the  time  for  performance  has  passed  will  not  be 
regarded  as  a  reason  for  withholding  specific  execution.  But 
while  this  is  the  general  rule  upon  the  subject,  that  general  rule 
has  well-defined  exceptions,  which  are  as  constantly  recognized 
as  the  general  rule  itself.  If  the  parties  have,  as  in  this  case, 
expressly  treated  time  as  of  the  essence  of  the  agreement,  or  if  it 
necessaril}'^  follows  from  the  nature  and  circumstances  of  the 
agreement  that  it  should  be  so  regarded,  courts  of  equity  will 
not  lend  their  aid  to  enforce  specifically  the  agreement,  regard- 
less of  the  limitation  of  time.  2  Story's  Eq.  Jur.  sec.  776. 
HerQ,  time  was  of  the  very  essence  of  the  agreement,  the  nomi- 
nal consideration  being  paid  to  the  owner  for  holding  the 
property  for  the  specified  time,  subject  to  the  right  of  the 
plaintiff  to  exercise  his  option  whether  he  would  buy  it  or  not. 
When  the  time  limited  expired,  the  contract  was  at  an  end,  and 
the  right  of  option  gone,  if  that  right  has  not  been  extended  by 
some  valid  binding  agreement  that  can  be  enforced.  This  would 
seem  to  be  the  plain  dictate  of  reason,  upon  the  terms  and 
nature  of  the  contract  itself ;  and  that  is  the  plain  result  of  the 
decision  of  this  court,  made  in  respect  to  an  optional  contract  to 
purchase,  in  the  case  of  Maughlin  v.  Perry,  35  Md.  352,  359,  360. 

As  must  be  observed,  it  is  not  alleged  or  pretended  that  the 
plaintifif  attempted  to  exercise  his  option,  and  to  complete  a  con- 
tract of  purchase,  within  the  time  limited  by  the  written  agree- 
ment of  the  3d  of  September,  1886.     But  it  is  alleged  and  shown 


60  FORMATION  OF  CONTRACT.  [Pabt  II. 

that  before  the  expiration  of  such  time,  the  defendant  Apple- 
garth  verbally  agreed  or  promised  to  extend  the  time  for  the 
exercise  of  the  option  by  the  plaintiff  from  the  1st  of  November 
to  the  1st  of  December,  1886 ;  and  that  it  was  within  this  latter 
or  extended  period  and  after  the  property  had  been  sold  and 
conveyed  to  Bradley,  that  the  plaintiff  proffered  himself  ready 
to  accept  the  property  and  pay  the  price  therefor.     It  is  quite 

I  clear,  however,  that  such  offer  to  accept  the  property  came  too 
late.  There  was  no  consideration  for  the  verbal  promise  or 
agreement  to  extend  the  time,  and  such  promise  was  a  mere 
nudum  pactum,  and  therefore  not  enforceable  to  say  nothing  of 
the  statute  of  frauds,  which  has  been  invoked  by  the  defendants. 
After  the  1st  of  November,  1886,  the  verbal  agreement  of  Apple- 
garth  operated  simply  as  a  mere  continuing  offer  at  the  price 
previously  fixed,  and  which  offer  only  continued  until  it  should 

\  be  withdrawn  or  otherwise  ended  by  some  act  of  his ;  but  he  was 
entirely  at  liberty  at  any  time,  before  acceptance,  to  withdraw 
the  offer;  and  the  subsequent  sale  and  transfer  of  the  property 

/  to  Bradley  had  the  effect  at  once  of  terminating  the  offer  to  the 
plaintiff.     Pomeroy  on  Specific  Performance,  sees.  60,  61. 

The  principles  that  govern  in  cases  like  the  present  are  very 
fully  and  clearly  stated  by  the  English  court  of  appeal  in  chan- 
cery in  the  case  of  Dickinson  v.  Dodds,  2  Ch.  Div.  463.  That 
case,  in  several  of  its  features,  is  not  unlike  the  present.  There 
the  owner  of  property  signed  a  document  which  purported  to  be 
an  agreement  to  sell  it  at  a  fixed  price,  but  added  a  postscript, 
which  he  also  signed,  in  these  words  :  "This  offer  to  be  left  over 
until  Friday,  nine  o'clock,  a.m.,"  two  days  from  the  date  of  the 
agreement.  Upon  application  of  the  party,  who  claimed  to  be 
vendee  of  the  property,  for  specific  performance,  it  was  held, 
upon  full  and  careful  consideration  by  the  court  of  appeal,  that 
the  document  amounted  only  to  an  offer,  which  might  be  with- 
drawn at  any  time  before  acceptance,  and  that  a  sale  to  a  third 
person  which  came  to  the  knowledge  of  the  person  to  whom  the 
offer  was  made  was  an  effectual  withdrawal  of  the  offer.  In  the 
course  of  his  judgment,  after  declaring  the  written  document  to 
be  nothing  more  than  an  offer  to  sell  at  a  fixed  price,  Lord 
Justice  James  said : 


Chap.  I  §  6.]        OFFER  AND  ACCEPTANCE.  61 

"  There  was  no  consideration  given  for  the  undertaking  or  promise,  to 
whatever  extent  it  may  be  considered  binding,  to  keep  the  property  un- 
sold until  nine  o'clock  on  Friday  morning;  but  apparently  Dickinson 
was  of  opinion,  and  probably  Dodds  was  of  the  same  opinion,  that  he 
(Dodds)  was  bound  by  that  promise,  and  could  not  in  any  way  with- 
draw from  it,  or  retract  it,  until  nine  o'clock  on  Friday  morning,  and 
this  probably  explains  a  good  deal  of  what  afterwards  took  place.  But 
it  is  clear,  settled  law,  on  one  of  the  clearest  principles  of  law,  that  this 
promise  being  a  mere  nudum  pactum,  was  not  binding,  and  that  at  any 
moment  before  complete  acceptance  by  Dickinson  of  the  offer,  Dodds 
was  as  free  as  Dickinson  himself.  That  being  the  state  of  things,  it  is 
said  that  the  only  mode  in  which  Dodds  could  assert  that  freedom  was 
by  actually  and  distinctly  saying  to  Dickinson, '  Now  I  withdraw  my  offer.' 
It  appears  to  me  that  there  is  neither  principle  or  authority  for  the  prop- 
osition that  there  must  be  an  express  and  actual  withdrawal  of  the 
offer,  or  what  is  called  a  retraction.  It  must,  to  constitute  a  contract, 
appear  that  the  two  minds  were  at  one,  at  the  same  moment  of  time, 
that  is,  that  there  was  an  offer  continuing  up  to  the  time  of  the  accept- 
ance. If  there  was  not  such  a  continuing  offer,  then  the  acceptance 
comes  to  nothing." 

And  Lord  Justice  Mellish  was  quite  as  explicit  in  stating  his 
judgment,  in  the  course  of  which  he  said : 

"  He  was  not  in  point  of  law  bound  to  hold  the  offer  over  until  nine 
o'clock  on  Friday  morning.  He  was  not  so  bound  either  in  law  or  in 
equity.  Well,  that  being  so,  when  on  the  next  day  he  made  an  agree- 
ment with  Allan  to  sell  the  property  to  him,  I  am  not  aware  of  any 
ground  on  which  it  can  be  said  that  that  contract  with  Allan  was  not  as 
good  and  binding  a  contract  as  ever  was  made.  Assuming  Allan  to  have 
known  (there  is  some  dispute  about  it,  and  Allan  does  not  admit  that  he 
knew  it,  but  I  will  assume  that  he  did)  that  Dodds  made  the  offer  to 
Dickinson,  and  had  given  him  until  Friday  morning  at  nine  o'clock  to 
accept  it,  still,  in  point  of  law,  that  could  not  prevent  Allan  from  making 
a  more  favorable  offer  than  Dickinson,  and  entering  at  once  into  a  bind- 
ing agreement  with  Dodds." 

And  further  on  he  says : 

"  If  the  rule  of  law  is  that  a  mere  offer  to  sell  property,  which  can  be 
withdrawn  at  any  time,  and  which  is  made  dependent  on  the  acceptance 
of  the  person  to  whom  it  is  made,  is  a  mere  nudum  pactum,  how  is  it 
possible  that  the  person  to  whom  the  offer  has  been  made  can  by  accept- 
ance make  a  binding  contract  after  he  knows  that  the  person  who  has 
made  the  offer  has  sold  the  property  to  some  one  else  ?  It  is  admitted 
law  that  if  a  man  who  makes  an  offer  dies,  the  offer  cannot  be  accepted 
after  he  is  dead,  and  parting  with  the  property  has  very  much  the  same 


62  FORMATION  OF  CONTRACT.  [Part  U. 

effect  as  the  death  of  the  owner,  for  it  makes  the  performance  of  the 
offer  impossible.  I  am  clearly  of  opinion  that,  just  as  when  a  man  who 
has  made  an  offer  dies  before  it  is  accepted  it  is  impossible  that  it  can 
then  be  accepted,  so  when  one  of  the  persons  to  whom  the  offer  was 
made  knows  that  the  property  has  been  sold  to  some  one  else,  it  is  too 
late  for  him  to  accept  the  offer;  and  on  that  ground  I  am  clearly  of 
opinion  that  there  was  no  binding  contract  for  the  sale  of  this  property 
by  Dodds  to  Dickinson." 

In  this  case,  the  plaintiff  admits  that,  at  the  time  he  proffered 
to  Applegarth  acceptance  of  the  previous  offer  to  sell  at  the 
/price  named,  he  was  aware  of  the  fact  that  the  property  had 
been  sold  to  Bradley.  It  was  therefore  too  late  for  him  to 
attempt  to  accept  the  offer,  and  there  was  not,  and  conld  not  be 
made  by  such  proffered  acceptance,  any  binding  contract  of  sale 
of  the  property. 

It  follows  that  the  decree  of  the  court  below,  dismissing  the 
bill  of  the  plaintiff,  must  be  affirmed. 

Decree  affirmed-* 


§  7.  An  offer  need  not  be  made  to  an  ascertained  person,  but  no 
contract  can  arise  until  it  has  been  accepted  by  an  ascertedned 
person. 

(i.)  Accidental  compliance  with  terms  of  offer. 
FITCH  V.   SNEDAKER. 

38  NEW  YORK,  248.  — 1868. 

Woodruff,  J.  On  the  14th  of  October,  1859,  the  defendant 
caused  a  notice  to  be  published,  offering  a  reward  of  two  hundred 
dollars  .  .  .  "to  any  person  or  persons  who  will  give  such 
information  as  shall  lead  to  the  apprehension  and  conviction  of 
the  person  or  persons  guilty  of  the  murder  of  "  a  certain  unknown 
female. 

On  the  15th  day  of  October,  before  the  plaintiffs  had  seen  or 
heard  of  the  offer  of  this  reward,  one  Fee  was  arrested  and  put  in 
jail,  and  though  not  in  terms  so  stated,  the  case  warrants  the 
inference,  that,  by  means  of  the  evidence  given  by  the  plaintiffs 

^  See  also  Boston  <&  Maine  R.  v.  Bartlett,  3  Cush.  224  ;  Houghwout  v. 
Boiaauhin,  18  N.  J.  Eq.  318 ;  Sherley  v.  Peehl  (Wis.),  54  N.  W.  R.  267. 


Chap.  I.  §  7.]         OFFER  AND  ACCEPTANCE.  6B 

on  his  trial  and  their  efforts  to  procure  testimony,  Fee  wa» 
convicted. 

This  action  is  brought  to  recover  the  reward  so  offered.  On 
the  trial  the  plaintiffs  proved  the  publication  of  the  notice,  and 
then  proposed  to  prove  that  they  gave  information  before  the 
notice  was  known  to  them,  which  led  to  the  arrest  of  Fee.  This 
evidence  was  excluded.  The  plaintiffs  then  offered  to  prove, 
that,  with  a  view  to  this  reward,  they  spent  time  and  money, 
made  disclosures  to  the  district  attorney,  to  the  grand  jury  and 
to  the  court  on  the  trial  after  Fee  was  in  jail,  and  that,  without 
their  effort,  evidence,  and  exertion,  no  indictment  or  conviction 
could  have  been  had.     This  evidence  was  excluded. 

The  court  thereupon  directed  a  nonsuit. 

It  is  entirely  clear  that,  in  order  to  entitle  any  person  to  the 
reward  offered  in  this  case,  he  must  give  such  information  as 
shall  lead  to  both  apprehension  and  conviction.  That  is,  both 
must  happen,  and  happen  as  a  consequence  of  the  information 
given.  No  person  could  claim  the  reward  whose  information 
caused  the  apprehension,  until  conviction  followed ;  both  are  con- 
ditions precedent.  No  one  could  therefore  claim  the  reward,  who 
gave  no  information  whatever  until  after  the  apprehension, 
although  the  information  he  afterward  gave  was  the  evidence 
upon  which  conviction  was  had,  and,  however  clear,  that,  had  the 
information  been  concealed  or  suppressed,  there  could  have  been 
no  conviction.  This  is  according  to  the  plajn  terms  of  the  offer 
of  the  reward,  and  is  held  in  Jones  v.  The  Phoenix  Bank,  8  N.  Y. 
228;   Thatcher  v.  England,  3  Com.  Bench,  254. 

In  the  last  case  it  was  distinctly  held,  that,  under  an  offer  of 
reward,  payable  "on  recovery  of  property  stolen  and  conviction 
of  the  offender, "  a  person  who  was  active  in  arresting  the  thief 
and  finding  and  restoring  part  of  the  stolen  property,  giving 
information  to  the  magistrates,  tracing  to  London  other  of  the 
property  and  producing  pawnbrokers  with  whom  the  prisoner  had 
pledged  it,  and  who  incurred  much  trouble  and  expense  in  bring- 
ing together  witnesses  for  the  prosecution,  was  not  entitled  to  the 
reward,  as  it  appeared  that  another  person  gave  the  first  informa- 
tion as  to  the  party  committing  the  robbery. 

In  the  present  case,  the  plaintiff,  after  the  advertisement  of 


64  FORMATION   OF  CONTRACT.  [Pabt  H. 

the  defendant's  offer  of  a  reward  came  to  his  knowledge,  did 
nothing  toward  procuring  the  arrest,  nor  which  led  thereto,  for 
at  that  time  Fee  had  already  been  arrested. 

The  cases  above  referred  to,  therefore,  establish  that,  if  no 
information  came  from  the  plaintiffs  which  led  to  the  arrest  of 
Fee,  the  plaintiffs  are  not  entitled  to  recover,  however  much  the 
information  they  subsequently  gave,  and  the  efforts  they  made  to 
procure  evidence,  may  have  contributed  to  or  even  have  caused 
his  conviction,  and,  therefore,  evidence  that  it  was  their  efforts 
and  information  which  led  to  his  conviction  was  wholly  immate- 
rial, if  they  did  not  prove  that  they  had  given  information  which 
led  to  his  apprehension,  and  was  properly  rejected. 

The  question  in  this  case  is  simple.  A  murderer  having  been 
arrested  and  imprisoned  in  consequence  of  information  given  by 
the  plaintiff  before  he  is  aware  that  a  reward  is  offered  for  such 
apprehension,  is  he  entitled  to  claim  the  reward  in  case  convic- 
tion follows? 

The  ruling  on  the  trial,  excluding  all  evidence  of  information 
given  by  the  plaintiffs  before  they  heard  of  this  reward,  neces- 
sarily answers  this  question  in  the  negative. 

The  case  of  Williams  v.  Carwardine  (4  Barn.  &  Adol.  621),  and 
same  case  at  the  assizes  (5  Carr.  &  Payne,  566),  holds  that  a 
person  who  gives  information  according  to  the  terms  of  an  offered 
reward  is  entitled  to  the  money,  although  it  distinctly  appeared 
that  the  informer  had  suppressed  the  information  for  five  months, 
and  was  led  to  inform,  not  by  the  promised  reward,  but  by  other 
motives.  The  court  said  the  plaintiff  had  proved  performance  of 
the  condition  upon  which  the  money  was  payable  and  that  estab- 
lished her  title.  That  the  court  would  not  look  into  her  motives. 
It  does  not  appear  by  the  reports  of  this  case  whether  or  not  the 
plaintiff  had  ever  seen .  the  notice  or  handbill  posted  by  the 
defendant,  offering  the  reward;  it  does  not,  therefore,  reach 
the  precise  point  involved  in  the  present  appeal. 

I  perceive,  however,  no  reason  for  applying  to  an  offer  of 
reward  for  the  apprehension  of  a  criminal  any  other  rules  than 
are  applicable  to  any  other  offer  by  one,  accepted  or  acted  upon 
by  another,  and  so  relied  upon  as  constituting  a  contract. 

The  form  of  action  in  all  such  cases  is  assumpsit.     The  defend' 


Chap.  I.  §  7.]        OFFER  AND  ACCEPTANCE.  66 

ant  is  proceeded  against  as  upon  his  contract  to  pay,  and  the 
first  question  is,  was  there  a  contract  between  the  parties? 

To  the  existence  of  a  contract  there  must  be  mutual  assent, 
or  in  another  form  offer  and  consent  to  the  offer.  The  motive 
inducing  consent  may  be  immaterial,  but  the  consent  is  vital. 
Without  that  there  is  no  contract.  How  then  can  there  be  con- 
sent or  assent  to  that  of  which  the  party  has  never  heard?  On 
the  15th  day  of  October,  1859,  the  murderer,  Fee,  had,  in  con- 
sequence of  information  given  by  the  plaintiffs,  been  apprehended 
and  lodged  in  jail.  But  the  plaintiffs  did  not,  in  giving  that 
information,  manifest  any  assent  to  the  defendant's  offer,  nor  act 
in  any  sense  in  reliance  thereon,  they  did  not  know  of  its  exist- 
ence. The  information  was  voluntary,  and  in  every  sense 
(material  to  this  case)  gratuitous.  The  offer  could  only  operate 
upon  the  plaintiffs  after  they  heard  of  it.  It  was  prospective  to 
those  who  will,  in  the  future,  give  information,  etc. 

An  offer  cannot  become  a  contract  unless  acted  upon  or 
assented  to. 

Such  is  the  elementary  rule  in  defining  what  is  essential  to  a 
contract.  Chitty  on  Con.  (5th  Am.  ed.),  Perkins'  notes,  p.  10,  9, 
and  2,  and  cases  cited.  Nothing  was  here  done  to  procure  or 
lead  to  Fee's  apprehension  in  view  of  this  reward.  Indeed,  if  we 
were  at  liberty  to  look  at  the  evidence  on  the  first  trial,  it  would 
appear  that  Fee  was  arrested  before  the  defendant  offered  the 
reward. 

I  think  the  evidence  was  properly  excluded  and  the  nonsuit 
necessarily  followed. 

The  judgment  should  be  affirmed. 

Judgment  affirmed.^ 


DAWKINS  V.   SAPPINGTON. 

26  INDIANA,  199.  — 1866. 

Fbazer,  J.     The  appellant  was  the  plaintiff  below.     The  com- 
plaint was  in  two  paragraphs.      1.  That  a  horse  of  the  defendant 

^  Accord :   Howland  v.  Lounds,  61  N.  Y.  604 ;   Stamper  v.    Temple,  6 
Humph.  (Tenn.)  113. 


66  FORMATION  OF  CONTRACT.  [Part  IL 

had  been  stolen,  whereupon  he  published  a  handbill,  offering  a 
reward  of  $50  for  the  recovery  of  the  stolen  property,  and  that 
thereupon  the  plaintiff  rescued  the  horse  from  the  thief  and 
restored  him  to  the  defendant,  who  refused  to  pay  the  reward. 
2.  That  the  horse  of  the  defendant  was  stolen,  whereupon  the 
plaintiff  recovered  and  returned  him  to  the  defendant,  who,  in 
consideration  thereof,  promised  to  pay  $50  to  the  plaintiff,  which 
he  has  failed  and  refused  to  do. 

To  the  second  paragraph  a  demurrer  was  sustained.  To  the 
first  an  answer  was  filed,  the  second  paragraph  of  which  alleged 
that  the  plaintiff,  when  he  rescued  the  horse  and  returned  him  to 
the  defendant,  had  no  knowledge  of  the  offering  of  the  reward. 
The  third  paragraph  averred  that  the  handbill  offering  the  reward 
was  not  published  until  after  the  irescue  of  the  horse  and  his 
delivery  to  the  defendant.  The  plaintiff  unsuccessfully  demurred 
to  each  of  these  paragraphs,  and  refusing  to  reply  the  defendant 
had  judgment. 

1.  Was  the  second  paragraph  of  the  complaint  sufficient?  The 
consideration  alleged  to  support  the  promise  was  a  voluntary 
service  rendered  for  the  defendant  without  request,  and  it  is  not 
shown  to  have  been  of  any  value.  A  request  should  have  been 
alleged.  This  was  necessary  at  common  law,  even  in  common 
count  for  work  and  labor  (Chitty's  PL  338),  though  it  was  not 
always  necessary  to  prove  an  express  request,  as  it  would  some- 
times be  implied  from  the  circumstances  exhibited  by  the 
evidence. 

2.  It  is  entirely  unnecessary,  as  to  the  third  paragraph  of  the 
answer,  to  say  more  than  that,  though  it  was  highly  improbable 
in  fact,  it  was  sufficient  in  law. 

3.  The  second  paragraph  of  the  answer  shows  a  performance 
of  the  service  without  the  knowledge  that  the  reward  had  been 
offered.  The  offer,  therefore,  did  not  induce  the  plaintiff  to  act. 
The  liability  to  pay  a  reward  offered  seems  to  rest,  in  some  cases, 
upon  an  anomalous  doctrine,  constituting  an  exception  to  the 
general  rule.  In  Williams  v.  Carwardine  (4  Barn.  &  Adolph. 
621)  there  was  a  special  finding,  with  a  general  verdict  for  the 
plaintiff,  that  the  information  for  which  the  reward  was  offered 
was  not  induced  to  be  given  by  the  offer,  yet  it  w;as  held  by  all 


Chap.  I.  §  7.]  OFFER  AND  ACCEPTANCE.  67 

the  judges  of  the  King's  Bench  then  present,  Denman,  C.  J.,  and 
Littledale,  Parke,  andPatteson,  JJ.,  that  the  plaintiff  was  entitled 
to  judgment.  It  was  put  upon  the  ground  that  the  offer  was  a 
general  promise  to  any  person  who  would  give  the  information 
sought;  that  the  plaintiff,  having  given  the  information,  was 
within  the  terms  of  the  offer,  and  that  the  court  could  not  go  into 
the  plaintiff's  motives.  This  decision  has  not,  we  believe,  been 
seriously  questioned,  and  its  reasoning  is  conclusive  against  the 
sufficiency  of  the  defense  under  examination.  There  are  some 
considerations  of  morality  and  public  policy  which  strongly  tend 
to  support  the  judgment  in  the  case  cited.  If  the  offer  was  made 
in  good  faith,  why  should  the  defendant  inquire  whether  the 
plaintiff  knew  that  it  had  been  made?  Would  the  benefit  to  him 
be  diminished  by  the  discovery  that  the  plaintiff,  instead  of  acting 
from  mercenary  motives,  had  been  impelled  solely  by  a  desire  to 
prevent  the  larceny  from  being  profitable  to  the  person  who  had 
committed  it?  Is  it  not  well  that  any  one  who  has  an  opportu- 
nity to  prevent  the  success  of  a  crime,  may  know  that  by  doing 
so  he  not  only  performs  a  virtuous  service,  but  also  entitles  him- 
self to  whatever  reward  has  been  offered  therefor  to  the  public? 
The  judgment  is  reversed,  with  costs,  and  the  cause  remanded, 
with  directions  to  the  court  below  to  sustain  the  demurrer  to  the 
second  paragraph  of  the  answer.^ 


(it.)  Offer  distinguished  from  invitation  to  treat. 
MOULTOISr  V.   KERSHAW. 

59  WISCONSIN,  316.  — 1884. 

Action  for  damages  for  non-performance  of  a  contract  alleged 
to  be  contained  in  the  following  correspondence : 

"Milwaukee,  September  19,  1882. 
"J.  H.  MouLTO-v,  Esq.,  La  Crosse,  Wis. 

^^ Dear  Sir:  In  consequence  of  a  rupture  in  the  salt  trade,  we  are 
authorized  to  ofifer  Michigan  fine  salt,  in  full  car-load  lots  of  eighty  to 

1  Accord:   Auditor  v.  Ballard,  9  Bush.  (Ky.)  672;  Buaaell  v.  Stewart, 
44  Vt.  170. 


68  FORMATION  OF  CONTRACT.  [Pabt  H. 

ninety-five  bbls.,  delivered  at  your  city,  at  85  cents  per  bbl.,  to  be  shipped 
per  C.  &  N.  W.  R.  R.  Co.  only.  At  this  price  it  is  a  bargain,  as  the 
price  in  general  remains  unchanged.  Shall  be  pleased  to  receive  your 
order. 

"  Yours  truly, 

"C.  J.  Kershaw  &  Son." 

"  La  Crosse,  September  20,  1882. 
"  To  C.  J.  Kershaw  §*  Son,  Milioaukee,  Wis. :  Your  letter  of  yesterday 
received  and  noted.      You  may  ship  me  two  thousand  (2000)  barrels 
Michigan  fine  salt,  as  offered  in  your  letter.     Answer. 

"J.    H.    MOULTON." 

Taylor,  J.  The  only  question  presented  is  whether  the 
appellant's  letter,  and  the  telegram  sent  by  respondent  in  reply 
thereto,  constitute  a  contract  for  the  sale  of  2000  barrels  of 
Michigan  fine  salt  by  the  appellants  to  the  respondent,  at  the 
price  named  in  such  letter. 

We  are  very  clear  that  no  contract  was  perfected  by  the  order 
telegraphed  by  the  respondent  in  answer  to  appellant's  letter. 
The  learned  counsel  for  the  respondent  clearly  appreciated  the 
necessity  of  putting  a  construction  upon  the  letter  which  is  not 
apparent  on  its  face,  and  in  their  complaint  have  interpreted  the 
letter  to  mean  that  the  appellants,  by  said  letter,  made  an  express 
•offer  to  sell  the  respondent,  on  the  terms  stated,  such  reasonable 
:amount  of  salt  as  he  might  order,  and  as  the  appellants  might 
leasonably  expect  him  to  order,  in  response  thereto.  If  in  order 
ito  entitle  the  plaintiff  to  recover  in  this  action  it  is  necessary  to 
prove  these  allegations,  then  it  seems  clear  to  us  that  the  writings 
between  the  parties  do  not  show  the  contract.  It  is  not  insisted 
by  the  learned  counsel  for  the  respondent  that  any  recovery  can 
be  had  unless  a  proper  construction  of  the  letter  and  telegram 
constitute  a  binding  contract  between  the  parties.  The  alleged 
contract  being  for  the  sale  and  delivery  of  personal  property  of  a 
value  exceeding  $50,  is  void  by  the  statute  of  frauds,  unless  in 
writing.     §  2308  i2.  S.  1878. 

The  counsel  for  the  respondent  claims  that  the  letter  of  the 
appellants  is  an  offer  to  sell  to  the  respondent,  on  the  terms 
mentioned,  any  reasonable  quantity  of  Michigan  fine  salt  that  he 
might  see  fit  to  order,  not  less  than  one  car-load.     On  the  other 


Chap.  I.  §  7.]  OFFER  AND  ACCEPTANCE,  69 

hand,  the  counsel  for  the  appellants  claim  that  the  letter  is  not 
an  ofEer  to  sell  any  specific  quantity  of  salt,  but  simply  a  letter 
such  as  a  business  man  would  send  out  to  customers  or  those  with 
whom  he  desired  to  trade,  soliciting  their  patronage.  To  give 
the  letter  of  the  appellants  the  construction  claimed  for  it  by 
the  learned  counsel  for  the  respondent,  would  introduce  such  an 
element  of  uncertainty  into  the  contract  as  would  necessarily 
render  its  enforcement  a  matter  of  difficulty,  and  in  every  case 
the  jury  trying  the  case  would  be  called  upon  to  determine 
whether  the  quantity  ordered  was  such  as  the  appellants  might 
reasonably  expect  from  the  party.  This  question  would  neces- 
sarily involve  an  inquiry  into  the  nature  and  extent  of  the  busi- 
ness of  the  person  to  whom  the  letter  was  addressed,  as  well  as 
to  the  extent  of  the  business  of  the  appellants.  So  that  it  would 
be  a  question  of  fact  for  the  jury  in  each  case  to  determine 
whether  there  was  a  binding  contract  between  the  parties.  And 
this  question  would  not  in  any  way  depend  upon  the  language 
used  in  the  written  contract,  but  upon  the  proofs  to  be  made 
outside  of  the  writings.  As  the  only  communications  between 
the  parties  upon  which  a  contract  can  be  predicated  are  the  letter 
and  the  reply  of  the  respondent,  we  must  look  to  them  and  noth- 
ing else,  in  order  to  determine  whether  there  was  a  contract  in 
fact.  We  are  not  at  liberty  to  help  out  the  written  contract,  if 
there  be  one,  by  adding  by  parol  evidence  additional  facts  to 
help  out  the  writing,  so  as  to  make  out  a  contract  not  expressed 
therein.  If  the  letter  of  the  appellants  is  an  offer  to  sell  salt  to 
the  respondent  on  the  terms  stated,  then  it  must  be  held  to  be  an 
offer  to  sell  any  quantity,  at  the  option  of  the  respondent,  not  less 
than  one  car-load.  The  difficulty  and  injustice  of  construing  the 
letter  into  such  an  offer  is  so  apparent  that  the  learned  counsel 
for  the  respondent  do  not  insist  upon  it,  and  consequently  insist 
that  it  ought  to  be  construed  as  an  offer  to  sell  such  a  quantity 
as  the  appellants,  from  their  knowledge  of  the  business  of  the 
respondent,  might  reasonably  expect  him  to  order. 

Rather  than  introduce  such  an  element  of  uncertainty  into  the 
contract,  we  deem  it  much  more  reasonable  to  construe  the  letter 
as  a  simple  notice  to  those  dealing  in  salt  that  the  appellants 
were  in  a  condition  to  supply  that  article  for  the  price  named, 


70  FORALA.TION  OF  CONTRACT.  [Pakt  II. 

and  requesting  the  person  to  whom  it  was  addressed  to  deal  with 
them.  This  case  is  one  where  it  is  eminently  proper  to  heed  the 
injunction  of  Justice  Foster  in  the  opinion  in  Lyman  v.  Mobin- 
son  (14  Allen,  2-54):  "That  care  should  always  be  taken  not  to 
construe  as  an  agreement,  letters  which  the  parties  intended  only 
as  preliminary  negotiations." 

We  do  not  wish  to  be  understood  as  holding  that  a  party  may 
not  be  bound  by  an  offer  to  sell  personal  property,  where  the 
amount  or  quantity  is  left  to  be  hxed  by  the  person  to  whom  the 
offer  is  made,  when  the  offer  is  accepted  and  the  amount  or  quan- 
tity fixed  before  the  offer  is  withdrawn.  We  simply  hold  that 
the  letter  of  the  appellants  in  this  case  was  not  such  an  offer.  If 
the  letter  had  said  to  the  respondent,  we  will  sell  you  all  the 
Michigan  fine  salt  you  will  order,  at  the  price  and  on  the  terms 
named,  then  it  is  undoubtedly  the  law  that  the  appellants  would 
have  been  bound  to  deliver  any  reasonable  amount  the  respondent 
might  have  ordered, —  possibly  any  amount, —  or  make  good 
their  default  in  damages.  The  case  cited  by  the  counsel,  decided 
by  the  California  Supreme  Court  (Keller  v.  Ybarru,  3  Cal.  147), 
was  an  offer  of  this  kind  with  an  additional  limitation.  The 
defendant  in  that  case  had  a  crop  of  growing  grapes,  and  he 
offered  to  pick  from  the  vines  and  deliver  to  the  plaintiff,  at 
defendant's  vineyard,  so  many  grapes  then  growing  in  said  vine- 
yard as  the  plaintiff  should  wish  to  take  during  the  present  year, 
at  ten  cents  per  pound  on  delivery.  "The  plaintiff,  within  the 
time  and  before  the  offer  was  withdrawn,  notified  the  defendant 
that  he  wished  to  take  1900  pounds  of  his  grapes  on  the  terms 
stated.  The  court  held  there  was  a  contract  to  deliver  the  1900 
pounds.  In  this  case,  the  fixing  of  the  quantity  was  left  to  the 
person  to  whom  the  offer  was  made,  but  the  amount  which  the 
defendant  offered,  beyond  which  he  could  not  be  bound,  was  also 
fixed  by  the  amount  of  grapes  he  might  have  in  his  vineyard  in 
that  year.  The  case  is  quite  different  in  its  facts  from  the  case 
at  bar. 

The  cases  cited  by  the  learned  counsel  for  the  appellants 
(BeauprS  v.  P.  &  A.  Tel.  Co.,  21  Minn.  155,  and  Kinghome  v. 
Montreal  Tel.  Co.,  U.  C.  18  Q.  B.  60)  are  nearer  in  their  main 
facts  to  the  case  at  bar,  and  in  both  it  was  held  there  was  no 


Chap.  I.  §  8.]  OFFER  AND  ACCEPTANCE.  71 

contract.  We,  however,  place  our  opinion  upon  the  language  of 
the  letter  of  the  appellants,  and  hold  that  it  cannot  be  fairly- 
construed  into  an  offer  to  sell  to  the  respondent  any  quantity  of 
salt  he  might  order,  nor  any  reasonable  amount  he  might  see  lit 
to  order.  The  language  is  not  such  as  a  business  man  would  use 
in  making  an  offer  to  sell  to  an  individual  a  definite  amount  of 
property.  The  word  "sell"  is  not  used.  They  say,  "We  are 
authorized  to  offer  Michigan  fine  salt,"  etc.,  and  volunteer  an 
opinion  that  at  the  terms  stated  it  is  a  bargain.  They  do  not 
say,  we  offer  to  sell  to  you.  They  use  the  general  language 
proper  to  be  addressed  generally  to  those  who  were  interested  in 
the  salt  trade.  It  is  clearly  in  the  nature  of  an  advertisement,  or 
business  circular,  to  attract  the  attention  of  those  interested  in 
that  business  to  the  fact  that  good  bargains  in  salt  could  be  had 
by  applying  to  them,  and  not  as  an  offer  by  which  they  are  to  be 
bound,  if  accepted,  for  any  amount  the  persons  to  whom  it  was 
addressed  might  see  fit  to  order.  We  think  the  complaint  fails 
to  show  any  contract  between  the  parties,  and  the  demurrer 
should  have  been  sustained. 

By  the  Court.     The  order  of  the  Circuit  Court  is  reversed  and 
the  cause  remanded  for  further  proceedings  according  to  law. 


§  8.  The  offer  must  be  intended  to  create,  and  capable  of  creat- 
ing, legal  relations. 

KELLER  V.    HOLDERMAN. 

11  MICHIGAN,  248.  — 1863. 

Action  on  a  three-hundred-dollar  check  which  had  been  drawn 
by  defendant  in  favor  of  plaintiff,  on  a  bank  which  had  refused 
to  honor  it.  The  facts  concerning  the  check  were,  that  it  was 
given  for  a  fifteen-dollar  watch,  which  defendant  kept  until  the 
day  of  trial,  when  he  offered  to  return  it,  but  plaintiff  refused 
to  receive  it;  that  the  whole  transaction  was  a  frolic  and  banter, 
the  plaintiff  not  expecting  to  sell  nor  the  defendant  intending  to 
buy  the  watch  at  the  sum  for  which  the  check  was  drawn;  and 
that  the  defendant  when  he  drew  the  check  had  no  money  in  the 
banker's  hands,  and  had  intended  to  insert  a  condition  in  the 


72  FORMATION  OF  CONTRACT.  [Pakt  U. 

check  that  ■would  prevent  his  being  liable  upon  it,  but  had  failed 
to  do  so.  Judgment  was  rendered  against  him  for  the  amount 
of  the  check,  whereupon  he  appealed. 

Martin,  C.  J.  When  the  court  below  found  as  a  fact  that  "the 
whole  transaction  between  parties  was  a  frolic  and  a  banter,  the 
plaintiff  not  expecting  to  sell  nor  the  defendant  intending  to  buy 
the  watch  at  the  sum  for  which  the  check  was  drawn,"  the  con- 
clusion should  have  been  that  no  contract  was  ever  made  by  the 
parties,  and  the  finding  should  have  been  that  no  cause  of  action 
existed  upon  the  check  to  the  plaintiff. 

The  judgment  is  reversed,  with  costs  of  this  court  and  of  the 

court  below. 

The  other  Justices  concurred. 


McCLURG  V.    TERRY. 

21  NEW  JERSEY  EQUITY,  225.  — 1870. 

The  Chancellor:  The  complainant  seeks  to  have  the  cere- 
mony of  marriage  performed  between  herself  and  the  defendant 
in  November,  1869,  declared  to  be  a  nullity.  The  ground  on 
which  she  asks  this  decree  is,  that  although  the  ceremony  was 
actually  performed,  and  by  a  justice  of  the  peace  of  the  county, 
it  was  only  in  jest,  and  not  intended  to  be  a  contract  of  marriage, 
and  that  it  was  so  understood  at  the  time  by  both  parties,  and 
the  other  persons  present;  and  that  both  parties  have  ever  since 
80  considered  and  treated  it,  and  have  never  lived  together,  or 
acted  towards  each  other  as  man  and  wife.  The  bill  and  answer 
both  state  these  as  the  facts  of  the  case,  and  that  neither  party 
intended  it  as  a  marriage,  or  was  willing  to  take  the  other  as 
husband  or  wife.  These  statements  are  corroborated  by  the  wit- 
nesses present.  The  complainant  is  an  infant  of  nineteen  years, 
and  had  returned  late  in  the  evening  to  Jersey  City,  from  an 
excursion  with  the  defendant  and  a  number  of  young  friends, 
among  whom  was  a  justice  of  the  peace,  and  all  being  in  good 
spirits,  excited  by  the  excursion,  she  in  jest  challenged  the  de- 
fendant to  be  married  to  her  on  the  spot;  he  in  the  same  spirit 
r^^-^pted   the   challenge,  and   the  justice   at  their  request  per- 


Chap.  I.  §  8.]  OFFER  AND  ACCEPTANCE.  78 

formed  the  ceremony,  tLey  making  the  proper  responses.  The 
ceremony  was  in  the  usual  and  proper  form,  the  justice  doubting 
whether  it  was  in  earnest  or  in  jest.  The  defendant  escorted 
the  complainant  to  her  home,  and  left  her  there  as  usual  on  occa- 
sions of  such  excursions ;  both  acted  and  treated  the  matter  as  if 
no  ceremony  had  taken  place.  After  some  time  the  friends  of 
the  complainant  having  heard  of  the  ceremony,  and  that  it  had 
been  formally  and  properly  performed  before  the  proper  magis- 
trate, raised  the  question  and  entertained  doubts  whether  it  was 
not  a  legal  marriage ;  and  the  justice  meditated  returning  a  cer- 
tificate of  the  marriage  to  be  recorded  before  the  proper  ofi&cer. 
The  bill  seeks  to  have  the  marriage  declared  a  nullity,  and  to  re- 
strain the  justice  from  certifying  it  for  record. 

Mere  words  without  any  intention  corresponding  to  them,  will 
not  make  a  marriage  or  any  other  civil  contract.  But  the  words 
are  the  evidence  of  such  intention,  and  if  once  exchanged,  it 
must  be  clearly  shown  that  both  parties  intended  and  understood 
that  they  were  not  to  have  effect.  In  this  case  the  evidence  is 
clear  that  no  marriage  was  intended  by  either  party;  that  it  was 
a  mere  jest  got  up  in  the  exuberance  of  spirits  to  amuse  the  com- 
pany and  themselves.  If  this  is  so,  there  was  no,  marriage.  On 
this  part  of  the  case  I  have  no  difficulty. 

*  *  *  *  * 

I  am  satisfied  that  this  court  has  the  power,  and  that  this  is  a 
proper  case  to  declare  this  marriage  a  nullity. 


SHERMAN  V.  KITSMILLER,   ADM'R. 

17  SERGEANT  AND  RAWLE  (Pknn.),  46.  — 1827. 

[Beported  herein  at  p.  157.] 


74  FORMATION   OF  CONTRACT.  [Part  II. 

§  9.  Acceptcince  must  be  absolute  and  identical  with  the  terms  of 
the  offer. 

MINNEAPOLIS    AND    ST.    LOUIS    RAILWAY   v. 
COLUMBUS   ROLLING  MILL. 

119  UNITED  STATES,  149.  —  1886. 

Mb.  Justice  Gray.  The  rules  of  law  which  govern  this  case 
are  well  settled.  As  no  contract  is  complete  without  the  mutual 
assent  of  the  parties,  an  offer  to  sell  imposes  no  obligation 
until  it  is  accepted  according  to  its  terms.  So  long  as  the 
offer  has  been  neither  accepted  nor  rejected,  the  negotiation 
remains  open,  and  imposes  no  obligation  upon  either  party;  the 
one  may  decline  to  accept,  or  the  other  may  withdraw  his  offer; 
and  either  rejection  or  withdrawal  leaves  the  matter  as  it  no 
offer  had  ever  been  made.  A  proposal  to  accept,  or  an  accept- 
ance, upon  terms  varying  from  those  offered,  is  a  rejection  of 
the  offer,  and  puts  an  end  to  the  negotiation,  unless  the  party 
who  made  the  original  offer  renews  it,  or  assents  to  the  modifica- 
tion suggested.  The  other  party,  having  once  rejected  the  offer, 
oannot  afterwards  revive  it  by  tendering  an  acceptance  of  it. 
Eliason  v.  Henshaw,  4  Wheat.  225;  Carr  v.  Duval,  14  Pet.  77; 
National  Bank  v.  Hall,  101  U.  S.  43,  50;  Hyde  v.  Wreyich,  3 
Beavan,  334;  Fox  v.  Turner,  1  Bradwell,  153.  If  the  offer  does 
not  limit  the  time  for  its  acceptance,  it  must  be  accepted  within 
a  reasonable  time.  If  it  does,  it  may,  at  any  time  within  the 
limit  and  so  long  as  it  remains  open,  be  accepted  or  rejected  by 
the  party  to  whom,  or  be  withdrawn  by  the  party  by  whom,  it 
was  made.  Boston  &  Maine  Railroad  v.  Bartlett,  3  Gush.  224; 
Dickinson  v.  Dodds,  2  Ch.  D.  463. 

The  defendant,  by  the  letter  of  December  8,  offered  to  sell  to 
the  plaintiff  two  thousand  to  five  thousand  tons  of  iron  rails  on 
certain  terms  specified,  and  added  that  if  the  offer  was  accepted 
the  defendant  would  expect  to  be  notified  prior  to  December  20. 
This  offer,  while  it  remained  open,  without  having  been  rejected 
by  the  plaintiff  or  revoked  by  the  defendant,  would  authorize  the 
plaintiff  to  take  at  his  election  any  number  of  tons  not  less  than 
two  thousand  nor  more  than  five  thousand,  on  the  terms  sped- 


Chap.  I.  §9.J         OFiEK  AND  ACCEPTANCE.  75 

fied.  The  offer,  while  unrevoked,  might  be  accepted  or  rejected 
by  the  plaintiff  at  any  time  before  December  20.  Instead  of 
accepting  the  offer  made,  the  plaintiff,  on  December  16,  by  tele- 
gram and  letter,  referring  to  the  defendant's  letter  of  December 
8,  directed  the  defendant  to  enter  an  order  for  twelve  hundred 
tons  on  the  same  terms.  The  mention,  in  both  telegram  and 
letter,  of  the  date  and  the  terms  of  the  defendant's  original  offer, 
shows  that  the  plaintiff's  order  was  not  an  independent  proposal, 
but  an  answer  to  the  defendant's  offer,  a  qualified  acceptance  of 
that  offer,  varying  the  number  of  tons,  and  therefore  in  law  a 
rejection  of  the  offer.  On  December  18,  the  defendant  by  tele- 
gram declined  to  fulfill  the  plaintiff's  order.  The  negotiation 
between  the  parties  was  thus  closed,  and  the  plaintiff  could  not 
afterwards  fall  back  on  the  defendant's  original  offer.  The 
plaintiff's  attempt  to  do  so,  by  the  telegram  of  December  19,  was 
therefore  ineffectual  and  created  no  rights  against  the  defendant. 
Such  being  the  legal  effect  of  what  passed  in  writing  between 
the  parties,  it  is  unnecessary  to  consider  whether,  upon  a  fair 
interpretation  of  the  instructions  of  the  court,  the  question 
whether  the  plaintiff's  telegram  and  letter  of  December  16  con- 
stituted a  rejection  of  the  defendant's  offer  of  December  8  was 
ruled  in  favor  of  the  defendant  as  matter  of  law,  or  was  sub- 
mitted to  the  jury  as  a  question  of  fact.  The  submission  of  a 
question  of  law  to  the  jury  is  no  ground  of  exception  if  they 
decide  it  aright.     Pence  v.  Langdon,  99  U.  S.  578. 

Judgment  affirmed.^ 

^See  also   Maclay  v.  Harvey,  90  111.  625,  ante,  p.  41,  44,45;  Fitch  v, 
Snedaker,  38  N.  Y.  248,  o?i«e,  p.  63. 


76  FORMATION  OF  CONTRACT.  [Pabt  U. 


CHAPTER   II. 

FORM   AND    CONSIDERATION. 
§  1.  Contracts  of  record. 

O'BEIEN,  late  sheriff,  v.  YOUNG  et  al 

95  NEW  YORK,  428.— 1884. 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court, 
in  the  first  judicial  department,  made  January  8,  1884,  which 
afl&rmed  an  order  of  Special  Term,  denying  a  motion  to  restrain 
the  sheriff  of  the  county  of  New  York  from  collecting,  upon  a 
judgment  issued  to  him  herein,  interest  at  a  greater  rate  than 
six  per  cent  after  January  1,  1880. 

Judgment  was  perfected  against  the  defendants  February  10, 
1877,  at  which  time  the  legal  rate  of  interest  in  the  State  was 
seven  per  cent.  By  Chap.  538  of  the  laws  of  1879  the  legal  rate 
of  interest  was  reduced  from  seven  to  six  per  cent,  the  act  to  go 
into  effect  January  1,  1880.  Execution  on  the  judgment  was 
issued  to  the  sheriff  November  19,  1883,  instructing  him  to  col- 
lect the  amount  thereof  with  interest  at  the  rate  of  seven  per 
cent  from  the  date  of  the  entry  of  judgment,  February  10,  1877. 

Earl,  J.  By  the  decided  weight  of  authority  in  this  State, 
where  one  contracts  to  pay  a  principal  sum  at  a  certain  future 
time  with  interest,  the  interest  prior  to  the  maturity  of  the 
contract  is  payable  by  virtue  of  the  contract,  and  thereafter  as 
damages  for  the  breach  of  the  contract.  Macomber  v.  Dunham,  8 
Wend.  550;  United  States  Bank  v.  Chapin,  9  Id.  471;  Hamilton 
V.  Van  Rensselaer,  43  N.  Y.  244;  Eitter  v.  Phillips,  53  Id.  586; 
Southern  Central  R.  R.  Co.  v.  Town  of  Moravia,  61  Barb.  180. 
And  such  is  the  rule  as  laid  down  by  the  Federal  Supreme  Court. 
Brewster  V.  Wakefield,  22  How,  (U.  S.)  118;  Burnhisely.  Firman, 
22  Wall.  170;  Eolden  v.  Trust  Co.,  100  U.  S.  72. 


Chap.  II.  §1.]     FORM:  CONTRACTS  OF  RECORD.  77 

The  same  authorities  show  that  after  the  maturity  of  such  a 
contract,  the  interest  is  to  be  computed  as  damages  according  to 
the  rate  prescribed  by  the  law,  and  not  according  to  that  pre- 
scribed in  the  contract  if  that  be  more  or  less. 

But  when  the  contract  provides  that  the  interest  shall  be  at  a 
specified  rate  until  the  principal  shall  be  paid,  then  the  contract  j 
rate  governs  until  payment  of  the  principal  or  until  the  contract  j 
is  merged  in  a  judgment.     And  where  one  contracts  to  pay  money  / 
on  demand  "with  interest,"  or  to  pay  money  generally  "with/ 
interest,"  without  specifying  time  of  payment,  the  statutory  ratel 
then  existing  becomes  the  contract  rate,  and  must  govern  until! 
payment  or  at  least  until  demand  and  actual  default,  as  the  par- 
ties must  have  so  intended.     Paine  v.  Caswell,  68  Me.  80;  28  Am. 
Kep.  21;  Eaton  v.  Boissonnault,  67  Me.  540;  24  Am.  Rep.  52. 

If,  therefore,  this  judgment,  the  amount  of  which  is  by  its 
terms  payable  with  interest,  is  to  be  treated  as  a  contract  —  as  a 
bond  executed  by  the  defendants  at  its  date  —  then  the  statutory  « 
rate  of  interest  existing  at  the  date  of  the  rendition  of  the  judg- 1 
ment  is  to  be  treated  as  part  of  the  contract  and  must  be  paid  byl 
the  defendants  according  to  the  terms  of  the  contract,  and  thusi 
the  plaintiff's  contention  is  well  founded. 

But  is  a  judgment,  properly  speaking,  for  the  purposes  now  in 
hand,  a  contract?  I  think  not.  The  most  important  elements 
of  a  contract  are  wanting.  There  is  no  aggregatio  mentium.  The 
defendant  has  not  voluntarily  assented.  All  the  authorities  assert 
that  the  existence  of  parties  legally  capable  of  contracting  is 
essential  to  every  contract,  and  yet  they  nearly  all  agree  that 
judgments  entered  against  lunatics  and  others  incapable  in  law 
of  contracting  are  conclusively  binding  until  vacated  or  reversed. 
In  Wyman  v.  Mitchell  (1  Cowen,  316),  Sutherland,  J.,  said  that 
"  a  judgment  is  in  no  sense  a  contract  or  agreement  between  the 
parties."  In  McCoun  v.  TJie  New  Yorli  Central  and  Hudson 
River  Railroad  Company  (50  N.  Y.  176),  Allen,  J.,  said  that  "a 
statute  liability  wants  all  the  elements  of  a  contract,  considera- 
tion and  mutuality  as  well  as  the  assent  of  the  party.  Even  a 
judgment  founded  upon  contract  is  no  contract."  In  Bidleson  v. 
Whytel  (3  Burrows,  1545-1548)  it  was  held  after  great  delibera- 
tion and  after  consultation  with  all  the  judges.  Lord  Mansfield 


78  FORMATION  OP  CONTRACT.  [Part  II. 

speaking  for  the  court,  "  that  a  judgment  is  no  contract,  nor  can  be 
;  considered  in  the  light  of  a  contract,  for  judicium  redditur  in 
invitum."  To  the  same  effect  are  the  following  authorities:  Bae 
V.  Hulhert,  17  111.  572;  Todd  v.  Crumb,  5  McLean,  172;  Smith  v. 
Harrison,  33  Ala.  706;  Masterson  v.  Gibson,  56  Id.  56;  Keith  v. 
Estill,  9  Port.  669;  Larrabee  v.  Baldwin,  35  Cal.  156;  In  re  Ken- 
nedy, 2  S.  C.  (N.  S.)  226;  State  of  Louisiana  v.  City  of  New  Orleans, 
109  U.  S.  Sup.  Ct.  285. 

But  in  some  decided  cases,  and  in  text-books,  judges  and  jurists 
have  frequently,  and,  as  I  think,  without  strict  accuracy,  spoken 
of  judgments  as  contracts.  They  have  been  classified  as  contracts 
with  reference  to  the  remedies  upon  them.     In  the  division  of 

(actions  into  actions  ex  contractu  and  ex  delicto,  actions  upon  judg- 
ments have  been  assigned  to  the  former  class.  It  has  been  said 
that  the  law  of  contracts,  in  its  widest  extent,  may  be  regarded  as 
including  nearly  all  the  law  which  regulates  the  relations  of 
human  life;  that  contract  is  co-ordinate  and  commensurate  with 
duty ;  that  whatever  it  is  the  duy  of  one  to  do  he  may  be  deemed 
in  law  to  have  contracted  to  do,  and  that  the  law  presumes  that 
every  man  undertakes  to  perform  what  reason  and  justice  dictate 
he  should  perform.  1  Pars,  on  Cont.  (6th  ed.)  3;  2  Black.  Com. 
443;  3  Id.  160;  McCoun  v.  N.  Y.  C.  &  H.  B.  B.  B.  Co.,  supra. 
Contracts  in  this  wide  sense  are  said  to  spring  from  the  relations 
of  men  to  each  other  and  to  the  society  of  which  they  are  mem- 
bers. Blackstone  says:  "It  is  a  part  of  the  original  contract 
entered  into  by  all  mankind  who  partake  the  benefits  of  society, 
to  submit  in  all  points  to  the  municipal  constitutions  and  local 
ordinances  of  that  State  of  which  each  individual  is  a  member." 
In  the  wide*  sense  thus  spoken  of,  the  contracts  are  mere  fictions 
invented  mainly  for  the  purpose  of  giving  and  regulating  remedies. 
A  man  ought  to  pay  for  services  which  he  accepts,  and  hence  the 
law  implies  a  promise  that  he  will  pay  for  them.  A  man  ought 
to  support  his  helpless  children,  and  hence  the  law  implies  a 
promise  that  he  will  do  so.  So  one  ought  to  pay  a  judgment 
rendered  against  him,  or  a  penalty  which  he  has  by  his  miscon- 
duct incurred,  and  hence  the  law  implies  a  promise  that  he  will 
pay.  There  is  no  more  contract  to  pay  the  judgment  than  there 
is  to  pay  the  penalty.     He  has  neither  promised  to  pay  the  one 


Chap.  II.  §  1.]  FORM:   CONTRACTS  OF  RECORD.  79 

nor  the  other.  The  promise  is  a  mere  fiction,  and  is  implied 
merely  for  the  purpose  of  the  remedy.  Judgments  and  penalties 
are,  in  the  books,  in  some  respects,  placed  upon  the  same  footing. 
At  common  law  both  could  be  sued  for  in  an  action  ex  contractu 
for  debt,  the  action  being  based  upon  the  implied  promise  to  pay. 
But  no  one  will  contend  that  a  penalty  is  a  contract,  or  that  one 
is  really  under  a  contract  liability  to  pay  it.  McCoun  v.  N.  Y. 
C.  &  H.  R.  B.  B.  Co.,  supra. 

Suppose  a  statute  gives  a  penalty  to  an  aggrieved  party,  with  j 
interest,  what  interest  could  he  recover?  The  interest  allowed  by 
law  when  the  penalty  accrued,  if  the  statutory  rate  has  since  been 
altered?  Clearly  not.  He  would  be  entitled  to  the  interest  pre- 
scribed by  law  during  the  time  of  the  defendant's  default  in  pay- 
ment. There  would,  in  such  a  case,  be  no  contract  to  pay 
interest,  and  the  statutory  rate  of  interest  at  the  time  the  penalty 
accrued  would  become  part  of  no  contract.  If,  therefore,  a  sub- 
sequent law  should  change  the  rate  of  interest,  no  vested  right 
would  be  interfered  with,  and  no  contract  obligation  would  be 
impaired. 

The  same  principles  apply  to  all  implied  contracts.  When  one 
makes  a  valid  agreement  to  pay  interest  at  any  stipulated  rate, 
for  any  time,  he  is  bound  to  pay  it,  and  no  legislative  enactment 
can  release  him  from  his  obligation.  But  in  all  cases  where  the 
obligation  to  pay  interest  is  one  merely  implied  by  the  law,  or  is 
imposed  ,by  law,  and  there  is  no  contract  to  pay  except  the  ficti- 
tious one  which  the  law  implies,  then  the  rate  of  interest  must 
at  all  times  be  the  statutory  rate.  The  rate  existing  at  the  time 
the  obligation  accrued  did  not  become  part  of  any  contract,  and 
hence  the  law  which  created  the  obligation  could  change  or  alter 
it  for  the  future  without  taking  away  a  vested  right  or  impairing 
a  contract. 

In  the  case  of  all  matured  contracts  which  contain  no  provision 
for  interest  after  they  are  past  due,  as  I  have  before  said,  interest 
is  allowed,  not  by  virtue  of  the  contract,  but  as  damages  for  the 
breach  thereof.  In  such  cases  what  would  be  the  effect  of  a 
statute  declaring  that  no  interest  should  be  recovered?  As  to  the 
interest  which  had  accrued  as  damages  before  the  date  of  the 
law,  the  law  could  have  no  effect  because  that  had  become  a 


80  FORMATION  OF  CONTRACT.  [Pabt  II. 

vested  right  of  property  which,  could  not  be  taken  away.  But 
the  law  could  have  effect  as  to  the  subsequent  interest,  and  in 
stopping  that  from  running  would  impair  no  contract.  A  law 
could  be  passed  providing  that  in  all  cases  of  unliquidated  claims 
which  now  draw  no  interest,  interest  should  thereafter  be  allowed 
as  damages;  and  thus  there  is  ample  legislative  power  in  such 
cases  to  regulate  the  future  rate  of  interest  without  invading  any 
constitutional  right.  When  a  man's  obligation  to  pay  interest  is 
simply  that  which  the  law  implies,  he  discharges  that  obligation 
by  paying  what  the  law  exacts. 

This  judgment,  so  far  as  pertains  to  the  question  we  are  now 
considering,  can  have  no  other  or  greater  force  than  if  a  valid 
statute  had  been  enacted  requiring  the  defendant  to  pay  the  same 
sum  with  interest.  Under  such  a  statute,  interest  would  be  com- 
puted, not  at  the  rate  in  force  when  the  statute  was  enacted,  but 
according  to  the  rate  in  force  during  the  time  of  default  in 
payment.  A  different  rule  would  apply  if  a  judgment  or  statute 
should  require  the  payment  of  a  given  sum  with  interest  at  a 
specified  rate.  Then  interest  at  the  rate  specified  would  form 
part  of  the  obligation  to  be  discharged. 

\  Here,  then,  the  defendant  did  not  in  fact  contract  or  promise 
to  pay  this  judgment,  or  the  interest  thereon.  The  law  made  it 
his  duty  to  pay  the  interest,  and  implied  a  promise  that  he  would 
pay  it.  That  duty  is  discharged  by  paying  such  interest  as  the 
law,  during  the  time  of  default  in  paying  the  principal  sum, 
prescribed  as  the  legal  rate. 

If  this  judgment  had  been  rendered  at  the  date  the  execution 
was  issued,  interest  would  have  been  computed  upon  the  original 
demand  at  seven  per  cent  to  January  1,  1880,  and  then  at  the 
rate  of  six  per  cent.  Shall  the  plaintiff  have  a  better  position 
because  the  judgment  was  rendered  prior  to  1880? 

As  no  intention  can  be  imputed  to  the  parties  in  reference  to 
the  clause  in  the  judgment  requiring  payment  "with  interest," 
we  may  inquire  what  intention  the  court  had.  It  is  plain  that  it 
could  have  had  no  other  intention  than  that  the  judgment  should 
draw  the  statutory  interest  until  payment.  It  cannot  be  pre- 
sumed that  the  court  intended  that  the  interest  should  be  at  the 
rate  of  seven  per  cent  if  the  statutory  rate  should  become  less. 


Chap.  II.  §  1.]  FORM:  CONTRACTS  OF  RECORD.  81 

That  there  is  no  contract  obligation  to  pay  the  interest  upon 
judgments  which  is  beyond  legislative  interference  is  shown  by 
legislation  in  this  country  and  in  England.  Laws  have  been 
passed  providing  that  all  judgments  should  draw  interest,  and 
changing  the  rate  of  interest  upon  judgments,  and  such  laws  have 
been  applied  to  judgments  existing  at  their  date,  and  yet  it 
was  never  supposed  that  such  laws  impaired  the  obligation  of 
contracts. 

It  is  claimed  that  the  provision  in  section  1  of  the  act  of  1879, 
-which  reduced  the  rate  of  interest  (Chap.  538),  saves  this  judgment 
from  the  operation  of  that  act.  The  provision  is  that  "  nothing 
herein  contained  shall  be  so  construed  as  to  in  any  way  affect  any 
contract  or  obligation  made  before  the  passage  of  this  act."  The 
answer  to  this  claim  is  that  here  there  was  no  contract  to  pay 
interest  at  any  given  rate.  The  implied  contract,  as  I  have 
shown,  was  to  pay  such  interest  as  the  law  prescribed,  and  that 
contract  is  not  affected  or  interfered  with. 

The  foregoing  was  written  as  my  opinion  in  the  case  of  Prouty 
V.  Lake  Shore  and  Michigan  Southern  Railway  Company.  The 
only  difference  between  that  case  and  this  is  that  there  the  judg- 
ment was  by  its  terms  payable  "with  interest."  Here  the  judg- 
ment contains  no  direction  as  to  interest.  The  reasoning  of  the 
opinion  is  applicable  to  this  case  and  is,  therefore,  read  to  justify 
my  vote  in  this.  Since  writing  the  opinion,  we  have  decided,  in 
the  case  of  Sanders  v.  Lake  Shore  and  Michigan  Southern  Railway 
Company,  the  law  to  be  as  laid  down  in  the  first  paragraph  of  the 
opinion. 

The  orders  of  the  General  and  Special  Terms  should  be  reversed 
and  the  motion  granted,  without  costs  in  either  court,  the  parties 
having  so  stipulated. 

RuGER,  C.  J.,  and  Finch,  J.,  concur  with  Earl  and  Andrews, 
JJ. ;  Miller  and  Danforth,  JJ.,  dissent. 

Orders  reversed  and  motion  granted.^ 

1  Accord :  Louisiana  v.  Mayor,  109  U.  S.  285.    On  recognizance,  see  Smith 
V.  Collins,  42  Kans.  259. 
o 


82  FORMATION  OF  CONTRACT.  [Pabt  II. 

§  2.   Contract  under  seal. 

ALLER  V.   ALLER. 

40  NEW  JERSEY  LAW,  446.  — 1878. 

On  rule  to  show  cause  why  a  new  trial  should  not  be  granted 
on  verdict  for  the  plaintiff  in  Hunterdon  County  Circuit  Court. 
The  action  was  brought  on  the  following  instrument,  viz. : 

"  One  day  after  date,  I  promise  to  pay  my  daughter,  Angeline  H. 
Aller,  the  sum  of  three  hundred  and  twelve  dollars  and  sixty-one  cents, 
for  value  received,  with  lawful  interest  from  date,  without  defalcation  or 
discount,  as  witness  my  hand  and  seal  this  fourth  day  of  September,  one 
thousand  eight  hundred  and  seventy-three.  ^312.61.  This  note  is  given 
in  lieu  of  one-half  of  the  balance  due  the  estate  of  Mary  A.  A  Her, 
deceased,  for  a  note  given  for  one  thousand  dollars  to  said  deceased  by 
me.  Peter  H.  Aller.  (L.  S.)  Witnesses  present :  John  J.  Smith,  John 
F.  Grandin." 

ScuDDER,  J.  Whether  the  note  for  $1000  could  have  been 
enforced  in  equity  as  evidence  of  an  indebtedness  by  the  husband 
to  the  wife  during  her  life,  is  immaterial,  for  after  her  death  he 
was  entitled,  as  husband  of  his  deceased  wife,  to  administer  on 
her  estate,  and  receive  any  balance  due  on  the  note,  after  deduct- 
ing legal  charges,  under  the  statute  of  distribution.  The  daugh- 
ters could  have  no  legal  or  equitable  claim  on  this  note  against 
their  father  after  their  mother's  decease.  The  giving  of  these  two 
sealed  promises  in  writing  to  them  by  their  father  was  therefore 
a  voluntary  act  on  his  part.  That  it  was  just  and  meritorious 
to  divide  the  amount  represented  by  the  original  note  between 
these  only  two  surviving  children  of  the  wife,  if  it  was  her  sepa- 
rate property,  and  keep  it  from  going  into  the  general  distribu- 
tion of  the  husband's  estate  among  his  other  children,  is  evident, 
and  such  appears  to  have  been  his  purpose. 

The  question  now  is,  whether  that  intention  was  legally  and 
conclusively  manifested,  so  that  it  cannot  now  be  resisted. 

This  depends  on  the  legal  construction  and  effect  of  the  instru- 
ment which  was  given  by  the  father  to  his  daughter. 

It  has  been  treated  by  the  counsel  of  the  defendant  in  his  argu- 
ment, as  a  promissory  note,  and  the  payment  was  resisted  at  the 
trial  on  the  ground  that  it  was  a  gift.  Being  a  gift  inter  vivos, 
and  without  any  legal  consideration,  it  was  claimed  that  the 


Chap.  II.  §2.]  FORM:  CONTRACT  UNDER  SEAL.  88 

action  could  not  be  maintained.  But  the  instrument  is  not  a 
promissory  note,  having  the  properties  of  negotiable  paper  by 
the  law  merchant;  nor  is  it  a  simple  contract,  with  all  the  lati- 
tude of  inquiry  into  the  consideration  allowable  in  such  a  case; 
but  it  is  in  form  and  legal  construction  a  deed  under  seal.  It 
says  in  the  body  of  the  writing,  "as  witness,  my  hand  and  seal," 
and  a  seal  is  added  to  the  name  of  Peter  H.  Aller.  It  is  not 
therefore  an  open  promise  for  the  payment  of  money,  which  is 
said  to  be  the  primary  requisite  of  a  bill  or  promissory  note,  but 
it  is  closed  or  sealed,  whereby  it  loses  its  character  as  a  commer-l 
cial  instrument  and  becomes  a  specialty  governed  by  the  rules 
affecting  common  law  securities.  1  DanieVs  Neg.  Inst.,  §§1, 
31,  34. 

It  is  not  at  this  time  necessary  to  state  the  distinction  between 
this  writing  and  corporation  bonds  and  other  securities  which 
have  been  held  to  have  the  properties  of  negotiable  paper  by 
commercial  usage.  This  is  merely  an  individual  promise  "to 
pay  my  daxighter,  Angeline  H.  Aller,  the  sum  of  $312.61,  for 
value  received,"  etc.  It  is  not  even  transferable  in  form,  and. 
there  is  no  intention  shown  upon  its  face  to  make  it  other  than 
it  is  clearly  expressed  to  be,  a  sealed  promise  to  pay  money  to  a 
certain  person  or  a  debt  in  law  under  seal.  How  then  will  it  be 
affected  by  the  evidence  which  was  offered  to  show  that  it  was  a 
mere  voluntary  promise,  without  legal  consideration,  or,  as  it 
was  claimed,  a  gift  unexecuted? 

Our  statute  concerning  evidence  (Reo.,  p.  380,  §  16),  which 
enacts  that  in  any  action  upon  an  instrument  in  writing,  under 
seal,  the  defendant  in  such  action  may  plead  and  set  up  as  a  de- 
fense therein  fraud  in  the  consideration,  is  not  applicable,  for 
here  there  is  no  fraud  shown. 

But  it  is  said  that  the  act  of  April  6,  1875  (Rev.,  p.  387, 
§  52),  opens  it  to  the  defense  of  want  of  sufficient  consideration, 
as  if  it  were  a  simple  contract,  and,  that  being  shown,  the  con- 
tract becomes  inoperative. 

The  statute  reads :  "  That  in  every  action  upon  a  sealed  instru- 
ment, or  where  a  set-off  is  founded  on  a  sealed  instrument,  the 
seal  thereof  shall  be  only  presumptive  evidence  of  a  sufficient 
consideration,  which  may  be  rebutted,  as  if  such  instrument  was 
not  sealed,"  etc. 


84  FORMATION  OF  CONTRACT.  [Pabt  II 

Suppose  the  presumption  that  the  seal  carries  with  it,  that 
there  is  a  sufficient  consideration,  is  rebutted,  and  overcome  by 
evidence  showing  there  was  no  such  consideration,  the  question 
still  remains,  whether  an  instrument  under  seal,  without  suffi- 
cient consideration,  is  not  a  good  promise,  and  enforceable  at 
law.  It  is  manifest  that  here  the  parties  intended  and  under- 
stood that  there  should  be  no  consideration.  The  old  man  said : 
"Now  here,  girls,  is  a  nice  present  for  each  of  you,"  and  so  it 
was  received  by  them.  The  mischief  which  the  above  quoted 
law  was  designed  to  remedy,  was  that  where  the  parties  intended 
there  should  be  a  consideration,  they  were  prevented  by  the 
common  law  from  showing  none,  if  the  contract  was  under  seal. 
But  it  would  be  going  too  far  to  say  that  the  statute  was  intended 
to  abrogate  all  voluntary  contracts,  and  to  abolish  all  distinction 
between  specialties  and  simple  contracts. 

It  will  not  do  to  hold  that  every  conveyance  of  land,  or  of 
chattels,  is  void  by  showing  that  no  sufficient  consideration 
passed  when  creditors  are  not  affected.  Nor  can  it  be  shown  by 
authority  that  an  executory  contract,  entered  into  intentionally 
and  deliberately,  and  attested  in  solemn  form  by  a  seal,  cannot 
be  enforced.  Both  by  the  civil  and  the  common  law,  persons 
were  guarded  against  haste  and  imprudence  in  entering  into  vol- 
untary agreements.  The  distinction  between  "nudum  pactum" 
and  "pactum  vestitum,"  by  the  civil  law,  was  in  the  formality 
of  execution  and  not  in  the  fact  that  in  one  case  there  was  a  con- 
sideration, and  in  the  other  none,  though  the  former  term,  as 
adopted  in  the  common  law,  has  the  signification  of  a  contract 
without  consideration.  The  latter  was  enforced  without  refer- 
ence to  the  consideration,  because  of  the  formality  of  its  ratifica- 
tion.    1  Parsons  on  Cont.  (6th  ed.)  427. 

The  opinion  of  Justice  Wilmot  in  Pillans  v.  Van  Mierop 
(3  Burr.  1663)  is  instructive  on  this  point. 

The  early  case  of  Sharington  v.  Strotton  (Plow.  308)  gives  the 
same  cause  for  the  adoption  of  the  sealing  and  delivery  of  a 
deed.     It  says,  among  other  things : 

"  Because  words  are  oftentimes  spoken  by  men  unadvisedly  and  with- 
out deliberation,  the  law  has  provided  that  a  contract  by  words  shall  not 
bind  without  consideration.     And  the  reason  is,  because  it  is  by  words 


Chaf.  II.  §2.]  FORM:   CONTRACT  UNDER  SEAL.  86 

which  pass  from  men  lightly  and  inconsiderately  ;  but  where  the  agree- 
ment is  by  deed,  there  is  more  time  for  deliberation,  etc.     So  that  there 
is  great  deliberation  used  in  the  making  of  deeds,  for  which  reason  they 
are  received  as  a  lien  final  to  the  party,  and  are  adjudged  to  bind  the  J 
party  without  examining  upon  what  cause  or  consideration  they  were 
made.     And  therefore  in  the  case  put  in  17  Ed.  IV.,  if  I  by  deed  promise  i 
to  give  you  £20  to  make  your  sale  de  novo,  here  you  shall  have  an  action 
of  debt  upon  the  deed,  and  the  consideration  is  not  examinable,  for  in  I 
the  deed  there  is  sufficient  consideration,  viz.,  the  will  of  the  party  that  I 
made  the  deed." 

It  would  seem  by  this  old  law,  that  in  case  of  a  deed  the  say- 
ing might  be  applied,  stat  pro  ratione  voluntas. 

In  Smith  on  Contracts,  the  learned  author,  after  stating  the 
strictness  of  the  rules  of  law,  that  there  must  be  a  consideration 
to  support  a  simple  contract  to  guard  persons  against  the  con- 
sequences of  their  own  imprudence,  says:  "The  law  does  not 
absolutely  prohibit  them  from  contracting  a  gratuitous  obliga- 
tion, for  they  may,  if  they  will,  do  so  by  deed." 

This  subject  of  the  derivation  of  terms  and  formalities  from 
the  civil  law,  and  of  the  rule  adopted  in  the  common  law,  is  fully 
described  in  Fonb.  Eq.  335,  note  a.  The  author  concludes  by 
saying:  "If,  however,  an  agreement  be  evidenced,  by  bond  or 
other  instrument,  under  seal,  it  would  certainly  be  seriously 
mischievous  to  allow  its  consideration  to  be  disputed,  the  com- 
mon law  not  having  pointed  out  any  other  means  by  which  an 
agreement  can  be  more  solemnly  authenticated.  Every  deed// 
therefore,  in  itself  imports  a  consideration,  though  it  be  only  th| 
will  of  the  maker,  and  therefore  shall  never  be  said  to  be  nudut^ 
pactum."  See  also  1  Chitty  on  Cont.  (11th  ed.)  6;  Morley  v. 
Boothhy,  3  Bing.  107;  Uann  v.  Hughes,  7  T.  R.  350,  note  a. 

These  statements  of  the  law  have  been  thus  particularly  given 
in  the  words  of  others,  because  the  significance  of  writings  under 
seal,  and  their  importance  in  our  common  law  system,  seems  in 
danger  of  being  overlooked  in  some  of  our  later  legislation.  If 
a  party  has  fully  and  absolutely  expressed  his  intention  in  a 
writing  sealed  and  delivered,  with  the  most  solemn  sanction 
known  to  our  law,  what  should  prevent  its  execution  where  there 
is  no  fraud  or  illegality?  But  because  deeds  have  been  used  to 
cover  fraud  and  illegality  in  the  consideration,  and  just  defenses 
have  been  often  shut  out  bv  the  conclusive  character  of  the  for- 


86  FORMATION  OF  CONTRACT.  [Part  U. 

mality  of  sealing,  we  have  enacted  in  our  State  tlie  two  recent 
statutes  above  quoted.  The  one  allows  fraud  in  the  considera- 
tion of  instruments  under  seal  to  be  set  up  as  defense,  the  other 
takes  away  the  conclusive  evidence  of  a  sufficient  consideration 
heretofore  accorded  to  a  sealed  writing,  and  makes  it  only  pre- 
sumptive evidence.  This  does  not  reach  the  case  of  a  voluntary 
agreement,  where  there  was  no  consideration,  and  none  intended 
by  the  parties.  The  statute  establishes  a  new  rule  of  evidence, 
by  which  the  consideration  of  sealed  instruments  may  be  shown, 
but  does  not  take  from  them  the  effect  of  establishing  a  contract 
expressing  the  intention  of  the  parties,  made  with  the  most 
solemn  authentication,  which  is  not  shown  to  be  fraudulent  or 
illegal.  It  could  not  have  been  in  the  mind  of  the  legislature  to 
make  it  impossible  for  parties  to  enter  into  such  promises;  and 
without  a  clear  expression  of  the  legislative  will,  not  only  as  to 
the  admissibility,  but  the  effect  of  such  evidence,  such  construc- 
tion should  not  be  given  to  this  law.  Even  if  it  should  be  held 
that  a  consideration  is  required  to  uphold  a  deed,  yet  it  might 
still  be  implied  where  its  purpose  is  not  within  the  mischief 
which  the  statute  was  intended  to  remedy.  It  was  certainly  not 
the  intention  of  the  legislature  to  abolish  all  distinction  between 
simple  contracts  and  specialties,  for  in  the  last  clause  of  the 
section  they  say  that  all  instruments  executed  with  a  scroll,  or 
other  device  by  way  of  scroll,  shall  be  deemed  sealed  instruments. 
It  is  evident  that  they  were  to  be  continued  with  their  former 
legal  effect,  except  so  far  as  they  might  be  controlled  by  evi- 
dence affecting  their  intended  consideration. 

If  the  statute  be  anything  more  than  a  change  of  the  rules  of 
evidence  which  existed  at  the  time  the  contract  was  made,  and 
in  effect  makes  a  valuable  consideration  necessary,  where  such 
requisite  to  its  validity  did  not  exist  at  that  time,  then  the  law 
would  be  void  in  this  case,  because  it  would  impair  the  obligation 
of  a  prior  contract.  This  cannot  be  done.  Cooley  on  Const. 
Lira.  28 S,  and  notes. 

The  rule  for  a  new  trial  should  be  discharged.^ 

»  As  to  what  constitutes  a  seal,  see  Hacker's  Appeal,  121  Pa.  St.  192 ; 
Cromwell  v.  Tate's  Ex'r.  7  Leigh  (Va.)  301  ;  Solon  v.  Willinm^burgh  Sav. 
Bk.,  114  N.  V.  122.  For  effect  of  seal  on  gratuitous  promise,  see  McMillan 
V.  Ames,  .3.S  Minn.  2o7,  ante,  p.  54. 


Chap.  II.  §  2.]  FORM :  CONTRACT  UNDER  SEAL.  87 

BENDER  v.  BEEN. 

78  IOWA,  283.  — 1889. 

Action  upon  a  promissory  note.  A  demurrer  to  defendant's 
answer  was  overruled,  and  plaintiff  refusing  to  further  plead,  and 
standing  on  his  demurrer,  judgment  was  rendered  for  defendant. 
Plaintiff  appeals. 

Beck,  J.  I.  The  promissory  note  in  suit  was  jointly  executed 
by  defendant  and  four  others.  It  called  for  two  hundred  and 
twenty  dollars,  and,  after  certain  payments  were  deducted,  it  is 
claimed  in  the  petition  that  one  hundred  and  fifty  dollars  remained 
due  thereon,  for  which  judgment  is  asked.  The  defendant  alleged 
in  his  answer  that  a  prior  indorsee  of  the  note,  while  holding  it, 
did  execute  a  writing,  discharging  defendant  from  all  liability 
thereon,  which  is  in  the  following  words : 

"Mt.  Ayr,  Iowa,  5  —  3,  1887. 

"Received  of  Chas.  A.  Been  forty  dollars,  and  same  credited  on 
note  dated  March  2,  1882,  given  for  two  hundred  and  twenty  dollars, 
and  signed  by  Calvin  Stiles,  Wm.  A.  Been,  J.  S.  Been,  C.  A.  Been  and 
Wm.  White,  given  to  G.  Bender.  The  consideration  of  payment  of 
above  forty  dollars  is  that  said  Chas.  A.  Been  is  to  be  released  entirely 
from  the  above-named  note.     This  is  done  by  consent  of  G.  Bender. 

"  (Signed)  Day  Dunning,  Cashier." 

It  is  further  alleged  in  the  answer  that  the  note  came  into  the 
possession  of  plaintiff  long  after  maturity,  who  had  full  knowl- 
edge of  the  release  pleaded.  A  demurrer  to  the  answer  was 
overruled,  and  from  that  decision  plaintiff  appeals. 

II.  It  is  a  familiar  rule  of  the  law  that  a  payment  of  a  part  / 
of  a  promissory  note,  or  of  a  debt  existing  in  any  different  form, 
in  discharge  of  the  whole,  will  not  bar  recovery  of  the  balance 
unpaid.  The  rule  is  based  upon  the  principle  that  there  is  no 
consideration  for  the  promise  of  discharge ;  the  sum  paid  being  in 
fact  due  from  the  payer  on  the  debt,  he  renders  no  consideration 
to  the  payee  for  his  promise  to  release  the  balance  of  the  debt. 
This  doctrine  has  been  recognized  in  more  than  one  decision  of 
this  court.  Myers  v.  Byington,  34  Iowa,  205;  Works  v.  Hershey, 
35  Iowa,  340;  Bea  v.  Owens,  37  Iowa,  262;  Bryan  v.  Brazil,  52 
Iowa,  350;   Early  v.  Burt,  68  Iowa,  716.     Under  this  rule  the 


88  FORMATION  OF  CONTRACT.  [Pabt  II. 

discharge  pleaded  by  defendant  is  without  consideration,  and  is 
therefore  void. 

III.  But  counsel  for  defendant  make  an  ingenious  argument 
to  show  that  the  rule  of  the  common  law  applicable  to  sealed 
instruments,  under  which  they  import  a  consideration  in  this 
State,  since  the  abolition  of  private  seals,  is  transferred  to  all 
writings  which,  like  sealed  instruments  under  the  common  law, 
import  consideration.  Without  at  all  approving  the  position 
advocated  by  counsel,  but  regarding  it  as  more  than  doubtful,  it 
may  be  assumed  for  the  purpose  of  showing  that  it  cannot  be 
applied  to  the  case  before  us.  It  is  not  and  cannot  be  claimed 
that  a  sealed  instrument  imports  a  valid  consideration  when  it 
shows,  by  its  own  conditions  and  recitations,  that  it  is  in  fact  not 
founded  upon  a  consideration.  In  other  words,  the  presumption 
of  consideration  arising  from  a  seal  will  not  overcome  the  express 
language  and  conditions  of  a  sealed  instrument,  showing  that  it 
is  without  consideration.  We  think  that  this  proposition  need 
only  to  be  stated  to  gain  assent.  It  does  not  demand  in  its  sup- 
port the  citation  of  authorities.  Attention  to  the  release  pleaded 
by  defendant,  and  quoted  above,  discloses  the  fact  that  it  shows, 
by  positive  and  direct  recitations,  that  a  payment  of  a  part  of  the 
debt  was  the  alleged  consideration  of  the  instrument  for  the 
release  of  the  balance  of  the  debt.  The  instrument,  therefore, 
relied  upon  to  show  the  release  establishes  the  fact  that  it  is 
entirely  without  consideration,  and  cannot  therefore  be  enforced. 

It  is  our  opinion  that  the  District  Court  erred  in  overruling 
plaintiff's  demurrer  to  defendant's  answer.  Its  judgment  is 
therefore  reversed. 


GORHAM'S  ADM'R  v.   MEACHAM'S  ADM'R. 

63  VERMONT,  231. —1891. 

Bill  in  chancery  for  foreclosure  of  a  mortgage.  Heard  at  the 
September  term,  1890,  upon  pleadings  and  an  agreed  statement 
of  facts.     Taft,  Chancellor,  dismissed  the  bill,  pro  forma. 

Tyler,  J.  The  following  facts  are  reported :  Rollin  S.  Meacham 
in  his  lifetime  was  administrator  with  the  will  annexed  of  the 


Chaf.  n.  §  2.]  FORM :   CONTRACT  UNDER  SEAL.  &^ 

estate  of  Angeline  W.  Gorham,  and  became  largely  indebted  to 
the  estate  for  moneys  that  had  come  into  his  hands  as  such 
administrator.  For  the  purpose  of  securing  the  estate  for  this 
indebtedness,  on  March  1,  1889,  he  made  and  executed  a  promis- 
sory note  for  $1550,  payable  to  himself  as  administrator,  on 
demand,  and  in  like  manner  a  mortgage  of  his  home  place,  condi- 
tioned for  the  payment  of  the  note.  He  never  .settled  the  estate 
nor  rendered  any  account  to  the  Probate  Court.  He  converted 
the  assets  into  money  and  appropriated  it  to  his  own  use  in  his 
private  business.  At  the  time  the  note  and  mortgage  were  exe- 
cuted, and  at  his  decease,  he  was  indebted  to  the  estate  to  the 
amount  of  $7000,  and  was  insolvent.  His  debts,  besides  what  he 
owed  the  estate,  amounted  to  about  $9000,  and  his  assets  to  about 
$4000.  The  note  and  mortgage  were  retained  by  him  and  were 
found  after  his  decease  in  his  safe  among  other  papers  that 
belonged  to  the  estate,  and  among  certain  deeds  and  mortgages  of 
his  own.  He  died  November  17,  1889.  His  wife  was  the  daughter 
of  the  testatrix,  and  is  the  only  person  interested  in  her  estate. 
After  Meacham's  decease,  the  defendant,  as  his  administrator, 
handed  the  note  and  mortgage  to  Burditt,  after  the  latter's 
appointment  as  administrator  upon  the  estate  of  Mrs.  Gorham, 
and  Burditt  caused  the  mortgage  to  be  recorded  in  the  town 
clerk's  office.     The  question  is  as  to  its  validity. 

1.  The  mortgage  must  be  held  invalid  for  want  of  contracting- 1 
parties.  A  contract  necessarily  implies  a  concurrence  of  inten- 
tion in  two  parties,  one  of  whom  promises  something  to  the  other, 
who  on  his  part  accepts  such  promise.  One  person  cannot  by 
his  promise  confer  a  right  against  himself  until  the  person  tOr 
whom  the  promise  is  made  has  accepted  the  same.  Until  the 
concurrence  of  the  two  minds  there  is  no  contract;  there  is  merely', 
an  offer  which  the  promisor  may  at  any  time  retract.  Chitty  on 
Cont.  9,  quoting  Pothier  on  Obligations.  It  is  essential  to  the 
validity  of  a  deed  that  there  be  proper  parties,  a  person  able  ta 
contract  and  a  person  able  to  be  contracted  with.  3  Wash.  Real 
Prop.  217. 

To  uphold  this  mortgage  we  must  say  that  there  may  be  two 
distinct  persons  in  one,  for  in  law  this  mortgagor  and  mortgagee 
are  identical.     The  addition  of  the  words,  "  executor  of  A.  W. 


^0  FORMATION  OF  CONTRACT.  [Part  II. 

Gorham's  estate,"  does  not  change  the  legal  effect  of  the  grant, 
which  is  to  Meacham  in  his  individual  capacity.  In  3  Wash. 
279,  it  is  said  that  a  grant  to  A,  B,  and  C,  trustees  of  a  society- 
named,  their  heirs,  etc.,  is  a  grant  to  them  individually,  and 
Austin  V.  Shaw,  10  Allen,  552,  Towar  v.  Hale,  46  Barb.  361,  and 
Brown  v.  Combs,  29  N.  J.  L.  36,  are  cited.  In  this  case  the  grant 
and  the  habendum  are  not  to  the  estate  and  its  legal  representa- 
tives, but  to  Meacham,  executor,  his  heirs  and  assigns.  Meacham 
had  misappropriated  the  funds  of  the  estate,  and  no  one  but 
himself  assented  to  his  giving  a  note  and  mortgage  for  the  pur- 
pose of  partially  covering  his  default. 

2.  The  mortgage  was  not  delivered.  An  actual  manual  delivery 
of  a  deed  or  mortgage  is  not  necessary.  If  it  has  been  so  disposed 
of  as  to  evince  clearly  the  intention  of  the  parties  that  it  should 
take  effect  as  a  conveyance,  it  is  a  sufficient  delivery.  Orr  v. 
Clark,  62  Vt.  136.  Whether  it  has  been  so  disposed  of  or  not 
depends  upon  the  facts  of  a  given  case.  In  Elmore  v.  Marks 
(39  Vt.  538)  the  orator  was  indebted  to  Marks,  and  for  the  pur- 
pose of  security  made  and  executed  to  him  a  deed  of  certain  land 
and  carried  it  to  the  town  clerk's  office  to  be  filed  but  not 
recorded,  and  to  be  returned  to  him  when  his  indebtedness  to 
Marks  should  be  paid.  Through  inadvertence  the  deed  was 
recorded  and  the  orator  took  it  into  his  possession.  It  was  never 
delivered  to  Marks  and  he  had  no  knowledge  of  it  until  several 
months  after  it  was  recorded,  when  the  orator  told  him  that  it 
had  been  recorded  by  mistake.  It  was  held  that  there  was  no 
.  delivery.  Pierpoint,  C.  J.,  said:  "All  authorities  seem  to  agree 
n  that  to  constitute  a  delivery  the  grantor  must  part  with  the 
|!  custody  and  control  of  the  instrument,  permanently,  with  the 
jj  intention  of  having  it  take  effect  as  a  transfer  of  the  title,  and 
jj  must  part  with  his  right  to  the  instrument  as  well  as  with  the 
possession.  So  long  as  he  retains  the  control  of  the  deed  he 
retains  the  title." 

Anything  which  clearly  manifests  the  intention  of  the  grantor 
and  the  person  to  whom  it  is  delivered  that  the  deed  should 
presently  become  operative  and  effectual,  that  the  grantor  loses 
all  control  over  it,  and  that  by  it  the  grantee  is  to  become  pos- 
sessed of  the  estate,  constitutes  a  delivery.  Byars  v.  Spencer, 
101  111.  429. 


! 


Chaf.  II.  §2.]  FORM:   CONTRACT  UNDER  SEAL.  91 

In  Stone  v.  French  (1  Am.  St.  Rep.  237)  it  appeared  that  Francis 
B.  French  formed  an  intention  of  giving  a  certain  piece  of  land 
to  his  brother  unless  he  should  dispose  of  it  during  his  lifetime; 
accordingly  he  wrote  a  letter  to  his  brother  in  which  he  stated 
that  in  case  of  his  decease  his  brother  should  have  the  land  and 
do  with  it  as  he  pleased ;  that  he,  the  grantor,  would  make  a  deed 
of  it,  inclose  it  in  an  envelope  and  direct  it  to  his  brother,  to  be 
mailed  in  event  of  the  grantor's  death.  The  grantor  afterwards 
made  a  deed  which  contained  tlie  usual  words,  **  signed,  sealed, 
and  delivered  in  the  presence  of,"  etc.  It  was  in  all  respects 
properly  executed  and  was  placed  in  an  envelope  in  the  grantor's 
table  drawer  with  directions  indorsed  upon  the  envelope  to  have 
the  deed  recorded,  but  it  was  in  fact  never  delivered.  It  was, 
held  that  there  was  no  delivery  of  the  deed  and  that  the  title  to  I 
the  land  did  not  pass  to  the  grantee;  that  the  deed  being  void,  the) 
recording  of  it  after  the  grantor's  death  gave  it  no  validity.  ' 

A  mere  intention   to   convey  a  title   is   not  sufficient.     The  | 
intention  and  the  act  of  delivery  of  the  deed  are  both  essential,  f 
To  constitute  a  complete  delivery  of  a  deed  the  grantor  must  do 
some  act  putting  it  beyond  his  power  to  revoke.     2  Cowen  & 
Mill's  Notes  to  Phillips'  Ev.  (5th  ed.)  660,  and  authorities  collated. 
In  Younge  v.  Guilbeau  (3  Wall.  636)  it  is  said  that  "  the  delivery 
of  a  deed  is  essential  to  the  transfer  of  a  title.     It  is  the  final  act     | 
without  which  all  other  formalities  are  ineffectual.     To  constitute     i 
such  delivery  the  grantor  must  part  with  the  possession  of  the 
deed  or  the  right  to  retain  it."     In  Fisher  v.  Hall  (41  N.  Y.  416) 
the  Court  of  Appeals  said :  "  A  rule  of  law,  by  which  a  voluntary 
deed  executed  by  the  grantor,  afterward  retained  by  him  during 
his  life  in  his  own  exclusive  possession  and  control,  never  during 
that  time  made  known  to  the  grantee,  and  never  delivered  to  any 
one  for  him,  or  declared  by  the  grantor  to  be  intended  as  a  present 
operative  conveyance,  could  be  permitted  to  take  effect  as  a  trans- 
mission of  the  title,  is  so  inconsistent  with  every  substantial  right 
of  property  as  to  deserve  no  toleration  whatever  from  any  intelli- 
gent court,  either  of  law  or  equity." 

Without  a  delivery  and  acceptance  there  is  no  mortgage,  but 
only  an  attempt  at  one,  or  a  proposition  to  make  one.  1  Jones  on 
Marts,  sec.  104;  Jewett  v.  Prer.ton,  27  Me.  400;  Foster  v.  Perkins, 
42  Me.  168;  3  Wash.  Real  Prop.  299 


92  FORMATION  OF  CONTRACT.  [Part  IL 

The  fact  that  the  note  and  mortgage,  duly  executed  by 
Meacham,  were  found  after  his  decease  among  his  papers  and 
papers  of  the  estate,  shows  no  delivery  of  them  in  any  legal 
sense;  on  the  contrary,  the  facts  that  he  omitted  to  have  the  mort- 
gage recorded,  that  he  retained  it  in  his  possession  and  under  his 
control  so  long  a  time,  and  that  it  ran  to  him  and  his  heirs  and 
assigns,  indicate  that  he  never  decided  to  give  it  legal  effect. 
He  did  not  make  it  operative  in  his  lifetime,  or  direct  that  it 
should  take  effect  at  his  death,  which  was  necessary  to  give  it  a 
testamentary  character.  The  act  of  recording  it  after  that  event 
could  not  give  it  validity. 

Decree  affirmed,  and  cause  remanded. 


§  3.  Simple  contracts  reqtiired  to  be  in  writing:  Statute  of 
Frauds. 

(i.)  Requirements  of  form. 

BIRD   V.    MUNROE. 

66  MAINE,  337.— 1877. 

Assumpit.  Defense,  the  statute  of  frauds.  After  hearing 
the  evidence,  which  sufficiently  appears  in  the  opinion,  the 
court  directed  that  the  action  be  made  law  on  report  to  stand 
for  trial  if  maintainable  upon  evidence  legally  admissible,  other- 
wise the  plaintiffs  to  be  nonsuit. 

Peters,  J.  On  March  2,  1874,  at  Rockland,  in  this  State,  the 
defendant  contracted  verbally  with  the  plaintiffs  for  the  purchase 
of  a  quantity  of  ice,  to  be  delivered  (by  immediate  shipments) 
to  the  defendant  in  New  York.  On  March  10,  1874,  or  there- 
abouts, the  defendant,  by  his  want  of  readiness  to  receive  a  por- 
tion of  the  ice  as  he  had  agreed  to,  temporarily  prevented  the 
plaintiffs  from  performing  the  contract  on  their  part  according  to 
the  preparations  made  by  them  for  the  purpose.  On  March  24, 
1874,  the  parties,  then  in  New  York,  put  their  previous  verbal 
contract  into  writing,  antedating  it  as  an  original  contract  made 
at  Rockland  on  March  2,  1874.  On  the  same  day  (March  24), 
by  consent  of  the  defendant,  the  plaintiffs  sold  the  same  ice  to 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  98 

another  party,  reserving  their  claim  against  the  defendant  for 
the  damages  sustained  by  them  by  the  breach  of  the  contract  by 
the  defendant  on  March  10th  or  about  that  time.  This  action 
was  commenced  on  April  11,  1874,  counting  on  the  contract  as 
made  on  March  2,  and  declaring  for  damages  sustained  by  the 
breach  of  contract  on  March  10,  or  thereabouts,  and  prior  to 
March  24,  1874.  Several  objections  are  set  up  against  the  plain- 
tiffs' right  to  recover. 

The  first  objection  is,  that  in  some  respects  the  allegations  in 
the  writ  and  the  written  proof  do  not  concur.  But  we  pass  this 
point,  as  any  imperfection  in  the  writ  may,  either  with  or  with- 
out terms,  be  corrected  by  amendment  hereafter. 

Then  it  is  claimed  for  the  defendant  that,  as  matter  of  fact, 
the  parties  intended  to  make  a  new  and  original  contract  as  of 
March  24,  by  their  writing  made  on  that  day  and  antedated 
March  2,  and  that  it  was  not  their  purpose  thereby  to  give  ex- 
pression and  efficacy  to  any  unwritten  contract  made  by  them 
before  that  time.  But  we  think  a  jury  would  be  well  warranted 
in  coming  to  a  different  conclusion.  Undoubtedly  there  are  cir- 
cumstances tending  to  throw  some  doubt  upon  the  idea  that  both 
parties  understood  that  a  contract  was  fully  entered  into  on 
March  2,  1874,  but  that  doubt  is  much  more  than  overcome  when 
all  the  written  and  oral  evidence  is  considered  together.  We 
think  the  writing  made  on  the  24th  March,  with  the  explana- 
tions as  to  its  origin,  is  to  be  considered  precisely  as  if  the  par- 
ties on  that  day  had  signed  a  paper  dated  of  that  date,  certifying 
and  admitting  that  they  had  on  the  2d  day  of  March  made  a 
verbal  contract,  and  stating  in  exact  written  terms  just  what  such 
verbal  contract  was.  Parol  evidence  is  proper  to  show  the  sit- 
uation of  the  parties  and  the  circumstances  under  which  the  con- 
tract was  made.  It  explains  but  does  not  alter  the  terms  of  the 
contract.  The  defendant  himself  invokes  it  to  show  that,  accord- 
ing to  his  view,  the  paper  bears  an  erroneous  date.  Such  evi- 
dence merely  discloses  in  this  case  such  facts  as  are  part  of  the 
res  gestae.  Benjamin  on  Sales,  §  213;  Stoops  v.  Smith,  100  Mass. 
63,  66,  and  cases  there  cited. 

Then  the  defendant  next  contends  that,  even  if  the  writing 
signed  by  the  parties  was  intended  by  them  to  operate  retro- 


94  FORMATION  OF  CONTRACT.  [Pabt  U. 

^actively  as  of  the  first-named  date,  as  a  matter  of  law,  it  cannot 
be  permitted  to  have  that  effect  and  meet  the  requirements  of 
the  statute  of  frauds.  The  position  of  the  defendant  is,  that  all 
•which  took  place  between  the  parties  before  the  24th  of  March 
was  of  the  nature  of  negotiation  and  proposition  only ;  and  that 
there  was  no  valid  contract,  such  as  is  called  for  by  the  statute 
of  frauds,  before  that  day ;  and  that  the  action  is  not  maintaina- 
ble, because  the  breach  of  contract  is  alleged  to  have  occurred 
before  that  time.  The  plaintiffs,  on  the  other  hand,  contend 
that  the  real  contract  was  made  verbally  on  the  2d  of  March,  and 
that  the  written  instrument  is  sufficient  proof  to  make  the  verbal 
contract  a  valid  one  as  of  that  date  (March  2),  although  the 
written  proof  was  not  made  out  until  twenty-two  days  after  that 
time.  Was  the  valid  contract,  therefore,  made  on  March  2d  or 
March  the  24th?  The  point  raised  is,  whether,  in  view  of  the 
statute  of  frauds,  the  writing  in  this  case  shall  be  considered  as 
constituting  the  contract  itself,  or  at  any  rate  any  substantial 
portion  of  it,  or  whether  it  may  be  regarded  as  merely  the  neces- 
sary legal  evidence  by  means  of  which  the  prior  unwritten  con- 
tract may  be  proved.  In  other  words,  is  the  writing  the  con- 
tract, or  only  evidence  of  it?    We  incline  to  the  latter  view. 

The  peculiar  wording  of  the  statute  presents  a  strong  argument 
for  such  a  determination.  The  section  reads :  "  No  contract  for 
the  sale  of  any  goods,  wares,  or  merchandise,  for  thirty  dollars 
or  more,  shall  be  valid,  unless  the  purchaser  accepts  and  receives 
part  of  the  goods,  or  gives  something  in  earnest  to  bind  the  bar- 
gain, or  in  part  payment  thereof,  or  some  note  or  memorandum 
thereof  is  made  and  signed  by  the  party  to  be  charged  thereby, 
or  his  agent."  In  the  first  place,  the  statute  does  not  go  to  all 
contracts  of  sale,  but  only  to  those  where  the  price  is  over  a  cer- 
tain sum.  Then  the  requirement  of  the  statute  is  in  the  alter- 
native. The  contract  need  not  be  evidenced  by  writing  at  all, 
provided  ''  the  purchaser  accepts  and  receives  a  part  of  the  goods, 
or  gives  something  in  earnest  to  bind  the  bargain  or  in  part  pay- 
ment thereof."  If  any  one  of  these  circumstances  will  as  effect- 
ually perfect  the  sale  as  a  writing  would,  it  is  not  easily  seen  how 
the  writing  can  actually  constitute  the  contract,  merely  because 
a  writing  happens  to  exist.     It  could  not  with  any  correctness 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  95 

be  said,  that  anything  given  in  earnest  to  bind  a  bargain  was 
a  substantial  part  of  the  bargain  itself,  or  anything  more  than  a 
particular  mode  of  proof.  Then  it  is  not  the  contract  that  is 
required  to  be  in  writing,  but  only  "  some  note  or  memorandum 
thereof."  This  language  supposes  that  the  verbal  bargain  may 
be  first  made,  and  a  memorandum  of  it  given  afterwards.  It 
also  implies  that  no  set  and  formal  agreement  is  called  for. 
Chancellor  Kent  says  "the  instrument  is  liberally  construed- 
without  regard  to  forms."  The  briefest  possible  forms  of  a  bar- 
gain have  been  deemed  sufficient  in  many  cases.  Certain  impor- 
tant elements  of  a  completed  contract  may  be  omitted  altogether. 
For  instance,  in  this  State,  the  consideration  for  the  promise  is 
not  required  to  be  expressed  in  writing.  QiUighan  v.  Board- 
man,  29  Me.  79.  Again,  it  is  provided  that  the  note  or  mem- 
orandum is  sufficient,  if  signed  only  by  the  person  sought  to  be 
charged.  One  party  may  be  held  thereby  and  the  other  not  be. 
There  may  be  a  mutuality  of  contract  but  not  of  evidence  or  of 
remedy.  Still,  if  the  writing  is  to  be  regarded  in  all  cases  as 
constituting  the  contract,  in  many  cases  there  would  be  but  one 
contracting  party. 

Another  idea  gives  weight  to  the  argument  for  the  position 
advocated  by  the  plaintiffs ;  and  that  is,  that  such  a  construction 
of  the  statute  upholds  contracts  according  to  the  intention  of 
parties  thereto,  while  it,  at  the  same  time,  fully  subserves  all 
the  purposes  for  which  the  statute  was  created.  It  must  be  borne 
in  mind  that  verbal  bargains  for  the  sale  of  personal  property 
are  good  at  common  law.  Nor  are  they  made  illegal  by  the 
statute.  Parties  can  execute  them  if  they  mutually  please  to  do 
so.  The  object  of  the  statute  is  to  prevent  perjury  and  fraud. 
Of  course,  perjury  and  fraud  cannot  be  wholly  prevented;  but, 
as  said  by  Bigelow,  J.  (Marsh  v.  Hyde,  3  Gray,  331),  "a  mem- 
orandum in  writing  will  be  as  effectual  against  perjury,  although 
signed  subsequently  to  the  making  of  a  verbal  contract,  as  if  it 
had  been  executed  at  the  moment  when  the  parties  consummated 
their  agreement  by  word  of  mouth."  We  think  it  would  be 
more  so.  A  person  would  be  likely  to  commit  himself  in  writ- 
ing with  more  care  and  caution  after  time  to  take  a  second 
thought.     The  locus  penitentice  remains  to  him. 


96  FORMATION  OF  CONTRACT.  [Part  II. 

By  no  means  are  we  to  be  understood  as  saying  that  all  written 
instruments  will  satisfy  the  statute,  by  having  the  effect  to  make 
the  contracts  described  in  them  valid  from  their  first  verbal 
inception.  That  must  depend  upon  circumstances.  In  many, 
and  perhaps  most,  instances  such  a  version  of  the  transaction 
would  not  agree  with  the  actual  understanding  of  the  parties. 
In  many  cases,  undoubtedly,  the  written  instrument  is  per  se 
the  contract  of  the  parties.  In  many  cases,  as,  for  instance,  like 
the  antedating  of  the  deed  in  Egery  v.  Woodard  (56  Maine, 
45),  cited  by  the  defendant,  the  contract  (by  deed)  could  not 
take  effect  before  delivery ;  the  law  forbids  it.  So  a  will  made 
by  parol  is  absolutely  void.  But  all  these  classes  of  cases  differ 
from  the  case  before  us. 

A  distinction  is  attempted  to  be  set  up  between  the  meaning 
to  be  given  to  R.  S.  c.  Ill,  §  4,  where  it  is  provided  that  no  un- 
written contract  for  the  sale  of  goods  "shall  be  valid,"  and  that 
to  be  given  to  the  several  preceding  sections  where  it  provided 
that  upon  certain  other  kinds  of  unwritten  contracts  "  no  action 
shall  be  maintained ; "  the  position  taken  being  that  in  the 
former  case  the  contract  is  void,  and  in  the  other  cases  only 
voidable  perhaps,  or  not  enforceable  by  suit  at  law.  But  the 
.distinction  is  without  any  essential  difference,  and  is  now  so 
regarded  by  authors  generally  and  in  most  of  the  decided  cases. 
All  the  sections  referred  to  rest  upon  precisely  the  same  policy. 
Exactly  the  same  object  is  aimed  at  in  all.  The  difference  of 
phraseology  in  the  different  sections  of  the  original  English 
statute,  of  which  ours  is  a  substantial  copy,  may  perhaps  be 
accounted  for  by  the  fact,  as  is  generally  conceded,  that  the 
authorship  of  the  statute  was  the  work  of  different  hands. 
Although  our  statute  (R.  S.  1871,  §  4)  uses  the  words  "no  con- 
tract shall  be  valid,"  our  previous  statutes  used  the  phrase  "shall 
be  allowed  to  be  good;  "  and  the  change  was  made  when  the  stat- 
utes were  revised  in  1857,  without  any  legislative  intent  to  make 
any  alteration  in  the  sense  of  the  section.  R.  S.  1841,  c.  136, 
§  4.  The  two  sets  of  phrases  were  undoubtedly  deemed  to  be 
equivalent  expressions.  The  words  of  the  original  English  sec- 
tion are,  "  shall  not  be  allowed  to  be  good, "  meaning,  it  is  said, 
not  good  for  the  purpose  of  sustaining  an  action  thereon  without 


Chap.  n.  §3.]  FORM:   STATUTE  OF  FRAUDS.  97 

"written  proof.  Browne,  St.  Frauds,  §§  115,  136,  and  notes  to 
the  sections;  Benjamin's  Sales,  §  114;  Townsend  v.  Hargraves, 
118  Mass.  325,  and  cases  there  cited. 

There  are  few  decisions  that  bear  directly  upon  the  precise 
point  which  this  case  presents  to  us.  From  the  nature  of  things, 
a  state  of  facts  involving  the  question  would  seldom  exist.  But 
we  regard  the  case  of  Townsend  v.  Hargraves,  above  cited,  as 
representing  the  principle  very  pointedly.  It  was  there  held 
that  the  statute  of  frauds  affects  the  remedy  only  and  not  the 
validity  of  the  contract;  and  that  where  there  has  been  a  com- 
pleted oral  contract  of  sale  of  goods,  the  acceptance  and  receipt  of 
part  of  the  goods  by  the  purchaser  takes  the  case  out  of  the 
statute,  although  such  acceptance  and  receipt  are  after  the  rest 
of  the  goods  are  destroyed  by  fire  while  in  the  hands  of  the  seller 
or  his  agent.  The  date  of  the  agreement  rather  than  the  date  of 
the  part  acceptance  was  treated  as  the  time  when  the  contract 
was  made ;  and  the  risk  of  the  loss  of  the  goods  was  cast  upon 
the  buyer.  Vincent  v.  Germond  (11  Johns.  283)  is  to  the  same 
effect.  We  are  not  aware  of  any  case  where  the  question  has 
been  directly  adjudicated  adversely  to  these  cases.  Webster  v. 
Zielly  (52  Barb.  [N.  Y.]  482),  in  the  argument  of  the  court, 
directly  admits  the  same  principle.  The  case  of  Leather  Cloth 
Co.  V.  Hieronimus  (L.  R.  10  Q.  B.  140)  seems  also  to  be  an 
authority  directly  in  point.  Thompson  v.  Alger  (12  Met.  428, 
435)  and  Marsh  v.  Hyde  (3  Gray,  331),  relied  on  by  defendant,  do 
not,  in  their  results,  oppose  the  idea  of  the  above  cases,  although 
there  may  be  some  expressions  in  them  inconsistent  therewith. 
Altogether  another  question  was  before  the  court  in  the  latter 
cases. 

But  there  are  a  great  many  cases  where,  in  construing  the 
statute  of  frauds,  the  force  and  effect  of  the  decisions  go  to  sus- 
tain the  view  we  take  of  this  question,  by  the  very  strongest 
implication;  such  as,  that  the  statute  does  not  apply  where  the 
contract  has  been  executed  on  both  sides,  Bucknam  v.  Nash,  12 
Maine,  474;  that  no  person  can  take  advantage  of  the  statute  but 
the  parties  to  the  contract,  and  their  privies,  Cowan  v.  Adams, 
10  Maine,  374;  that  the  memorandum  may  be  made  by  a  broker, 
Hinckley  v.  Arey,  27  Maine,  362 ;  or  by  an  auctioneer,  Cleaves  y. 


98  FORMATION  OF  CONTRACT.  [Pabt  U, 

Foss,  4  Maine,  1 ;  that  a  sale  of  personal  property  is  valid  when 
there  has  been  a  delivery  and  acceptance  of  part,  although  the 
part  be  accepted  several  hours  after  the  sale,  Davis  v.  Moore,  13 
Maine,  424;  or  several  days  after,  Bush  v.  Holmes,  53  Maine, 
417;  or  ever  so  long  after,  Broione,  St.  Frauds,  §  337,  and  cases 
there  noted;  that  a  creditor,  receiving  payments  from  his  debtor 
without  any  direction  as  to  their  application,  may  apply  them  to 
a  debt  on  which  the  statute  of  frauds  does  not  allow  an  action  to 
be  maintained,  Haynes  v.  Nice,  100  Mass.  327:  that  a  contract 
made  in  France,  and  valid  there  without  a  writing,  could  not  be 
enforced  in  England  without  one,  upon  the  ground  that  the  statute 
related  to  the  mode  of  procedure  and  not  to  the  validity  of  the 
contract,  Leroux  v.  Brown,  12  C.  B.  801 ;  but  this  case  has  been 
questioned  somewhat;  that  a  witness  may  be  guilty  of  perjury 
who  falsely  swears  to  a  fact  which  may  not  be  competent  evidence 
by  the  statute  of  frauds,  but  which  becomes  material  because  not 
objected  to  by  the  party  against  whom  it  was  offered  and  received, 
Howard  v.  Sexton,  4  Comstock,  157 ;  that  an  agent  who  signs  a 
memorandum  need  not  have  his  authority  at  the  time  the  contract 
is  entered  into,  if  his  act  is  orally  ratified  afterwards,  Maclean  v. 
Dunn,  4  Bing,  722;  that  the  identical  agreement  need  not  be 
signed,  and  that  it  is  sufficient  if  it  is  acknowledged  by  any 
other  instrument  duly  signed,  Gale  v.  Nixon,  6  Cow.  445;  that  the 
recognition  of  the  contract  may  be  contained  in  a  letter,  or  in 
several  letters,  if  so  connected  by  "written  links"  as  to  form 
sufficient  evidence  of  the  contract;  that  the  letters  may  be 
addressed  to  a  third  person,  Browne,  St.  Frauds,  §  346 ;  Fyson  v. 
Kitton,  30  E.  L.  &  Eq.  374;  Gibson  v.  Holland,  L.  R.  1  C.  P.  1; 
that  an  agent  may  write  his  own  name  instead  of  that  of  his 
principal  if  intending  to  bind  his  principal  by  it,  Williams  v. 
Bacon,  2  Gray,  387,  393,  and  citations  there;  that  a  proposal  in 
writing,  if  accepted  by  the  other  party  by  parol,  is  a  sufficient 
memorandum,  Reuss  v.  Picksley,  L.  R.  1  Exc.  342;  that  where 
one  party  is  bound  by  a  note  or  memorandum  the  other  party  may 
be  bound  if  he  admits  the  writing  by  another  writing  by  him 
subsequently  signed,  Dobell  v.  Hutchinson,  3  A.  &  E.  355 ;  that  the 
written  contract  may  be  rescinded  by  parol,  although  many  decis- 
ions are  opposed  to  this  proposition,  Richardson  v.    Cooper,  25 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  99 

Maine,  450 ;  that  equity  will  interfere  to  prevent  a  party  making 
the  statute  an  instrument  of  fraud,  Ryan  v.  Dox,  34  N.  Y.  307; 
Hassam  v.  Barrett,  115  Mass.  256,  258;  that  a  contract  verbally 
made  may  be  maintained  for  certain  purposes,  notwithstanding 
the  statute ;  that  a  person  who  pays  his  money  under  it  cannot 
recover  it  back  if  the  other  side  is  willing  to  perform ;  and  he 
can  recover  if  performance  is  refused,  Chapman  v.  Rich,  63 
Maine,  588,  and  cases  cited;  that  a  respondent  in  equity  waives 
the  statute  as  a  defense  unless  set  up  in  plea  or  answer,  Adams  v. 
Patrick,  30  Vt.  516;  that  it  must  be  specially  pleaded  in  an  action 
at  law,  Middlesex  Co.  v.  Osgood,  4  Gray,  447 ;  Lawrence  v.  Chase, 

64  Maine,  196;  that  the  defendant  may  waive  the  protection  of 
the  statute  and  admit  verbal  evidence  and  become  bound  by  it, 
Browne,  St.  Frauds,  §  135. 

It  may  be  remarked,  however,  that  in  most  courts  a  defendant 
may  avail  himself  of  a  defense  of  the  statute  under  the  general 
issue.  The  different  rule  in  Massachusetts  and  Maine  grew  out 
of  the  practice  act  in  the  one  State  and  in  the  statute  requiring 
the  filing  of  specifications  in  the  other. 

It  is  clear  from  the  foregoing  cases,  as  well  as  from  many  more 
that  might  be  cited,  that  the  statute  does  not  forbid  parol  con- 
tracts, but  only  precludes  the  bringing  of  actions  to  enforce  them. 
As  said  in  Thornton  v.  Kempster  (5  Taunt.  786,  788),  "  the  statute 
of  frauds  throws  a  difficulty  in  the  way  of  the  evidence."  In  a 
case  already  cited,  Jervis,  C.  .7.,  said :  "  The  effect  of  the  section  is 
not  to  avoid  the  contract,  but  to  bar  the  remedy  upon  it,  unless 
there  be  writing."     See  analogous  case  of  McClellan  v.  McClellan, 

65  Maine,  500. 

But  the  defendant  contends  that  this  course  of  reasoning  would 
make  a  memorandum  sufficient  if  made  after  action  brought,  and 
that  the  authorities  do  not  agree  to  that  proposition.  There  has 
been  some  judicial  inclination  tp  favor  the  doctrine  to  that  extent 
even,  and  there  may  be  some  logic  in  it.  Still  the  current  of 
decision  requires  that  the  writing  must  exist  before  action 
brought.  And  the  reason  for  the  requirement  does  not  militate 
against  the  idea  that  a  memorandum  is  only  evidence  of  the 
contract.  There  is  no  actionable  contract  before  memorandum 
obtained.     The  contract  cannot  be  sued  until  it  has  been  legally 


100  FORMATION  OF  CONTRACT.  [Part  II. 

rerified  by  writing;  until  then  there  is  no  cause  of  action, 
although  there  is  a  contract.  The  writing  is  a  condition  prece- 
dent to  the  right  to  sue.  Willes,  J.,  perhaps  correctly  describes 
it  in  Gibson  y.  Holland,  supra,  when  he  says,  "the  memorandum 
is  in  some  way  to  stand  in  the  place  of  a  contract."  He  adds: 
"The  courts  have  considered  the  intention  of  the  legislature  to 
be  of  a  mixed  character;  to  prevent  persons  from  having  actions 
brought  against  them  so  long  as  no  written  evidence  was  existing 
when  the  action  was  instituted."  Browne,  St.  Frauds,  §  338; 
Benjamin's  Sales,  §  159;  Fricker  v.  Thomlinson,  1  Man.  &  Gr. 
772;  Bradford  v.  Spyker,  32  Ala.  134;  Bill  v.  Bament,  9  M.  &  W. 
36;  Philhrook  v.  Beljcnap,  6  Vt.  383.  In  the  last  case  it  is  said, 
"strictly  speaking,  the  statute  does  not  make  the  contract  void, 
except  for  the  purpose  of  sustaining  an  action  upon  it,  to 
enforce  it." 

Action  to  stand  for  trial. 

Appleton,  C.  J.,  Walton,  Danforth,  Virgin,  and  Libbey, 
JJ.,  concurred.^ 


O'DONNELL  v.   LEEMAN. 

43  MAINE,  158.  — 1867. 

Mat,  J.  The  declaration  in  this  case  alleges  a  contract  in 
"writing,  of  a  sale  from  the  defendant  to  the  plaintiff,  of  a 

1  That  the  statute  affects  only  executory  contracts,  see  Finch,  J.,  in  Brown 
y.  Farmers''  Loan  &  Trust  Co.,  117  N.  Y.  266,  273  (1889)  :  "It  is  insisted, 
however,  that  the  sale  cannot  stand  because  the  contract  was  void  under 
the  statute  of  frauds.  But  that  statute  affects  only  executory  and  not 
executed  contracts  (Dodge  v.  Crandall,  30  N.  Y.  304).  It  is  the  rule  of 
evidence  where  the  one  party  or  the  other  is  seeking  performance  or  damages 
for  non-performance.  It  has  no  ofiBce  to  perform  when  the  contract  has  been 
executed  on  both  sides,  has  been  fully  carried  out  by  the  parties,  and  requires 
no  aid  from  the  law." 

As  to  whether  the  statute  must  be  pleaded,  the  same  judge  in  Wells  v. 
Moni?ian,  129  N.  Y.  161,  164  (1891),  says:  "So  far  as  the  defense  in  this 
caae  rests  upon  the  statute  of  frauds,  it  must  fail  for  two  reasons.  No  such 
defense  has  been  pleaded,  and  it  is  not  raised  by  the  averments  of  the  com- 
plaint, and  without  one  or  the  other  of  these  conditions,  the  defense,  if  existing, 
cannot  be  made  available.  ..."  See  also  on  this  point.  Crane  v.  Potoell, 
139  N.  Y.  379  (1893);  Hamer  v.  Sidway,  124  N.  Y.  538,  post,  p.  143,  147. 

See  also  Hunt  v.  Jones,  12  R.  I.  265. 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  101 

dwelling-house  at  auction,  upon  certain  specified  terms  and 
conditions.  According  to  the  contract  alleged,  the  price  to  be 
paid  was  twelve  hundred  dollars;  one-third  cash  down,  and  the 
residue  in  equal  payments,  in  one  and  two  years.  The  mem- 
orandum of  sale,  as  contained  in  the  auctioneer's  book,  is  as 
follows : 

"Oct.  9,  1855.  This  day  sold  W.  H.  Leeman  house  and  land  on 
Bartlett  street,  in  Lewiston ;  was  struck  down  to  Patrick  O'Donnell  for 
f  1200,  one-third  cash  down. 

"Ham  Brooks,  Auctioneer." 

That  the  auctioneer  in  cases  of  such  sales,  whether  of  real  or 
personal  estate,  is  the  agent  of  both  parties,  and  that  a  memoran- 
dum signed  by  him  at  the  time  of  the  sale,  stating  the  particulars 
of  the  contract,  and  the  parties  thereto,  is  a  sufficient  signing 
within  the  statute  of  frauds,  is  well  settled.  Emmerson  v.  Heelis, 
2  Taunt.  46;  McComb  r.  Wright,  4  John.  Ch.  R.  666;  Chitty  on 
Contracts,  305;  Cleaves  v.  Foss,  4  Maine,  R.  1;  Alna  v.  Plum- 
mer,  4  Id.  258. 

It  is  equally  well  settled  that  unless  there  be  a  memorandum 
showing,  within  itself,  or  by  reference  to  some  other  paper,  all 
the  material  conditions  of  the  contract,  no  action  can  be  main- 
tained upon  such  contract,  either  at  law  or  in  equity.  Sales  at 
auction  are  now  held  to  fall  within  the  statute;  as  much  so  as 
other  sales.  Pike  v.  Balch  et  al.,  38  Maine  R.  302;  Merritt  v. 
Clason,  12  Johns.  R.  102;  Bailey  et  al.  v.  Ogden,  3  Johns.  R.  399; 
Morton  v.  Dean,  13  Met.  R.  385.  And  it  cannot  well  be  doubted 
that  evasions  of  this  statute,  made  as  it  was  for  the  suppression 
of  perjury,  ought  not  to  be  encouraged. 

The  memorandum  in  this  case  contains  no  reference  to  the 
condition  of  the  payment,  except  in  the  words,  "  one-third  cash 
down."  It  does  not  appear  from  it  when  the  residue  was  intended 
to  be  paid.  It  was  attempted  at  the  trial  to  show  the  terms  of 
the  payment  to  be  as  alleged  in  the  writ,  by  the  introduction  of 
certain  handbills  and  newspaper  notices,  signed  by  tlie  defendant, 
and  published  by  him  just  before  the  sale,  and  which,  it  is  said 
in  argument,  were  exhibited  at  the  time  of  the  sale,  and  in  which 
the  terms  of  the  sale,  it  is  said,  wer'^  fully  stated.  The  evidence 
offered  by  the  plaintiff  to  connect  the  handbills  and  notices  with 


102  FORMATION  OF  CONTRACT.  [Part  II. 

the  memorandum,  and  to  explain  it,  was  excluded  by  the  presid- 
ing judge. 

That  such  extrinsic  evidence  was  inadmissible  the  following 
authorities  clearly  show:  2  Parsons  on  Contracts,  p.  298;  Hinde  v. 
Whitehouse,  7  East,  558;  The  First  Baptist  Church  in  Ithaca  v. 
Bigelow,  16  Wend.  28 ;  The  Inhah.  of  the  First  Parish  in  Freeport 
V.  Bartol,  3  Maine  R.  340. 

It  is  said,  however,  that  if  such  evidence  is  not  admissible, 
then  the  contract,  upon  its  face,  as  stated  in  the  memorandum, 
stipulates  for  the  payment  of  one-third  cash  down,  and  the  residue 
in  a  reasonable  time ;  and  that,  if  so,  the  notes  tendered  in  this 
case,  having  been  made  payable  in  one  and  two  years,  should  be 
deemed  a  compliance  with  the  terms  of  the  contract  in  this 
respect.  Considering  the  nature  and  value  of  the  estate  to  be 
conveyed,  and  that  long  credit  is  often  if  not  usually  given  in 
such  sales,  perhaps  a  somewhat  extended  time  of  payment  might 
be  regarded  as  reasonable;  but  we  know  of  no  rule  by  which 
money  that  is  made  payable  in  a  reasonable  time,  can,  at  the 
election  of  the  party  paying,*  be  divided  so  as  to  make  it  payable 
at  different  times,  and  in  different  years.  A  reasonable  time  is 
indivisible;  and  the  party  to  whom  the  money  is  payable,  iinder 
such  a  contract,  cannot  be  required  to  take  it  in  separate  pay- 
ments, and  at  separate  times. 

The  auctioneer's  memorandum  in  this  case  failing  to  show  any 
such  contract  as  is  alleged,  so  far  as  relates  to  the  terms  of  pay- 
ment, it  becomes  unnecessary  to  decide  upon  its  sufficiency  in 
other  respects,  or  upon  the  admissibility  of  the  other  evidence 
offered.  According  to  the  agreement  of  the  parties,  the  nonsuit 
must  stand. 


CLASON"  V.  BAILEY. 

14  JOHNSON  (N.  Y.),  484.— 1817. 

These  causes  came  before  this  court  on  writs  of  error  to  the 
Supreme  Court.  The  facts  in  all  were,  substantially,  the  same. 
See  Merritt  &  Merritt  v.  Clason,  12  Johns.  Rep.  102. 

The  Chancellor.     The  case  stnick  me  upon  the  argument  as 


Chap.  n.  §3.]  FORM:   STATUTE  OF  FRAUDS.  103 

being  very  plain.  But  as  it  may  have  appeared  to  other  mem- 
bers of  the  court  in  a  different,  or,  at  least,  in  a  more  serious 
light,  I  will  very  briefly  state  the  reasons  why  I  am  of  opinion 
that  the  judgment  of  the  Supreme  Court  ought  to  be  affirmed. 

The  contract  on  which  the  controversy  arises  was  made  in 
the  following  manner : 

Isaac  Clason  employed  John  Townsend  to  purchase  a  quan- 
tity of  rye  for  him.  He,  in  pursuance  of  this  authority,  pur- 
chased of  Bailey  &  Voorhees  3000  bushels,  at  one  dollar  per 
bushel,  and  at  the  time  of  closing  the  bargain,  he  wrote  a  mem- 
orandum in  his  memorandum  book  in  the  presence  of  Bailey  & 
Voorhees,  in  these  words  :  "  February  29th,  bought  for  Isaac 
Clason,  of  Bailey  &  Voorhees,  3000  bushels  of  good  merchant- 
able rye,  deliverable  from  the  5th  to  the  15th  of  April  next,  at 
one  dollar  per  bushel,  and  payable  on  delivery." 

The  terms  of  the  sale  and  purchase  had  been  previously  com- 
municated to  Clason,  and  approved  of  by  him,  and  yet  at  the 
time  of  delivery  he  refused  to  accept  and  pay  for  the  rye. 

The  objection  to  the  contract,  on  the  part  of  Clason,  is  that 
it  was  not  a  valid  contract  within  the  statute  of  frauds. 

1.  Because  the  contract  was  not  signed  by  Bailey  &  Voorhees. 

2.  Because  it  was  written  with  a  lead  pencil,  instead  of  pen 
and  ink. 

I  will  examine  each  of  these  objections. 

1.  It  is  admitted  that  Clason  signed  this  contract,  by  the  inser- 
tion of  his  name  by  his  authorized  agent,  in  the  body  of  the 
memorandum.  The  counsel  for  the  plaintiff  in  error  do  not  con- 
tend against  the  position  that  this  was  a  sufficient  subscription 
on  his  part.  It  is  a  point  settled,  that  if  the  name  of  a  party 
appears  in  the  memorandum,  and  is  applicable  to  the  whole 
substance  of  the  writing,  and  is  put  there  by  him  or  by  his 
authority,  it  is  immaterial  in  what  part  of  the  instrument  the 
name  appears,  whether  at  the  top,  in  the  middle,  or  at  the  bot- 
tom. Saunderson  v.  Jackson,  2  B.  &  Puller,  238;  Welford  v. 
Beazely,  3  Atk.  503 ;  Stokes  v.  Moore,  cited  by  Mr.  Coxe  in  a  note 
to  1  P.  Wms.  771.  Forms  are  not  regarded,  and  the  statute  is 
satisfied  if  the  terms  of  the  contract  are  in  writing,  and  the 
names  of  the  contracting  parties  appear.    Clason's  name  was  in- 


104  FORMATION  OF  CONTRACT.  [Part  U. 

serted  in  tlie  contract  by  his  authorized  agent,  and  if  it  were 
admitted  that  the  name  of  the  other  party  was  not  there  by 
their  direction,  yet  the  better  opinion  is,  that  Clason,  the  party 
who  is  sought  to  be  charged,  is  estopped,  by  his  name,  from  say- 
ing that  the  contract  was  not  duly  signed  within  the  purview 
of  the  statute  of  frauds  ;  and  that  it  is  sufficient,  if  the  agree- 
ment be  signed  by  the  party  to  be  charged. 

It  appears  to  me,  that  this  is  the  result  of  the  weight  of  au- 
thority both  in  the  courts  of  law  and  equity. 

In  Ballard  v.  Walker  (3  Johns,  Cases,  60),  decided  in  the  Su- 
preme Court,  in  1802,  it  was  held,  that  a  contract  to  sell  land,  signed 
by  the  vendor  only,  and  accepted  by  the  other  party,  was  binding 
on  the  vendor,  who  was  the  party  there  sought  to  be  charged. 
So  in  Boget  v.  Merrit  (2  Caines,  117)  an  agreement  concerning 
goods  signed  by  the  seller,  and  accepted  by  the  buyer,  was  con- 
sidered a  valid  agreement,  and  binding  on  the  party  who  signed  it. 

These  were  decisions  here,  under  both  branches  of  the  statute, 
and  the  cases  in  the  English  courts  are  to  the  same  effect. 

In  Saunderson  v.  Jackson  (2  Bos.  &  Pull.  238)  the  suit  was 
against  the  seller,  for  not  delivering  goods  according  to  a  mem- 
orandum signed  by  him  only,  and  judgment  was  given  for  the 
plaintiff,  notwithstanding  the  objection  that  this  was  not  a  suf- 
ficient note  within  the  statute.  In  Champion  v.  Plummer  (4  Bos. 
&  Pull.  252)  the  suit  was  against  the  seller,  who  alone  had 
signed  the  agreement.  No  objection  was  made  that  it  was  not 
signed  by  both  parties,  but  the  memorandum  was  held  defective, 
because  the  name  of  the  buyer  was  not  mentioned  at  all,  and  con- 
sequently there  was  no  certainty  in  the  writing.  Again,  in  Eger- 
ton  V.  Mathews  (6  East,  307)  the  suit  was  on  a  memorandum 
for  the  purchase  of  goods,  signed  only  by  the  defendant,  who  was 
the  buyer,  and  it  was  held  a  good  agreement  within  the  statute. 
Lastly,  in  Allen  v.  Bennet  (3  Taunton,  169)  the  seller  was  sued 
for  the  non-delivery  of  goods,  in  pursuance  of  an  agreement  signed 
by  him  only,  and  judgment  was  rendered  for  the  plaintiff.  In 
that  case  Ch.  J.  Mansfield  made  the  observation,  that  "  the  cases 
of  Egerton  v.  Mathews,  Saunderson  v.  Jackson,  and  Champion  v. 
^^Plummer,  suppose  the  signature  of  the  seller  to  be  sufficient ;  and 
every  one  knows  it  is  the  daily  practice  of  the  Court  of  Chancery 


Chap.  n.  §3.]  FORM:   STATUTE  OF  FRAUDS.  105 

to  establish  contracts  signed  by  one  person  only,  and  yet  a  court 
of  equity  can  no  more  dispense  with  the  statute  of  frauds  than  a 
court  of  law  can."  So  Lawrence,  J.,  observed,  that  "  the  statute 
clearly  supposes  the  probability  of  there  being  a  signature  by  one 
person  only." 

If  we  pass  from  the  decisions  at  the  law  to  the  courts  of  equity^ 
we  meet  with  the  same  uniform  construction.  Indeed,  Lord 
Eldon  has  said  (18  Vesey,  183)  that  chancery  professes  to  follow 
courts  of  laws  in  the  construction  of  the  statute  of  frauds. 

In  Hatton  v.  Gray  (2  Chan.  Cas.  164 ;  1  Eq.  Cas.  Abr.  21,  pi.  10) 
the  purchaser  of  the  land  signed  the  agreement,  and  not  the  other 
party,  and  yet  the  agreement  was  held  by  Lord  Keeper  North 
to  be  binding  on  him,  and  this  too  on  a  bill  for  a  specific  perform- 
ance. So  in  Coleman  v.  Upcot  (5  Viner,  527,  pi.  17)  the  Lord 
Keeper  Wright  held,  that  an  agreement  concerning  lands  was 
within  the  statute,  if  signed  by  the  party  to  be  charged,  and  that 
there  was  no  need  of  its  being  signed  by  both  parties,  as  the  plain- 
tiff, by  his  bill  for  a  specific  performance,  had  submitted  to  perform 
what  was  required  on  his  part  to  be  performed. 

Lord  Hardwicke  repeatedly  adopted  the  same  language.  In 
Buckho^ise  v.  Crosby  (2  Eq.  Cas.  Abr.  32,  pi.  44)  he  said  he 
had  often  known  the  objection  taken,  that  a  mutual  contract  in 
writing  signed  by  both  parties  ought  to  appear,  but  that  the  ob- 
jection had  as  often  been  overruled ;  and  in  Welford  v.  Beazely 
(3  Atk.  503)  he  said  there  were  cases  where  writing  a  letter, 
setting  forth  the  terms  of  an  agreement,  was  held  a  signing  within 
the  statute  ;  and  in  Owen  v.  Davies  (1  Ves.  82)  an  agreement  to 
sell  land,  signed  by  the  defendant  only,  was  held  binding. 

The  modern  cases  are  equally  explicit.  In  Cotton  v.  Lee,  before 
the  lords  commissioners,  in  1770,  Avhich  is  cited  in  2  Bro.  564,  it 
was  deemed  sufficient  that  the  party  to  be  charged  had  signed  the 
agreement.  So  in  Seton  v.  Slade  (7  Vesey,  275)  Lord  Eldon,  on 
a  bill  for  a  specific  performance  against  the  buyer  of  land,  said  that 
the  agreement  being  signed  by  the  defendant  only,  made  him  with- 
in the  statute,  a  party  to  be  charged.  The  case  of  Fowle  v.  Freeman 
(9  Vesey,  351)  was  an  express  decision  of  the  master  of  the  rolls, 
on  the  very  point  that  an  agreement  to  sell  lands,  signed  by  th& 
vendor  only,  was  binding. 


106  FORMATION  OF  CONTRACT.  [Part  II. 

There  is  nothing  to  disturb  this  strong  and  united  current  of 
authority  but  the  observations  of  Lord  Ch.  Redesdale,  in  Lawren- 
9on  V.  Butler  (1  Sch.  &  Lef.  13),  who  thought  that  the  contract 
ought  to  be  mutual  to  be  binding,  and  that  if  one  party  could  not 
enforce  it,  the  other  ought  not.  To  decree  performance,  when  one 
party  only  was  bound,  would  "  make  the  statute  really  a  statute 
of  frauds,  for  it  Avould  enable  any  person  who  had  procured 
another  to  sign  an  agreement,  to  make  it  depend  on  his  own  will 
and  pleasure  whether  it  should  be  an  agreement  or  not."  The 
intrinsic  force  of  this  argument,  the  boldness  with  which  it  was 
applied,  and  the  commanding  weight  of  the  very  respectable 
character  who  used  it,  caused  the  courts  for  a  time  to  pause. 
Lord  Eldon,  in  11  Vesey,  592,  out  of  respect  to  this  opinion, 
waived,  in  that  case,  the  discussion  of  the  point ;  but  the  courts 
have,  on  further  consideration,  resumed  their  former  track.  In 
Western  v.  Russell  (3  Vesey  &  Beames,  192)  the  master  of  the  rolls 
declared  he  was  hardly  at  liberty,  notwithstanding  the  consider- 
able doubt  thrown  upon  the  point  by  Lord  Redesdale,  to  refuse  a 
special  performance  of  a  contract  to  sell  land,  upon  the  ground 
that  there  was  no  agreement  signed  by  the  party  seeking  a  per- 
formance ;  and  in  Ormond  v.  Anderson  (2  Ball  &  Beatty,  370) 
"the  present  lord  chancellor  of  Ireland  (and  whose  authority,  if 
we  may  judge  from  the  ability  of  his  decisions,  is  not  far  short  of 
that  of  his  predecessor  )  has  not  felt  himself  authorized  to  follow 
the  opinion  of  Lord  Redesdale.  "  I  am  well  aware,"  he  observes, 
*'  that  a  doubt  has  been  entertained  by  a  judge  of  this  court,  of 
very  high  authority,  whether  courts  of  equity  would  specifically 
execute  an  agreement  where  one  party  only  was  bound ;  but  there 
exists  no  provision  in  the  statute  of  frauds  to  prevent  the  execu- 
tion of  such  an  agreement."  He  then  cites  with  approbation  what 
was  said  by  Sir  J.  Mansfield  in  Allen  v.  Bennet. 

I  have  thought,  and  have  often  intimated,  that  the  weight  of 
argument  was  in  favor  of  the  construction  that  the  agreement 
concerning  lands,  to  be  enforced  in  equity,  should  be  mutually 
binding,  and  that  the  one  party  ought  not  to  be  at  liberty  to 
enforce  at  his  pleasure  an  agreement  which  the  other  was  not 
entitled  to  claim.  It  appears  to  be  settled  {Hawkins  v.  Holmes, 
1  P.  Wms.  770)  that  though  the  plaintiff  has  signed  the  agree- 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  107 

merit,  he  never  can  enforce  it  against  the  party  who  has  not  signed 
it.  The  remedy,  therefore,  in  such  case  is  not  mutual.  But,  not- 
withstanding this  objection,  it  appears  from  the  review  of  the 
cases  that  the  point  is  too  well  settled  to  be  now  questioned. 

There  is  a  slight  variation  in  the  statute  respecting  agree- 
ments concerning  the  sale  of  lands,  and  agreements  concerning 
the  sale  of  chattels,  inasmuch  as  the  one  section  (being  the 
4th  section  of  the  English,  and  the  11th  section  of  our  statute) 
speaks  of  the  party,  and  the  other  section  (being  the  17th  of 
English,  and  the  15th  of  ours)  speaks  of  the  parties  to  be 
charged.  But  I  do  not  find  from  the  cases  that  this  variation 
has  produced  any  difference  in  the  decisions.  The  construc- 
tion, as  to  the  point  under  consideration,  has  been  uniformly 
the  same  in  both  cases. 

Clason,  who  signed  the  agreement,  and  is  the  party  sought  to 
be  charged,  is,  then,  according  to  the  authorities,  bound  by  the 
agreement,  and  he  cannot  set  up  the  statute  in  bar.  But  I  do 
not  deem  it  absolutely  necessary  to  place  the  cause  on  this 
ground,  though,  as  the  question  was  raised  and  discussed,  I 
thought  it  would  be  useful  to  advert  to  the  most  material  cases , 
and  to  trace  the  doctrine  through  the  course  of  authority.  In  my 
opinioi.,  the  objection  itself  is  not  well  founded  in  point  of  fact. 

The  names  of  Bailey  &  Voorhees  are  as  much  in  the  memo- 
randum as  that  of  Clason.  The  words  are,  "Bought  for  Isaac 
Clason,  of  Bailey  &  Voorhees,  3000  bushels,"  etc. ;  and  how  came 
their  names  to  be  inserted  ?  Most  undoubtedly  they  were  in- 
serted by  their  direction  and  consent,  and  so  it  appears  by  the 
special  verdict.  The  jury  find,  that  when  the  bargain  was 
closed,  Townsend,  the  agent  of  Clason,  did  at  the  time,  and  in 
their  presence,  write  the  memorandum ;  and  if  so,  were  not  their 
names  inserted  by  their  consent  ?  Was  not  Townsend  their 
agent  for  that  pui-pose  ?  If  they  had  not  assented  to  the  memo- 
randum, they  should  have  spoken.  But  they  did  assent,  for  the 
memorandum  was  made  to  reduce  the  bargain  to  writing  in  their 
presence  at  the  time  it  was  closed.  It  was,  therefore,  as  much 
their  memorandum  as  if  they  had  written  it  themselves.  Town- 
send  was,  so  far,  the  acknowledged  agent  of  both  parties.  The 
auctioneer  who  takes  down  the  name  of  a  buyer,  when  he  bids, 


108  FORMATION  OF  CONTRACT.  [Part  H. 

is,  quoad  hoe,  his  agent.  Emmerson  v.  Heelis,  2  Taunt.  38.  The 
contract  was,  then,  in  judgment  of  law  reduced  to  writing,  and 
signed  by  both  parties ;  and  it  appears  to  me  to  be  as  unjust  as  it 
is  illegal,  for  Clason  or  his  representatives  to  get  rid  of  so  fair  a 
bargain  on  so  groundless  a  pretext. 

2.  The  remaining  objection  is  that  the  memorandum  was  made 
with  a  lead  pencil. 

The  statute  requires  a  writing.  It  does  not  undertake  to 
define  with  what  instrument,  or  with  what  material,  the  contract 
ahall  be  written.  It  only  requires  it  to  be  in  writing,  and  signed, 
etc. ;  the  verdict  here  finds  that  the  memorandum  was  written, 
but  it  proceeds  further,  and  tells  us  with  what  instrument  it  was 
written,  viz.,  with  a  lead  pencil.  But  what  have  we  to  do  with 
the  kind  of  instrument  which  the  parties  employed  when  we 
find  all  that  the  statute  required,  viz.,  a  memorandum  of  the 
contract  in  writing,  together  with  the  names  of  the  parties  ? 

To  write  is  to  express  our  ideas  by  letters  visible  to  the  eye. 
The  mode  or  manner  of  impressing  those  letters  is  no  part  of 
the  substance  or  definition  of  writing.  A  pencil  is  an  instrument 
with  which  we  write  without  ink.  The  ancients  understood 
alphabetic  writing  as  well  as  we  do,  but  it  is  certain  that  the  use 
of  paper,  pen,  and  ink  was,  for  a  long  time,  unknown  to  them. 
In  the  days  of  Job  they  wrote  upon  lead  with  an  iron  pen.  The 
ancients  used  to  write  upon  hard  substances,  as  stones,  metals, 
ivory,  wood,  etc.,  with  a  style  or  iron  instrument.  The  next 
improvement  was  writing  upon  waxed  tables  ;  until  at  last  paper 
and  parchment  were  adopted,  when  the  use  of  the  calamus  or 
leed  was  introduced.  The  common  law  has  gone  so  far  to  regu- 
late writings,  as  to  make  it  necessary  that  a  deed  should  be 
written  on  paper  or  parchment,  and  not  on  wood  or  stone.  This 
was  for  the  sake  of  durability  and  safety;  and  this  is  all  the 
regulation  that  the  law  has  prescribed.  The  instrument  or  the 
material  by  which  letters  were  to  be  impressed  on  paper  or 
parchment  has  never  yet  been  defined.  This  has  been  left  to 
be  governed  by  public  convenience  and  usage ;  and  as  far  as 
questions  have  arisen  on  this  subject,  the  courts  have,  with  great 
latitude  and  liberality,  left  the  parties  to  their  own  discretion.  It 
has  accordingly  been  admitted  (2  Bl  Com.  297 ;  2  Bos.  &  Pull. 


Chap.  II.  §  3.]  FORM :  STATUTE  OF  FRAUDS.  109 

238 ;  3  Esp.  Rep.  180)  that  printing  was  writing  within  the  stat- 
ute, and  (2  Bro.  585)  that  stamping  was  equivalent  to  signing, 
and  (8  Vesey,  175)  that  making  a  mark  was  subscribing  within 
the  act.  I  do  not  find  any  case  in  the  courts  of  common  law  in 
which  the  very  point  now  before  us  has  been  decided,  viz., 
whether  writing  with  a  lead  pencil  was  sufficient ;  but  there  are 
several  cases  in  which  such  writings  were  produced,  and  no  objec- 
tion taken.  The  courts  have  impliedly  admitted  that  writing 
with  such  an  instrument,  without  the  use  of  any  liquid,  was 
valid.  Thus  in  a  case  in  Comyn's  Reports  (p.  451)  the  counsel 
cited  the  case  of  Loveday  v.  Claridge,  in  1730,  where  Loveday, 
intending  to  make  his  will,  pulled  a  paper  out  of  his  pocket, 
wrote  some  things  down  with  ink,  and  some  with  a  pencil,  and  it 
was  held  a  good  will.  But  we  have  a  more  full  and  authentic 
authority  in  a  late  case  decided  at  doctors'  commons  (Byrnes  v. 
Clarkson,  1  Phillim.  Rep.  22.),  where  the  very  question  arose  on 
the  validity  of  a  codicil  written  with  a  pencil.  It  was  a  point 
over  which  the  prerogative  court  had  complete  jurisdiction,  and 
one  objection  taken  to  the  codicil  was  the  material  with  which  it 
was  written ;  but  it  was  contended,  on  the  other  side,  that  a  man 
might  write  his  will  with  any  material  he  pleased,  quocunque 
modo  velit,  quocunque  modo  possit,  and  it  was  ruled  by  Sir  John 
Nicholl,  that  a  will  or  codicil  written  in  pencil  was  valid  in  law. 

The  statute  of  frauds,  in  respect  to  such  contracts  as  the  one 
before  us,  did  not  require  any  formal  and  solemn  instrument.  It 
only  required  a  note  or  memorandum,  which  imports  an  informal 
writing  done  on  the  spot,  in  the  moment  and  hurry  and  tumult 
of  commercial  business.  A  lead  pencil  is  generally  the  most 
accessible  and  convenient  instrument  of  writing  on  such  occa- 
sions, and  I  see  no  good  reason  why  we  should  wish  to  put  an 
interdict  on  all  memoranda  written  with  a  pencil.  I  am  persuaded 
it  would  be  attended  with  much  inconvenience,  and  afford  more 
opportunities  and  temptation  to  parties  to  break  faith  with  each 
other,  than  by  allowing  the  writing  with  a  pencil  to  stand.  It  is 
no  doubt  very  much  in  use.  The  courts  have  frequently  seen 
such  papers  before  them,  and  have  always  assumed  them  to  be 
valid.     This  is  a  sanction  not  to  be  disregarded. 

I  am,  accordingly,  of  opinion  that  the  judgment  of  the  Supreme 
Court  ought  to  be  affirmed. 


110  FORMATION  OF  CONTRACT.  [Part  U. 

This  was  the  opinion  of  the  court.  (Elmendorf  &  Livingston, 
senators,  dissenting.) 

It  was  thereupon  ordered,  adjudged,  and  decreed,  that  the 
judgment  of  the  Supreme  Court  be,  in  all  things,  affirmed,  and 
that  the  defendant  recover  from  the  plaintiffs  their  double  costs, 
to  be  taxed,  and  that  the  record  be  remitted,  etc. 

Judgment  affirmed.* 


(ii.)  Provisio7is  of  fourth  section. 

a.  Special  promise  by  an  executor  or  administrator  to  answer 
damages  out  of  his  own  estate. 

BELLOWS  V.  SOWLES. 

67  VERMONT,  IW.  — 1884. 

Assumpsit.  Heard  on  demurrer  to  the  declaration.  The  dec. 
laration  alleged  that  plaintiff,  a  relative  and  heir  at  law  of 
defendant's  testator,  being  left  out  of  the  will  of  the  testator, 
had  employed  counsel,  etc.,  to  contest  the  will,  and  that  defendant, 
being  executor  and  himself  a  legatee,  and  the  husband  of  the 
principal  legatee,  had  also  employed  counsel  to  defend  the  will, 
and  that  the  parties  met  and  agreed  that  if  plaintiff  would  for- 
bear to  contest  the  will,  defendant  would  pay  the  plaintiff  the 
sum  of  five  thousand  dollars,  and  that  although  plaintiff  did  for- 
bear and  the  will  was  duly  probated,  defendant  failed  and  refused 
to  pay  the  amount  agreed  on. 

Powers,  J.  Counsel  for  the  defendant  have  demurred  to  the 
declaration  in  this  case  upon  two  grounds;  first,  that  the  con- 
sideration alleged  is  insufficient;  secondly,  that  the  promise  not 
being  in  writing  comes  within,  and  is  therefore  not  enforceable 
under,  the  statute  of  frauds. 

It  has  been  so  often  held  that  forbearance  of  a  legal  right 
affords  a  sufficient  consideration  upon  which  to  found  a  valid 
contract,  and  that  the  consideration  required  by  the  statute  of 
frauds  does  not  differ  from  that  required  by  the  common  law,  it 
does  not  appear  to  us  to  be  necessary  to  review  the  authorities 

1  Contra :  Wilkinson  v.  Heavenrich,  58  Mich.  574. 


Chap.  II.  §3.]  FORM:  STATUTE  OF  FRAUDS.  Ill 

or  discuss  the  principle.  As  to  the  second  point  urged  in  behalf 
of  the  defendant,  this  case  presents  greater  difficulties.  Although 
the  statute  of  frauds  was  enacted  two  centuries  ago,  and  even 
then  was  little  more  than  a  re-enactment  of  the  pre-existing  com- 
mon law,  and  though  cases  have  continually  arisen  under  it,  both 
in  England  and  America,  yet  so  confusing  and  at  times  inconsistent 
are  the  decisions,  that  its  consideration  is  always  attended  with 
difficulty  and  embarrassment. 

The  best  understanding  of  the  statute  is  derived  from  the 
language  itself,  viewed  in  the  light  of  the  authorities  which  seem 
to  us  to  interpret  its  meaning  as  best  to  attain  its  object.  That 
clause  of  the  statute  under  which  this  case  falls,  reads:  "No 
action  at  law  or  in  equity  shall  be  brought  ,  .  .  upon  a  special 
promise  of  an  executor  or  administrator  to  answer  damages  out 
of  his  own  estate."  « 

This  special  promise  referred  to  is,  in  short,  any  actual  promise 
made  by  an  executor  or  administrator,  in  distinction  from  promises 
implied  by  law,  which  are  held  not  within  the  statute. 

The  promise  must  be  "  to  answer  damages  out  of  his  own  estate." 
This  phraseology  clearly  implies  an  obligation,  duty,  or  liability 
on  the  part  of  the  testator's  estate,  for  which  the  executor  promises 
to  pay  damages  out  of  his  own  estate.  The  statute,  then,  was 
enacted  to  prevent  executors  or  administrators  from  being  fraud- 
ulently held  for  the  debts  or  liabilities  of  the  estates  upon  which 
they  were  called  to  administer.  In  this  view  of  the  case,  this 
clause  of  the  statute  is  closely  allied,  if  not  identical  in  principle, 
with  the  following  clause,  namely:  "No  action,  etc.,  upon  a 
special  promise  to  answer  for  the  debt,  default,  or  misdoings  of 
another."  And  so  Judge  Royce,  in  delivering  the  opinion  of  the 
court  in  Harrington  v.  Rich  (6  Vt.  666),  declares  these  two  classes 
of  undertakings  to  be  "  very  nearly  allied,"  and  considers  them 
together.  This  seems  to  us  to  be  the  true  idea  of  this  clause  of 
the  statute :  —  that  the  undertaking  contemplated  by  it,  like  that 
contemplated  by  the  next  clause,  is  in  the  nature  of  a  guaranty; 
and  that  reasoning  applicable  to  the  latter  is  equally  applicable 
to  the  former. 

We  believe  this  view  to  be  well  supported  by  the  authorities. 
Browne,  in  his  work  on  the  Statute  of  Frauds,  p.  150,  says :  "  In 


112  FORMATION  OF  CONTRACT.  [Pabt  II. 

the  fourth  section  of  the  Statute  of  Frauds,  special  promises  of 
executors  and  administrators  to  answer  damages  out  of  their  own 
estates  appear  to  be  spoken  of  as  one  class  of  that  large  body  of  con- 
tracts known  as  guaranties."  And  so  on  page  184,  he  interprets 
"  to  answer  damages  "  as  equivalent  to  to  pay  debts  of  the  decedent. 
This  seems  to  be  the  construction  given  to  the  statute  by  Chief 
Justice  Redfield,  in  his  work  on  Wills.     Vol.  2,  p.  290,  et  seq. 

The  Revised  Statutes  of  New  York,  Vol.  2,  p.  113,  have  im- 
proved upon  the  phraseology  of  the  old  statute  as  we  have 
adopted  it,  by  adding  or  to  pay  the  debts  of  the  testator  or  intestate 
out  of  his  own  estate. 

If  we  are  correct  in  this  view  of  the  relation  between  these  two 
clauses,  the  solution  of  the  question  presented  by  this  case  is  com- 
paratively easy. 

It  has  been  held  in  this  State,  that  when  the  contract  is  founded 
upon  anew  and  distinct  consideration  moving  between  the  parties, 
the  undertaking  is  original  and  independent,  and  not  within  the 
statute.  Templeton  v.  Bascom,  33  Vt.  132 ;  Cross  v.  Richardson, 
30  Vt.  641 ;  Lampson  v.  Hobart,  28  Vt.  697.  Whether  or  not  it 
would  be  safe  to  announce  this  as  a  general  rule  of  universal 
application,  it  is  a  principle  of  law  well  fortified  by  authority, 
that  where  the  principal  or  immediate  object  of  the  promisor  is 
not  to  pay  the  debt  of  another,  but  to  subserve  some  purpose  of 
his  ovm,  the  promise  is  original  and  independent,  and  not  within 
the  statute.  Brandt  Sur.  72 ;  3  Par.  Cont.  24 ;  Rob.  Fr.  232 ; 
Emerson  v.  Slater,  22  How.  28.  And  this  seems  to  be  the  real 
ground  of  the  decisions  above  cited  in  the  28th  and  30th  Vt.,  in 
which  the  court  seems  to  blend  the  two  rules  just  laid  down. 

Pierpoint,  J.,  in  delivering  the  opinion  of  the  court  in  Cross 
V.  Richardson,  supra,  says  :  "  The  consideration  must  be  not  only 
sufficient  to  support  the  promise,  but  of  such  a  nature  as  to  take 
the  promise  out  of  the  statute ;  and  that  requisite,  we  think,  is  to 
be  found  in  the  fact  that  it  operates  to  the  advantage  of  the 
promisor,  and  places  him  under  a  pecuniary  obligation  to  the 
promisee,  entirely  independent  of  the  original  debt." 

Apply  this  rule  to  this  case.  Here  the  main  purpose  of  this 
promise  was,  not  to  answer  damages  (for  the  testator)  out  of  his 
own  estate,  but  was  entirely  to  subserve  some  purpose  of  the 


Chap.  n.  §3.]  FORM:   STATUTE  OF  FRAUDS.  113 

defendant.  The  consideration  did  not  affect  the  estate,  but  was 
a  matter  purely  personal  to  the  defendant.  Here  there  was  no 
liability  or  obligation  on  the  part  of  the  estate  to  be  answered 
for  in  damages.  It  could  make  no  difference  to  the  executor  of 
that  estate  whether  it  was  to  be  divided  according  to  the  will,  or 
by  the  law  of  descent.  If  the  subject  matter  of  this  contract  had 
been  something  entirely  foreign  to  this  estate,  no  one  would 
maintain  that  the  defendant  was  not  bound  by  it,  because  he 
happened  to  be  named  executor  in  this  will.  Here  the  subject 
matter  of  the  contract  was  connected  with  the  estate,  but  in  such 
a  way  that  it  was  practically  immaterial  to  the  estate  which  way 
the  question  was  decided.  There  exists,  therefore,  in  this  case, 
no  sufficient,  actual,  primary  liability  to  which  this  promise  could 
be  collateral.  This  seems  to  us  to  be  the  fairest  interpretation 
of  the  law.  The  statute  was  passed  for  the  benefit  of  executors 
and  administrators ;  but  it  might  be  said  of  it,  as  has  been  said 
of  the  protection  afforded  to  an  infant  by  the  law  of  contracts, 
that  "  it  is  a  shield  to  protect,  not  a  sword  to  destroy."  If  this 
class  of  contracts  was  allowed  to  be  avoided  under  it,  instead  of 
being  a  prevention  of  frauds,  it  would  become  a  powerful  instru- 
ment for  fraud.  As  in  this  case  the  plaintiff  would  be  deprived 
of  his  legal  right  to  contest  the  will,  by  a  party  who  has  reaped 
all  the  benefits  of  the  transaction,  and  is  shielded  from  responsi- 
bility by  a  technicality.  We  do  not  believe  this  was  the  result 
contemplated  by  the  statute. 

The  judgment  of  the  County  Court  overruling  the  demurrer  and 
adjudging  the  declaration  sufficient  is  affirmed,  and  case  remanded 
with  leave  to  the  defendant  to  replead  on  the  usual  terms. 


6.   Any  promise  to  answer  for  the  debt,  default,  or  miscarnage  of 
another. 

MAY  V.  WILLIAMS. 
61  MISSISSIPPI,  125.  — 1883. 

Cooper,  J.     It  was  not  an  error  for  the  court  below  to  permit 
an  amendment  to  be  made  of  the  affidavit  on  which  the  writ  of 


114  FORMATION  OF  CONTRACT.  [Part  H. 

seizure  was  issued.  Louisa  Williams  and  her  infant  sisters  were 
jointly  interested  under  the  contract  with  Mrs.  May  in  the  fruits 
of  their  labor.  In  the  original  affidavit  Louisa  Williams  had 
demanded  in  her  own  name  the  interest  of  all  the  laborers  in  the 
crop,  and  the  amendment  was  necessary  to  bring  before  the  court 
all  the  joint-owners  of  the  claim  propounded.  A  suit  to  enforce 
a  laborer's  lien  is,  under  the  Code  of  1880,  c.  52,  a  proceeding 
partly  in  rem  and  partly  in  personam.  A  general  judgment  is 
rendered  in  personam  for  the  amount  found  due,  and  the  property 
seized  is  condemned  to  be  sold  for  its  satisfaction.  It  is  the 
amount  demanded  and  not  the  value  of  the  property  seized  which 
determines  the  jurisdiction  of  the  court.  Code  1880,  §  1365.  In 
suits  oE  this  character  the  question  of  cost  is  left  to  the  discretion 
of  the  presiding  judge,  and  costs  should  be  awarded  in  each  case 
against  the  party  by  whom,  in  view  of  all  the  circumstances,  it  is 
equitable  they  should  be  borne.     Code  1880,  §  1369. 

On  the  trial  the  defendant  proposed  to  prove  that  in  the  spring 
of  the  year  in  which  the  crop  sued  for  was  planted,  the  husband 
of  the  plaintiff,  Louisa  Williams,  was  incarcerated  in  the  jail  of 
Noxubee  County  on  the  charge  of  grand  larceny,  and  that  Louisa 
Williams  applied  to  her,  the  defendant,  to  become  surety  on  his 
bail-bond,  and  verbally  agreed  that  if  the  defendant  would  become 
so  bound,  the  interest  in  the  crop  to  be  raised  which  belonged  to 
Louisa  and  to  her  infant  sisters  should  remain  in  the  hands  of  the 
defendant  to  indemnify  her  against  the  default  of  the  husband ; 
that  in  consideration  of  such  agreement  the  defendant  became 
surety  as  requested ;  that  Williams,  the  accused,  had  absconded, 
and  that  a  judgment  nisi  had  been  rendered  against  the  defendant 
for  the  sum  of  two  hundred  dollars  upon  the  forfeited  bond. 
Upon  the  objection  of  the  plaintiffs  the  evidence  was  excluded 
by  the  court  as  being  a  parol  promise  to  answer  for  the  "  debt  or 
default  or  miscarriage  of  another,"  and,  therefore,  unenforceable 
under  the  statute  of  frauds. 

There  is  great  conflict  of  authority  upon  the  question  whether 
a  parol  promise  to  indemnify  one  who  becomes  surety  for  another 
at  the  request  of  the  promisor  is  within  that  clause  of  the  statute 
of  frauds  which  declares  that  "  no  action  shall  be  brought  whereby 
to  charge  the  defendant  upon  any  special  promise  to  answer  for 


Chap.  II.  §  3.]  FORM:   STATUTE  OF  FRAUDS.  116 

the  debt  or  default  or  miscarriage  of  another  person,  unless  the 
promise  or  agreement  upon  which  such  action  shall  be  brought, 
or  some  memorandum  or  note  thereof,  shall  be  in  writing,  and 
signed  by  the  party  to  be  charged  therewith,  or  some  other  person 
by  him  or  her  thereunto  lawfully  authorized."  In  England  the 
courts  have  vacillated  upon  the  question,  and  the  courts  of  this 
country  have,  to  a  considerable  extent,  taken  position  with  that 
view  which  at  the  time  of  the  several  decisions  prevailed  in  Eng- 
land. In  Thomas  v.  Cook  (8  B.  &  C.  728)  a  promise  to  indemnify 
was  held  not  to  be  within  the  statute.  In  Oreen  v.  CressweU 
(10  Ad.  &  E.  453)  the  contrary  view  was  announced.  In  Cripps  v. 
Hartnoll  (4  B.  &  S.  414)  the  distinction  was  drawn  between  those 
cases  in  which  the  promisee  was  surety  upon  a  bond  by  which  the 
principal  was  bound  to  answer  a  criminal  charge  and  those  in 
which  the  bond  was  given  in  a  civil  cause,  the  court  saying  that 
there  was  no  implied  contract  on  the  part  of  a  principal  who  was 
bound  over  to  answer  a  criminal  charge  to  indemnify  his  surety, 
and,  therefore,  that  the  promise  of  the  promisee  did  not  come  in 
aid  of  that  of  another  person,  for  which  reason  it  Avas  decided 
that  the  promise  in  that  case  was  not  obnoxious  to  the  statute^ 
In  Wildes  v.  Dudlow  (L.  fl.  19  Eq.  198)  Vice-Chancellor  Malins 
treated  the  case  of  Green  v.  CressweU  as  virtually  overruled  by 
Cripps  V.  Hartnoll,  and  in  Reader  v.  Kingham  (13  C.  B.  N.  S, 
344)  it  was  held  that  a  promise,  to  be  within  the  statute,  must  be 
made  to  the  promisee  to  pay  a  debt  due  by  another  to  him.  It 
may  therefore  be  considered  that  in  England  Oreen  v.  CressweU 
has  been  overruled,  and  the  doctrine  of  Thomas  v.  Cook  re- 
established. 

In  this  country  the  States  of  Massachusetts,  Maine,  New 
Hampshire,  Georgia,  Kentucky,  Iowa,  Indiana,  Minnesota,  Wis- 
consin, Vermont,  and  Connecticut  have  followed  the  authority  of 
Thomas  v.  Cook,  while  South  Carolina,  North  Carolina,  Missouri, 
Alabama,  and  Ohio  have  adhered  to  the  rule  announced  in  Green 
V.  CressweU.  See  authorities  cited  in  Browne  on  the  Statute  of 
Frauds,  §§  161-161  c;  Anderson  v.  Spence,  72  Ind.  315.  In  this 
conflict  of  American  authority,  produced  in  no  inconsiderable 
degree  by  the  inconstancy  of  the  English  courts,  the  weight  in 
numbers  is  in  favor  of  the  rule  that  such  promises  are  not  within 


116  FORMATION  OF  C0NTRAC5T.  [Pabt  IL 

the  statute ;  but  an  examination  of  the  cases  holding  this  view 
discloses  equally  as  great  conflict  among  themselves  as  to  the 
principle  upon  which  the  decisions  are  rested.  In  Cripps  v. 
Hartnoll  a  promise  to  indemnify  was  held  not  to  be  within  the 
statute,  because  the  bond  was  given  in  a  criminal  proceeding,  and 
in  such  cases,  it  was  said,  there  is  no  contract  on  the  part  of  the 
person  bailed  to  indemnify  the  surety.  In  Holmes  v.  Knights  (10 
N.  H.  175)  it  was  suggested  that  the  principal  would  not  be 
bound  to  indemnify  the  surety  unless  he  had  requested  him  to 
become  bound;  but,  passing  this  question  by,  the  decision  was 
put  upon  the  ground  that  the  obligation  of  the  principal,  if  it 
existed  at  all,  was  an  implied  one,  and  its  existence  would  not 
prevent  the  surety  from  proceeding  against  the  parol  promisor, 
who  was  bound  by  express  agreement,  the  court  saying  that  if 
either  was  to  be  deemed  collateral,  the  liability  of  the  principal, 
in  such  a  case,  would  seem  to  be  collateral  to  that  of  the  defend- 
ant. In  Reader  v.  Kingham  (13  C.  B.  N.  S.  344),  Wildes  y.  Dud- 
low  (L.  R.  19  Eq.  198),  Aldrich  v.  Ames  (9  Gray  76),  and  Ander- 
*on  V.  Spence  (72  Ind.  315),  and  many  other  cases,  the  promise  is 
held  not  to  be  within  the  statute,  because  it  is  said  not  to  be 
made  to  the  creditor,  but  to  one  who  is  debtor,  while  in  Dunn  v. 
West  (5  B.  Mon.  376)  and  Lucas  v.  Chamberlain  (8  B.  Mon.  276) 
the  promise  was  held  to  be  enforceable,  because  the  implied  obli- 
gation of  the  principal  to  indemnify  his  surety  is  said  to  arise 
from  a  subsequent  fact,  to  wit,  the  payment  of  the  debt  by  the 
surety.  Upon  some  one  or  the  other  of  these  principles  the  cases 
holding  this  view  which  are  most  approved  by  the  text-writers 
are  based,  though  there  are  others  in  which  other  reasons  are 
given,  as  in  Read  v.  Nash,  1  Wils.  305 ;  D'  Wolf  v.  Rabaud,  1 
Peters,  476 ;  Emerson  v.  Slater,  22  How.  U.  S.  28. 

Notwithstanding  the  number  of  cases  in  which  these  views  are 
announced,  we  are  satisfied,  upon  an  examination  of  the  subject,  to 
take  our  stand  with  those  courts  which  hold  such  promises  to  be 
within  the  statute  and  unenforceable,  unless  evidenced  by  writing. 
We  do  not  assent  to  the  proposition  that  a  principal  in  a  bail- 
bond  is  not  under  an  implied  contract  to  indemnify  his  surety. 
He  knows  that  the  law  requires  some  one  to  be  bound  for  his 
appearance  as  a  condition  to  his   discharge  from  custody ;   he 


Chap.  H.  §  3.]  FORM:  STATUTE  OF  FRAUDS.  117 

executes  the  instrument  by  which  the  surety  is  bound,  and  by  the 
bond  he  becomes  bound  as  principal  to  that  surety.  By  execut- 
ing the  bond  and  accepting  the  benefits  which  flow  from,  he 
assumes  the  duties  and  obligations  which  spring  out  of,  his 
engagement,  whether  due  to  the  State  or  to  his  surety.  Why 
should  a  different  rule  be  applied  where  one  is  bound  to  appear 
to  answer  a  criminal  charge  than  would  be  applicable  if  the 
thing  to  be  done  was  the  performance  of  physical  labor,  the 
proper  administration  of  an  estate,  or  the  doing  of  any  other  act 
by  the  principal  ?  Where  the  engagement  is  made  with  the 
knowledge  and  consent  of  the  principal  debtor,  there  is  in  point 
of  law  an  implied  request  from  the  latter  to  the  surety  to  inter- 
vene in  the  principal's  behalf  if  the  latter  makes  default,  and 
money  paid  by  the  surety  for  the  purpose  of  discharging  the 
claim  against  the  principal  is  money  paid  for  the  use  of  the  prin- 
cipal at  his  request,  which  may  be  recovered  from  the  latter. 
Exall  V.  Partridge,  8  T.  E.  308. 

It  cannot  be  said  that  the  promise  to  indemnify  the  surety  is 
made  to  him  as  debtor  and  not  as  creditor.  It  is  true  that  both 
the  principal  and  surety  are  bound  to  the  fourth  person,  the 
State ;  but  the  contract  of  the  promisor  is  not  to  discharge  that 
obligation.  He  assumes  no  duty  or  debt  to  the  State,  nor  does 
he  agree  with  the  promisee  to  pay  to  the  State  the  debt  which 
may  become  due  to  it  if  default  shall  be  made  by  the  principal 
in  the  bond.  It  is  only  when  the  promisee  has  changed  his 
relationship  of  debtor  to  the  State  and  assumed  that  of  creditor 
to  his  principal  by  paying  to  the  State  the  penalty  for  which 
both  he  and  his  principal  were  bound  that  a  right  arises  to  go 
against  the  guarantor  on  his  contract.  It  is  to  one  who  is  under 
a  conditional  and  contingent  liability  that  the  promise  is  made ; 
but  it  is  to  him  as  creditor,  and  not  as  debtor,  that  a  right  of 
action  arises  on  it.  Nor  do  we  think  it  sufficient  to  take  the 
case  from  the  operation  of  the  statute  that  the  liability  of  the  prin- 
cipal arises  by  implication  rather  than  by  express  contract.  The 
statute  makes  no  distinction  between  a  debt  due  on  an  implied 
and  one  due  by  express  contract.  It  is  the  existence  of  the 
debt  against  the  principal,  and  not  the  manner  in  which  it 
originates,  that  makes  voidable  a  parol  promise  by  another  to 


118        •  FORMATION  OF  CONTRACT.  [Part  II. 

become  responsible  for  its  payment.  Nor  are  we  able  to  per- 
ceive that  the  contract  of  the  promisee  is  anterior  to  that  of  the 
principal  in  the  bond.  Until  the  surety  assumes  responsibility 
by  executing  the  bond,  the  agreement  of  the  promisor  to  indem- 
nify is  only  a  proposition  which  may  be  withdrawn  by  him  or 
declined  by  the  promisee.  It  is  only  when  the  proposition  is 
acted  on  by  the  promisee  that  the  contract  becomes  absolute; 
but  at  the  very  instant  that  it  thus  becomes  a  contract  there 
also  springs  up  an  implied  contract  of  the  principal  to  do  and 
perform  the  same  act,  viz.,  to  indemnify  the  surety  against  loss. 
It  arises  at  the  same  moment,  exists  to  the  same  extent,  is  sup- 
ported by  the  same  consideration,  broken  at  the  same  instant, 
and  is  discharged  by  the  same  act,  whether  it  be  done  by  the 
principal  in  the  bond  or  by  the  promisee  in  the  contract  to 
indemnify.  It  is  the  debt  of  the  principal ;  and,  being  his  debt, 
no  third  person  can  be  bound  for  its  payment  unless  the  contract 
be  evidenced  by  writing.  This,  we  think,  is  the  fair  import  of 
the  statute  and  it  ought  not  to  be  refined  or  frittered  away. 

Judgment  affirmed.^ 


c.  Contract  for  sale  of  lands  or  hereditaments,  or  any  interest  in 
or  concerning  them. 

HEYN  V.   PHILIPS. 

37  CALIFORNIA,  529.— 1869. 

Appeal  from  the  District  Court,  Third  Judicial  District,  Ala- 
meda County.     Judgment  for  defendant.     Plaintiff  appeals. 

Sawyer,  C.  J.  The  question  in  this  case  is,  whether  the 
contract  sued  on  and  proved  is  a  contract  "  for  the  sale  of  any 
lands,  or  interest  in  lands,"  within  the  meaning  of  the  eighth 
section  of  the  statute  of  frauds,  and  which  is  required  to  be  in 
writing,  and  subscribed  by  the  party  to  be  charged. 

The  contract  alleged  is,  that  defendant  employed  said  plaintiff 

1  Contra,  with  review  of  cases,  Anderson  v.  Spence,  72  Ind.  315.  For 
a  case  that  escapes  the  statute,  where  the  primary  debt  does  subsist,  see 
White  V.  Rintoul,  108  N.  Y.  222. 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  119 

to  negotiate  a  sale  of  certain  described  lands,  and  find  a  pur- 
chaser for  the  same;  that  it  was 

"  stipulated  and  agreed  by  and  between  said  defendant  and  said  plaintiff, 
that  if  said  plaintiff  would  and  should,  within  ten  days  from  said  last- 
named  day,  find  a  purchaser  or  purchasers  xor  said  land,  at  the  price  of 
two  hundred  dollars  per  acre,  that  the  said  defendant  would  sell  and 
convey  the  same  for  that  sum  to  such  purchaser  or  purchasers,  and  that 
said  plaintiff  might  and  should  have  for  his  services  in  making  such 
negotiation  and  finding  a  purchaser  or  purchasers,  all  that  might  or 
could  be  obtained  from  such  purchaser  or  purchasers  over  said  sum  of 
two  hundred  dollars  per  acre  ;  " 

that  plaintiff  found  a  purchaser  at  that  sum  and  four  thousand 
dollars  over;  that  said  purchaser  tendered  the  money  to  defendant 
and  demanded  a  conveyance,  and  that  said  defendant  refused  to 
receive  said  sum,  or  make  a  conveyance,  whereby  plaintiif  was 
prevented  from  receiving  the  said  excess  of  four  thousand  dol- 
lars as  compensation  for  his  services. 

It  does  not  appear  to  us  that  this  is  a  contract  for  the  sale  of 
land,  or  an  interest  in  land,  within  the  meaning  of  the  statute 
of  frauds.  It  was  a  mere  contract  of  employment  between  the 
plaintiff  and  defendant.  There  was  no  sale  of  land  from  the 
defendant  to  the  plaintiff.  The  plaintiff  was  simply  employed 
to  find  a  purchaser  for  defendant's  land  at  a  given  price  to  be 
realized  by  defendant,  and  the  compensation  to  be  received  by 
plaintiff  was  to  be  such  sum  as  he  could  get  for  the  land  over  the 
given  price.  It  is  true  that  defendant  agreed  that  in  case  a  pur- 
chaser should  be  found  willing  to  pay  the  given  price  or  a  larger 
sum,  he  would  convey  to  such  purchaser  upon  the  receipt  of  the 
money  so  as  to  enable  plaintiff  to  realize  the  compensation,  and 
he  did  not  agree  to  pay  anything  himself,  but  this  was  still  but 
a  mode  of  ascertaining  and  obtaining  a  compensation  for  plain- 
tiff's services.  The  plaintiff  had  no  interest,  and  was  to  have 
no  interest  whatever  in  the  land,  as  such.  The  contract  was  sub- 
stantially one  of  employment  to  find  a  purchaser  of  land,  and 
not  as  between  the  parties  a  sale  or  agreement  to  sell  land,  or 
any  interest  in  land.  The  subject  matter  of  the  contract  was 
the  business  of  finding  a  party  who  would  purchase  the  land  for 
a  given  price  and  such  sum  over  as  would  compensate  the  plain- 
tiff for  his  services.     He  found  a  purchaser,  and  he  was  pre- 


120  FORMATION  OP  CONTRACT.  [Pabt  U. 

vented  from  receiving  his  compensation  by  the  refusal  of  the 
defendant  to  enter  into  the  contract  of  sale  with  the  purchaser 
found  by  plaintiff. 

We  think  the  judgment  and  order  denying  a  new  trial  should 
be  reversed  and  a  new  trial  had,  and  it  is  so  ordered. 


d.  Agreement  not  to  be  performed  within  the  spnce  of  one  year 
from  the  making  thereof. 

PETERS  V.   WESTBOROUGH. 

19  PICKERING  (Mass.),  364.  — 1837. 

Assumpsit  for  expenses  incurred,  etc.,  in  the  support  of  Cath- 
arine Ladds,  from  March  2,  1835,  until  her  death. 

At  the  trial  in  the  Common  Pleas,  before  Strong,  J.,  it  ap- 
peared that  the  plaintiff  was  an  inhabitant  of  Westborough ;  that 
Catharine  Ladds  was  the  daughter  of  John  Ladds,  who  resided 
in  a  neighboring  town;  that  she  came  into  the  family  of  the 
plaintiff  in  March,  1834,  when  she  was  eleven  or  twelve  years  of 
age,  and  remained  there  until  her  death,  which  took  place  on 
the  31st  of  May,  1835,  after  a  sickness  of  four  or  five  months ; 
that  on  the  2d  of  March,  1835,  the  plaintiff  gave  notice  of  her 
illness  to  one  of  the  overseers  of  the  poor  of  Westborough,  and 
requested  that  she  might  be  supported  by  the  town ;  but  that  no 
action  was  taken  by  them  on  the  subject. 

The  counsel  of  the  defendants  then  proposed  to  show  by  parol 
evidence,  that  a  short  time  before  Catharine  went  into  the  plain- 
tiff's family,  it  was  agreed  between  him  and  her  father  that  the 
plaintiff  should  take  her  into  his  family  and  employment  for 
one  month  on  trial,  and  if,  at  the  end  of  the  month,  he  was  not 
satisfied  with  her,  he  might  return  her  to  her  father,  but  that, 
otherwise,  he  should  support  her  until  she  was  eighteen  years  of 
age,  and  should  not  return  her  for  any  cause  but  bad  conduct  on 
her  part;  that,  in  pursuance  of  this  agreement,  she  went  into 
the  family  of  the  plaintiff,  and  that  at  the  end  of  the  month  the 
plaintiff  expressed  himself  to  be  satisfied  with  her,  and  never 
offered  to  return  her  to  her  father. 


Chap.  n.  §3.]  FORM:   STATUTE  OF  FRAUDS.  121 

The  plaintiff  objected  to  the  introduction  of  this  evidence,  on 
the  ground  that  the  contract  not  being  in  writing,  was  void  hy 
the  statute  of  frauds. 

The  judge  ruled,  that,  as  this  contract  was  by  parol,  it  was 
competent  for  the  plaintiff  to  put  an  end  to  it  at  any  time,  and 
that,  after  the  notice  given  to  the  overseers  on  the  2d  of  March, 
1835,  the  plaintiff  ceased  to  be  liable  for  the  support  of  the 
pauper;  and  the  evidence  was  accordingly  rejected. 

The  jury  returned  a  verdict  for  the  plaintiff.  The  defendant 
excepted  to  the  ruling  of  the  judge. 

Wilde,  J.  This  case  depends  on  the  question,  whether  the 
plaintiff  was  not,  by  his  contract,  as  it  was  offered  to  be  proved 
by  the  defendants,  bound  to  support  the  pauper  for  the  expenses 
of  whose  support  the  defendants  are  charged;  and  we  are  of 
opinion  that  he  was  so  bound  by  his  contract  with  the  pauper's 
father.  This  was  clearly  a  valid  contract,  unless,  being  by  parol, 
it  was  void  by  the  statute  of  frauds,  as  an  agreement  not  to  be 
performed  within  the  space  of  one  year  from  the  making  thereof. 
St.  1788,  c.  16,  §  1.  But  this  clause  of  the  statute  extends  only 
to  such  agreements  as,  by  the  express  appointment  of  the  parties, 
are  not  to  be  performed  within  a  year.  If  an  agreement  be  capa 
ble  of  being  performed  within  a  year  from  the  making  thereof, 
it  is  not  within  the  statute,  although  it  be  not  actually  performed 
till  after  that  period.  1  Com.  on  Contr.  86.  On  this  construc- 
tion of  the  statute  it  was  decided,  in  an  anonymous  case  in  1 
Salk.  280,  that  a  parol  promise  to  pay  so  much  money  upon  the 
return  of  a  certain  ship  was  not  within  the  statute,  although 
the  ship  happened  not  to  return  within  two  years  after  the  prom- 
ise was  made;  for  that,  by  possibility,  the  ship  might  have 
returned  within  a  year.  So,  in  the  case  of  Peter  v.  Compton 
(Skin.  353)  it  was  decided  that  a  promise  to  pay  money  to  the 
plaintiff  on  the  day  of  his  marriage  was  not  within  the  statute, 
though  the  marriage  did  not  happen  within  a  year.  And  it  was 
held  by  a  majority  of  the  judges,  that  where  an  agreement  is  to 
be  performed  upon  a  contingency,  and  it  does  not  appear  in  the 
agreement,  that  it  is  to  be  performed  after  the  year,  there  a  note 
in  writing  is  not  necessary;  for  the  contingency  might  happen 
within  the  year. 


122  FORMATION   OF  CONTRACT.  [Pabt  H. 

This  construction  of  the  statute  is  fully  confirmed  by  the  case 
of  Fento'n  v.  Emblers,  3  Burr.  1278.  In  that  case  the  defend- 
ant's testator  had  promised  the  plaintiff,  that  if  she  would  be- 
come his  housekeeper,  he  would  pay  her  wages  after  the  rate  of 
£6  per  annum,  and  give  her,  by  his  last  will  and  testament,  a 
legacy  or  annuity  of  £16  by  the  year,  to  be  paid  yearly.  The 
plaintiff,  on  this  agreement,  entered  into  the  testator's  service, 
and  became  his  housekeeper,  and  continued  so  for  more  than 
three  years.  And  the  contract,  though  by  parol,  was  held  to  be 
valid  and  not  within  the  statute,  Mr.  Justice  Dennison  declar- 
ing his  opinion  to  be  (in  which  opinion  the  other  judges  coin- 
cided) that  the  statute  of  frauds  plainly  means  an  agreement  not 
to  be  performed  within  the  space  of  a  year,  and  expressly  and 
specifically  so  agreed,  that  a  contingency  was  not  within  it,  nor 
any  case  that  depended  on  a  contingency,  and  that  it  did  not 
extend  to  cases  where  the  thing  might  be  performed  within  the 
year. 

But  if  it  appears  clearly  that  an  agreement  is  not  to  be  per- 
formed within  a  year,  and  that  such  is  the  understanding  of  the 
parties,  it  is  within  the  statute  of  frauds,  although  it  might  be 
partly  performed  within  that  period.  Such  was  the  decision  in 
Boydell  v.  Drummond,  11  East,  142.  But  the  performance  of 
"the  agreement  in  that  case  did  not  depend  on  the  life  of  either 
party,  or  any  other  contingency.  The  defendant  had  agreed  to 
take  and  pay  for  a  series  of  large  prints  from  some  of  the  scenes 
in  Shakespeare's  plays.  The  whole  were  to  be  published  in  num- 
bers; and  one  number,  at  least,  was  to  be  published  annually 
after  the  delivery  of  the  first.  The  whole  scope  of  the  under- 
taking shows,  as  Lord  Ellenborough  remarks,  that  it  Avas  not  to 
be  performed  within  a  year;  and  if,  contrary  to  all  physical 
probability,  it  could  have  been  performed  within  that  time,  yet 
the  whole  work  could  not  have  been  obtruded  upon  the  subscrib- 
ers at  once,  so  as  to  have  entitled  the  publishers  to  demand  pay- 
ment of  the  whole  subscription  from  them  within  the  year. 

From  these  authorities  it  appears  to  be  settled,  that  in  order 
to  bring  a  parol  agreement  within  the  clause  of  the  statute  in 
question,  it  must  either  have  been  expressly  stipulated  by  the 
parties,  or  it  must  appear  to  have  been  so  understood  by  them, 


Chap.  II.  §  3.]  FORM:  STATUTE  OF  FRAUDS.  123 

that  the  agreement  was  not  to  be  performed  within  a  year.  And 
this  stipulation  or  understanding  is  to  be  absolute  and  certain, 
and  not  to  depend  on  any  contingency.  And  this,  we  think,  is 
the  clear  meaning  of  the  statute. 

In  the  present  case,  the  performance  of  the  plaintiff's  agree- 
ment with  the  child's  father  depended  on  the  contingency  of 
her  life.  If  she  had  continued  in  the  plaintiff's  service,  and  he 
had  supported  her,  and  she  had  died  within  a  year  after  the 
making  of  the  agreement,  it  would  have  been  fully  performed. 
And  an  agreement  by  parol  is  not  within  the  statute,  when  by 
the  happening  of  any  contingency  it  might  be  performed  within 
a  year. 

Judgment  of  the  Court  of  Common  Pleas  reversed,  and  a  new 
trial  granted.^ 


(m.)   Provisions  of  seventeenth  section. 

NOKTHERN  et  al.  v.  THE  STATE  on  the  Relation  of 
LATHROP. 

1  INDIANA,   113.  — 1848. 

Perkins,  J.  .  .  .  The  finding  of  the  court  upon  the  issue  on  the 
replication  to  the  third  plea  was  wrong.  The  defendants  had 
no  property  subject  to  execution.  It  is  admitted  they  had  not, 
unless  the  corn  mentioned  below  was  so.  A  witness,  "  James  H. 
Goff,  testified  that,  about  the  last  of  May  or  first  of  June,  1844, 
after  the  corn  which  David  Griffin  had  planted  on  the  farm  of 
George  Cheek  was  two  or  three  inches  high,  said  Griffin  called 
and  told  him  the  weeds  were  about  taking  his  corn;  that  he  was 
poor  and  sick,  and  should  not  be  able  to  raise  his  crop  unless," 
etc.  Goff  then  bought  the  corn  of  Griffin,  paid  a  part  of  the  con- 
sideration in  hand,  etc.  The  execution  against  Griffin,  for  failing 
to  make  the  money  on  which  the  defendants  are  sued,  did  not 
issue  till  the  August  succeeding  this  sale,  and  it  is  not  pretended 
there  was  any  fraud;  but  it  is  insisted  that  the  corn  was  not  so 
in  esse  at  the  time  as  to  be  the  subject  of  sale,  and  that  the 
*  The  case  came  aprain  before  the  court.     20  Pick.  506. 


124  FORMATION  OF  CONTRACT.  [Pabt  n. 

contract  was  for  an  interest  in  land  and  within  the  statute  requir- 
ing a  memorandum  in  writing.  The  cases  of  Whipple  v.  Foot 
(2  John.  418),  Austin  v.  Sawyer  (9  Cow.  39),  Craddock  v.  Riddles- 
barger  (2  Dana,  205),  and  Jones  v.  Flint  (10  Ad.  &  Ell.  753), 
among  others,  decide  that  growing  crops,  raised  annually,  by 
labor,  are  the  subject  of  sale  as  personal  property,  before  maturity, 
and  that  their  sale  does  not  necessarily  involve  an  interest  in  the 
realty  requiring  a  written  agreement.  See  also  Chit,  on  Con.  301; 
1  Hill  Ah.  58.  We  think  this  case  comes  within  those  cited.  No 
other  point  requires  an  opinion. 

It  is  only  necessary  to  add,  that  we  are  not  satisfied,  upon  a 
full  examination  of  this  case,  that  the  plaintiff  in  error  was  not 
injured  by  the  erroneous  decision  of  the  court  below,  and  shall, 
therefore,  reverse  the  final  judgment  there  rendered. 

Per  Curiam.  The  judgment  is  reversed  with  costs.  Cause 
remanded,  etc. 


HIRTH  V.   GRAHAM. 
50  OfflO  STATE,  57.  — 1893. 

The  plaintiff  in  error  brought  an  action  before  a  justice  of  the 
peace  to  recover  of  the  defendant  in  error  damages  alleged  to  have 
been  sustained  on  account  of  the  refusal  of  the  latter  to  perform 
a  contract  by  which  he  had  sold  to  the  plaintiff  in  error  certain 
growing  timber.  Plaintiff  had  judgment  before  the  justice  of  the 
peace  which  was  affirmed  by  the  Court  of  Common  Pleas,  but 
reversed  by  the  Circuit  Court.     Error  to  Circuit  Court. 

Bradbury,  J.  .  .  .  Whether  a  sale  of  growing  trees  is  the  sale 
of  an  interest  in  or  concerning  land  has  long  been  a  much  contro- 
verted subject  in  the  courts  of  England,  as  well  as  in  the  courts 
of  the  several  States  of  the  Union.  The  question  has  been 
differently  decided  in  different  jurisdictions,  and  by  different 
courts,  or  at  different  times  by  the  same  court  within  the  same 
jurisdiction.  The  courts  of  England,  particularly,  have  varied 
widely  in  their  holdings  on  the  subject.  Lord  Mansfield  held 
that  the  sale  of  a  crop  of  growing  turnips  was  within  this  clause  of 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  126 

the  statute.  Emmerson  v.  Heelis,  2  Taunt.  38,  following  the  case 
of  Waddiyigton  v.  Bristow,  2  Bos.  &  P.  452,  where  the  sale  of  a 
crop  of  growing  hops  was  adjudged  not  to  have  been  a  sale  of 
goods  and  chattels  merely.  And  in  Crosby  v.  Wadsworth  (6  East. 
602)  the  sale  of  growing  grass  was  held  to  be  a  contract  for  the 
sale  of  an  interest  in  or  concerning  land,  Lord  Ellenborough 
saying,  "  Upon  the  first  of  these  questions  "(whether  this  purchase 
of  the  growing  crop  be  a  contract  or  sale  of  lands,  tenements,  or 
hereditaments,  or  any  interest  in  or  concerning  them)  "  I  think 
that  the  agreement  stated,  conferring,  as  it  professes  to  do,  an 
exclusive  right  to  the  vesture  of  the  land  during  a  limited  time 
and  for  given  purposes,  is  a  contract  or  sale  of  an  interest  in,  or 
at  least  an  interest  concerning,  lands."  Id.  610.  Afterwards,  in 
Teal  V.  Auty  (2  Brod.  &  B.  99),  the  Court  of  Common  Pleas  held 
a  contract  for  the  sale  of  growing  poles  was  a  sale  of  an  interest 
in  or  concerning  lands.  Many  decisions  have  been  announced  by 
the  English  courts  since  the  cases  above  noted  were  decided,  the 
tendency  of  which  have  been  to  greatly  narrow  the  application  of 
the  fourth  section  of  the  statute  of  frauds  to  crops,  or  timber, 
growing  upon  land.  Crops  planted  and  raised  annually  by  the 
hand  of  man  are  practically  withdrawn  from  its  operation,  while 
the  sale  of  other  crops,  and  in  some  instances  growing  timber 
also,  are  withdrawn  from  the  statute,  where,  in  the  contemplation 
of  the  contracting  parties,  the  subject  of  the  contract  is  to  be 
treated  as  a  chattel.  The  latest  declaration  of  the  English  courts 
upon  this  question  is  that  of  the  common  pleas  division  of  the 
high  court  of  justice  in  Marshall  v.  Green  (1  C.  P.  Div.  35), 
decided  in  1875.  The  syllabus  reads  :  "  A  sale  of  growing  timber 
to  be  taken  away  as  soon  as  possible  by  the  purchaser  is  not  a 
contract  or  sale  of  land,  or  any  interest  therein,  within  the  fourth 
section  of  the  statute  of  frauds."  This  decision  was  rendered  by 
the  three  justices  who  constituted  the  common  pleas  division  of 
the  high  court  of  justice,  Coleridge,  C.  J.,  Brett  and  Grove,  J  J., 
whose  characters  and  attainments  entitle  it  to  great  weight;  yet, 
in  view  of  the  prior  long  period  of  unsettled  professional  and 
judicial  opinion  in  England  upon  the  question,  that  the  court  was 
not  one  of  final  resort,  and  that  the  decision  has  encountered 
adverse  criticism  from  high  authority  (Benj.  Sales  [ed.  1892], 


126  FORMATION  OF  CONTRACT.  [Pabt  IL 

§  126),  it  cannot  be  considered  as  finally  settling  the  law  of 
England  on  this  subject.  The  conflict  among  the  American  cases 
on  the  subject  cannot  be  wholly  reconciled.  In  Massachusetts, 
Maine,  Maryland,  Kentucky,  and  Connecticut,  sales  of  growing 
trees  to  be  presently  cut  and  removed  by  the  vendee,  are  held  not 
to  be  within  the  operation  of  the  fourth  section  of  the  statute  of 
frauds.  Clajlin  v.  Carpenter,  4  Mete.  (Mass.)  580;  Nettleton  v. 
Sikes,  8  Mete.  (Mass.)  34;  Bostwick  v.  Leach,  3  Day,  476;  Erskine 
V.  Plummer,  7  Me.  447;  Cutler  v.  Pope,  13  Me.  377;  Cain  v. 
McOuire,  13  B.  Mon.  340;  Byassee  v.  Reese,  4  Mete.  (Ky.)  372; 
Smith  V.  Bryan,  5  Md.  141.  In  none  of  these  cases,  except  4 
Mete.  (Ky.)  372,  and  in  13  B.  Mon.  340,  had  the  vendor  attempted 
to  repudiate  the  contract  before  the  vendee  had  entered  upon  its 
execution,  and  the  statement  of  facts  in  those  two  cases  do  not 
speak  clearly  upon  this  point.  In  the  leading  English  case  before 
cited  (Marshall  v.  Green,  1  C.  P.  Div.  35)  the  vendee  had  also 
entered  upon  the  work  of  felling  the  trees,  and  had  sold  some  of 
their  tops  before  the  vendor  countermanded  the  sale.  These 
cases,  therefore,  cannot  be  regarded  as  directly  holding  that  a 
vendee,  by  parol,  of  growing  timber  to  be  presently  felled  and 
removed,  may  not  repudiate  the  contract  before  anything  is  done 
under  it;  and  this  was  the  situation  in  which  the  parties  to  the 
case  now  under  consideration  stood  when  the  contract  was  repu- 
diated. Indeed,  a  late  case  in  Massachusetts  (Giles  v.  Simonds, 
15  Gray,  441)  holds  that  "the  owner  of  land,  who  has  made  a 
verbal  contract  for  the  sale  of  standing  wood  to  be  cut  and  severed 
from  the  freehold  by  the  purchaser,  may  at  any  time  revoke  the 
license  which  he  thereby  gives  to  the  purchaser  to  enter  his  land 
to  cut  and  carry  away  the  wood,  so  far  as  it  relates  to  any  wood 
not  cut  at  the  time  of  the  revocation. "  The  courts  of  most  of  the 
American  States,  however,  that  have  considered  the  question, 
hold  expressly  that  a  sale  of  growing  or  standing  timber  is  a 
contract  concerning  an  interest  in  lands,  and  within  the  fourth 
section  of  the  statute  of  frauds.  Green  v.  Armstrong,  1  Denio, 
650;  Bishop  v.  Bishop,  11  N.  Y.  123;  Westbrook  v.  Eager,  16 
N.  J.  Law,  81;  Buck  v.  Pickwell,  27  Vt.  157;  Cool  v.  Lumber  Co., 
87  Ind.  531;  Terrell  v.  Frazier,  79  Ind.  473;  Owens  v.  Lewis,  46 
Ind.  488;  Armstrong  v.  Lawson,  73  Ind.  498;  Jackson  v.  Evans, 


Chap.  II.  §3.]  FORM:  STATUTE  OF  FRAUDS.  I'^J 

44  Mich.  510,  7  N.  W.  Rep.  79;  Lyle  v.  Shinnebarger,  17  Mo.  App. 
66;  Hoive  v.  Batchelder,  49  N.  H.  204;  Putney  v.  Day,  6  N.  H. 
430;  Bowers  v.  Bowers,  95  Pa.  St.  477;  Daniels  v.  Bailey,  43  Wis. 
666;  ZiKie  V.  Dunbar,  62  Wis.  198,  22  N.  W.  Rep.  467;  Knox  v. 
Haralson,  2  Tenn.  Ch.  232.  The  question  is  now,  for  the  first 
time,  before  this  court  for  determination;  and  we  are  at  liberty 
to  adopt  that  rule  on  the  subject  most  conformable  to  sound 
reason.  In  all  its  other  relations  to  the  affairs  of  men,  growing 
timber  is  regarded  as  an  integral  part  of  the  land  upon  which  it 
stands ;  it  is  not  subject  to  levy  and  sale  upon  execution  as  chattel 
property ;  it  descends  with  the  land  to  the  heir,  and  passes  to  the 
vendor  with  the  soil.  Jones  v.  Timmons,  21  Ohio  St.  596.  Coal, 
petroleum,  building  stone,  and  many  other  substances  constituting 
integral  parts  of  the  land,  have  become  articles  of  commerce,  and 
easily  detached  and  removed,  and,  when  detached  and  removed, 
become  personal  property,  as  well  as  fallen  timber;  but  no  case 
is  found  in  which  it  is  suggested  that  sales  of  such  substances, 
with  a  view  to  their  immediate  removal,  would  not  be  within  the 
statute.  Sales  of  growing  timber  are  as  likely  to  become  the  sub- 
jects of  fraud  and  perjury  as  are  the  other  integral  parts  of  the 
land,  and  the  question  whether  such  sale  is  a  sale  of  an  interest 
in  or  concerning  lands  should  depend  not  upon  the  intention  of 
the  parties,  but  upon  the  legal  character  of  the  subject  of  the 
contract,  which,  in  the  case  of  growing  timber,  is  that  of  realty. 
This  rule  has  the  additional  merit  of  being  clear,  simple,  and  of 
easy  application, —  qualities  entitled  to  substantial  weight  in 
choosing  between  conflicting  principles.  Whether  circumstances 
of  part  performance  might  require  a  modification  of  this  rule  is  not 
before  the  court,  and  has  not  been  considered.    Judgment  affirmed. 


GODDARD  V.  BINNEY. 

115  MASSACHUSETTS,  450.— 1874. 

Contract  to  recover  the  price  of  a  buggy  built  by  plaintiff  for 
defendant.     Defense,  the  statute  of  frauds. 

Defendant  ordered  plaintiff,  a  carriage  manufacturer,  to  build 
him  a  buggy,  with  a  drab  lining,  outside  seat  of  cane,  painted  in 
a  specified  style,  and  with  defendant's  monogram  on  the  sides. 


128  FORMATION  OF  CONTRACT.  [Pakt  II. 

Defendant  called  on  plaintiff  afterward,  and  on  being  asked  if  he 
would  consent  that  plaintiff  should  sell  the  buggy,  replied  no,  that 
he  would  keep  it.  After  it  was  finished  according  to  directions, 
plaintiff  sent  a  bill  to  defendant,  and  sent  twice  afterward  for 
payment,  and  each  time  defendant  promised  to  call  and  see 
plaintiff  about  it.  Before  the  buggy  was  paid  for  or  delivered,  it 
was  burned. 

Verdict  was  directed  for  defendant,  and  it  was  agreed  that  if 
the  court  is  of  opinion  that  the  buggy  was  on  the  premises  of 
plaintiff  at  risk  of  defendant,  the  verdict  should  be  set  aside  and 
judgment  entered  for  plaintiff  for  $675  and  interest;  otherwise, 
judgment  on  the  verdict. 

Ames,  J.  Whether  an  agreement  like  that  described  in  this 
report  should  be  considered  as  a  contract  for  the  sale  of  goods, 
within  the  meaning  of  the  statute  of  frauds,  or  a  contract  for 
labor,  services,  and  materials,  and  therefore  not  within  that 
statute,  is  a  question  upon  which  there  is  a  conflict  of  authority. 
According  to  a  long  course  of  decisions  in  New  York,  and  in 
some  other  States  of  the  Union,  an  agreement  for  the  sale  of 
any  commodity  not  in  existence  at  the  time,  but  which  the  vendor 
is  to  manufacture  or  put  in  a  condition  to  be  delivered  (such  as 
flour  from  wheat  not  yet  ground,  or  nails  to  be  made  from  iron 
in  the  vendor's  hands),  is  not  a  contract  of  sale  within  the  mean- 
ing of  the  statute.  Crookshank  v.  Burrell,  18  Johns.  58 ;  Sew- 
all  V.  Fitch,  8  Cow.  215;  Robertson  v.  Vaughn,  5  Sandf.  1; 
Downs  V.  Boss,  23  Wend.  270;  Eichelberger  v.  M'Cauley,  5 
Har.  &  J.  213.  In  England,  on  the  other  hand,  the  tendency 
of  the  recent  decisions  is  to  treat  all  contracts  of  such  a  kind  in- 
tended to  result  in  a  sale,  as  substantially  contracts  for  the  sale 
of  chattels;  and  the  decision  in  Lee  v.  Griffin  (1  B.  &  S.  272) 
goes  so  far  as  to  hold  that  a  contract  to  make  and  fit  a  set  of 
artificial  teeth  for  a  patient  is  essentially  a  contract  for  the  sale  of 
goods,  and  therefore  is  subject  to  the  provisions  of  the  statute. 
See  Maherley  v.  Sheppard,  10  Bing.  99;  Howe  v.  Palmer,  3  B. 
&  Aid.  321;  Baldey  v.  Parker,  2  B.  &  C.  37;  Atkinson  v.  Bell, 
8  B.  &  C.  277. 

In  this  commonwealth,  a  rule  avoiding  both  of  these  extremes 
was  established  in  Mixer  v.  Howarth  (21  Pick.  205),  and  has  been 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  129 

recognized  and  affirmed  in  repeated  decisions  of  more  recent  f 
date.  The  effect  of  these  decisions  we  understand  to  be  this, 
namely,  that  a  contract  for  the  sale  of  articles  then  existing  or 
such  as  the  vendor  in  the  ordinary  course  of  his  business  manu- 
factures or  procures  for  the  general  market,  whether  on  hand  at 
the  time  or  not,  is  a  contract  for  the  sale  of  goods,  to  which  the 
statute  applies.  But  on  the  other  hand,  if  the  goods  are  to  be 
manufactured  especially  for  the  purchaser,  and  upon  his  special 
order,  and  not  for  the  general  market,  the  case  is  not  within  the 
statute.  Spencer  Y.  Cone,  1  Met.  283.  "The  distinction,"  says 
Chief  Justice  Shaw,  in  Lamb  v.  Crafts  (12  Met.  353),  "we  be- 
lieve is  now  well  understood.  When  a  person  stipulates  for  the 
future  sale  of  articles,  which  he  is  habitually  making,  and  which, 
at  the  time,  are  not  made  or  finished,  it  is  essentially  a  contract 
of  sale,  and  not  a  contract  for  labor ;  otherwise,  when  the  article 
is  made  pursuant  to  the  agreement."  In  Gardner  v.  Joy  (9 
Met.  177)  a  contract  to  buy  a  certain  number  of  boxes  of  candles 
at  a  fixed  rate  per  pound,  which  the  vendor  said  he  would  manu- 
facture and  deliver  in  about  three  months,  was  held  to  be  a  con- 
tract of  sale  and  within  the  statute.  To  the  same  general  effect 
are  Waterman  v.  Meigs,  4  Cush.  497,  and  Clark  v.  Nichols,  107 
Mass.  547.  It  is  true  that  in  "the  infinitely  various  shades  of 
different  contracts,"  there  is  some  practical  difficulty  in  dispos- 
ing of  the  questions  that  arise  under  that  section  of  the  statute. 
Oen.  Sts.  c.  105,  §  5.  But  we  see  no  ground  for  holding  that 
there  is  any  uncertainty  in  the  rule  itself.  On  the  contrary,  its 
correctness  and  justice  are  clearly  implied  or  expressly  affirmed 
in  all  of  our  decisions  upon  the  subject  matter.  It  is  proper  to 
say  also  that  the  present  case  is  a  much  stronger  one  than  Mixer 
V.  Howarth.  In  this  case,  the  carriage  was  not  only  built  for 
the  defendant,  but  in  conformity  in  some  respects  with  his  direc- 
tions, and  at  his  request  was  marked  with  his  initials.  It  was 
neither  intended  nor  adapted  for  the  general  market.  As  we  are 
by  no  means  prepared  to  overrule  the  decision  in  that  case,  we 
must  therefore  hold  that  the  statute  of  frauds  does  not  apply  to  the 
contract  which  the  plaintiff  is  seeking  to  enforce  in  this  action. 

Independently  of  that  statute,  and  in  cases  to  which  it  does 
not  apply,  it  is  well  settled  that  as  between  the  immediate  par- 


130  FORMATION  OF  CONTRACT.  [Fart  n. 

ties,  property  in  personal  chattels  may  pass  by  bargain  and  sale 
without  actual  delivery.  If  the  parties  have  agreed  upon  the 
specific  thing  that  is  sold  and  the  price  that  the  buyer  is  to  pay 
for  it,  and  nothing  remains  to  be  done  but  that  the  buyer  should 
pay  the  price  and  take  the  same  thing,  the  property  passes  to  the 
buyer,  and  with  it  the  risk  of  loss  by  fire  or  any  other  accident. 
The  appropriation  of  the  chattel  to  the  buyer  is  equivalent,  for 
that  purpose,  to  delivery  by  the  seller.  The  assent  of  the  buyer 
to  take  the  specific  chattel  is  equivalent  for  the  same  purpose  to 
his  acceptance  of  possession.  Dixon  v.  Yates,  5  B.  &  Ad.  313, 
340.  The  property  may  well  be  in  the  buyer,  though  the  right 
of  possession,  or  lien  for  the  price,  is  in  the  seller.  There  could 
in  fact  be  no  such  lien  without  a  change  of  ownership.  Ko  man 
can  be  said  to  have  a  lien,  in  the  proper  sense  of  the  term,  upon 
his  own  property,  and  the  seller's  lien  can  only  be  upon  the 
buyer's  property.  It  has  often  been  decided  that  assumpsit  for 
the  price  of  goods  bargained  and  sold  can  be  maintained  where 
the  goods  have  been  selected  by  the  buyer,  and  set  apart  for  him 
by  the  seller,  though  not  actually  delivered  to  him,  and  where 
nothing  remains  to  be  done  except  that  the  buyer  should  pay  the 
agreed  price.  In  such  a  state  of  things  the  property  vests  in  him, 
and  with  it  the  risk  of  any  accident  that  may  happen  to  the  goods, 
in  the  meantime.  Noy's  Maxims,  89;  2  Kent.  Com.  (12th  ed.) 
492;  Bloxam  v.  Sanders,  4  B.  &  C.  941;  Tarling  v.  Baxter, 
6  B.  &  C.  360;  Hinde  v.  Whitehouse,  7  East,  571;  Macomher 
v.  Parker,  13  Pick.  175,  183;  Morse  v.  Sherman,  106  Mass.  430. 
In  the  present  case,  nothing  remained  to  be  done  on  the  part 
of  the  plaintiff.  The  price  had  been  agreed  upon;  the  specific 
chattel  had  been  finished  according  to  order,  set  apart  and  ap- 
propriated for  the  defendant,  and  marked  with  his  initials.  The 
plaintiff  had  not  undertaken  to  deliver  it  elsewhere  than  on  his 
own  premises.  He  gave  notice  that  it  was  finished,  and  pre- 
sented his  bill  to  the  defendant,  who  promised  to  pay  it  soon. 
He  had  previously  requested  that  the  carriage  should  not  be  sold, 
a  request  which  substantially  is  equivalent  to  asking  the  plain- 
tiff to  keep  it  for  him  when  finished.  Without  contending  that 
these  circumstances  amount  to  a  delivery  and  acceptance  within 
the  statute  of  frauds,  the  plaintiff  may  well  claim  that  enough 


Chap.  II.  §3.]  FORM:   STATUTE  OF  FRAUDS.  131 

has  been  done,  in  a  case  not  within  that  statute,  to  vest  the  gen- 
eral ownership  in  the  defendant,  and  to  cast  upon  him  the  risk 
of  loss  by  fire,  while  the  chattel  remained  in  the  plaintiff's  pos- 
session. 

According  to  the  terms  of  the  reservation,  the  verdict  must  be 
set  aside,  and  judgment  entered  for  the  plaintiff. 

><    Q  '         

0  GKEENWOOD  v.   LAW. 

55  NEW  JERSEY  LAW,   168.— 1892. 

Van  Syckel,  J.  Law,  the  plaintiff  below,  gave  to  Green- 
wood, the  defendant,  a  mortgage  upon  lands  in  this  State  for  the 
sum  of  $3700.  Law  alleged  that  Greenwood  entered  into  a  parol 
agreement  with  him  to  assign  him  this  mortgage  for  the  sum  of 
$3000,  and  brought  this  suit  to  recover  damages  for  the  refusal 
of  Greenwood  to  execute  said  parol  agreement. 
■  On  the  trial  below,  a  motion  was  made  to  nonsuit  the  plain- 
tiff, on  the  ground  that  the  alleged  agreement  was  within  the 
statute  of  frauds.  The  refusal  of  the  trial  court  to  grant  this 
motion  is  assigned  for  error. 

Lord  Chief  Justice  Denman,  in  Humble  v.  Mitchell,  reported  in 
11  Ad.  &  E.  205,  and  decided  in  1840,  said  that  no  case  directly 
in  point  on  this  subject  had  been  found,  and  he  held  that  shares 
in  an  incorporated  company  were  not  goods,  wares,  and  merchan- 
dise within  the  seventeenth  section  of  the  statute  of  frauds. 

He  overlooked  the  cases  of  Mussell  v.  Cooke,  reported  in 
Precedents  in  Chancery,  533  (decided  in  1720),  and  Crull  v.  Dod- 
son,  reported  in  Select  Cases  in  Chancery  (temp.  King),  41  (decided 
in  1725),  in  which  the  contrary  view  was  taken. 

In  the  case  of  Pickering  v.  Appleby  (Com.  354)  this  question 
was  fully  argued  before  the  twelve  judges,  who  were  equally 
divided  upon  it.  The  cases  decided  in  the  English  courts  since 
1840  have  followed  Humble  v.  Mitchell.  They  will  be  found 
collected  in  Benjamin  on  Sales  (ed.  1888)  in  a  note  on  page  106. 

In  this  country  a  different  rule  prevails  in  most  of  the  States. 

In  Baldwin  v.  Williams  (3  Mete.  365)  a  parol  contract  for  the 
sale  of  a  promissory  note  was  held  to  be  within  the  statute. 


132  VoRMATION  OF  CONTRACT.  [Pabt  H. 

In  Connecticut  and  Maine  a  contract  for  the  sale  of  shares  in 
a  joint  stock  company  is  required  to  be  in  "writing.  North  v. 
Forest,  15  Conn.  400  j  Pray  v.  Mitchell,  60  Me.  430. 

Chief  Justice  Shaw,  after  a  full  discussion  of  the  subject  in 
Tisdale  v.  Harris  (20  Pick.  9),  concludes  that  a  contract  for  the 
sale  of  shares  in  a  manufacturing  corporation  is  a  contract  for 
the  sale  of  goods  or  merchandise  within  the  statute  of  frauds,  and 
in  the  absence  of  the  other  requisites  of  the  statute  must  be 
proved  by  some  note  or  memorandum  in  writing  signed  by  the 
party  to  be  charged  or  his  agent.  He  did  not  regard  the  argu- 
ment, that  by  necessary  implication  the  statute  applies  only  to 
goods  of  which  part  may  be  delivered,  as  worthy  of  much  consid- 
eration. An  animal  is  not  susceptible  of  part  delivery,  yet 
undoubtedly  the  sale  of  a  horse  by  parol  is  within  the  statute. 
The  exception  in  the  statute  is,  when  part  is  delivered;  but  if 
there  cannot  be  a  delivery  in  part,  the  exception  cannot  exist  to 
take  the  case  out  of  the  general  prohibition. 

Bonds  and  mortgages  were  expressly  held  to  be  goods  and  chat- 
tels in  Terhune  v.  Executors  of  Bray,  1  Harr.  53.  That  was  an 
action  of  trover  for  a  bond  and  mortgage.  Chief  Justice  Horn- 
blower,  in  deciding  the  case,  said  that,  although  the  attachment 
Act  and  letters  of  administration  seem  to  distinguish  between 
rights  and  credits  and  goods  and  chattels,  and  although  an  execu- 
tion against  the  latter  will  not  reach  bonds  and  notes,  yet  there 
is  a  sense  in  which  upon  sound  legal  principles  such  securities 
are  goods  and  chattels. 

This  sense  ought  to  be  applied  to  these  words  in  this  case. 

Reason  and  sound  policy  require  that  contracts  in  respect  to 
securities  for  money  should  be  subject  to  the  reasonable  restric- 
tions provided  by  the  statute  to  prevent  frauds  in  the  sale  of 
other  personal  property. 

The  words  "  goods,  wares,  and  merchandise  "  in  the  sixth  sec- 
tion of  the  statute  are  equivalent  to  the  term  "personal  prop- 
erty," and  are  intended  to  include  whatever  is  not  embraced  by 
the  phrase  "  lands,  tenements,  and  hereditaments  "  in  the  preced- 
ing section.  In  my  judgment,  the  contract  sued  upon  is  within 
the  statute  of  frauds,  and  it  was  error  in  the  court  below  to  refuse 
to  nonsuit. 


Chap.  II.  §  4.]  CONSIDERATION.  133 

§  4.    Consideration. 

(t.)  Consideration  is  necessary  to  the  validity  of  every  simple 
contract. 

COOK  V.    BRADLEY. 
7  CONNECTICUT,  57.  — 1828. 

Bill  for  the  correction  of  a  mistake  in  a  discharge  given  by 
Bradley  to  defendant's  intestate,  or  for  an  injunction  against  the 
use  of  the  discharge  in  an  action  at  law,  then  pending. 

The  action  at  law  was  on  a  written  instrument  delivered  by 
defendant's  intestate  to  Bradley,  wherein  he  acknowledged  him- 
self indebted  in  the  sum  of  sixty  dollars  to  Bradley  for  necessa- 
ries furnished  by  Bradley  to  the  father  of.  the  intestate,  and 
promised  to  pay  the  same  in  case  the  father  failed  to  do  so.  The 
father  had  since  died  without  paying  the  same. 

The  discharge  was  given  in  settlement  of  an  action  of  book 
debt,  and  by  mistake  was  so  drawn  as  to  cover  all  claims  and 
demands  whatever.  Bradley  had  demanded  of  the  intestate  the 
correction  of  the  discharge,  but  this  was  refused. 

On  demurrer  the  bill  was  adjudged  sufficient.  Defendant  ap- 
pealed. 

Daggett,  J.  The  question  presented  on  this  record  for  discus- 
sion, arises  on  the  validity  of  the  promise  of  the  deceased,  Henry 
Cook,  stated  in  the  bill.  If  no  action  can  be  supported  on  that 
contract,  then  the  interference  of  the  court  to  exercise  its  chancery 
power,  to  explain  or  invalidate  the  discharge,  would  be  useless; 
and  the  examination  of  other  points  suggested  in  argument, 
unnecessary.  I  am  satisfied,  on  a  full  view  of  the  case,  that  the 
contract  is  void,  for  want  of  consideration;  and  therefore  that 
no  action  can  be  supported  on  it. 

1.  The  contract  is  not  a  specialty,  though  in  writing;  nor  is  it 
governed  by  the  law  merchant  applicable  to  negotiable  paper. 
Were  it  of  the  first  description,  by  the  rules  of  the  common  law, 
the  consideration  would  be  locked  up,  and  could  not  be  inquired 
into.  Were  it  a  note  or  bill  of  exchange,  the  law  merchant  would 
give  to  it  the  same  force  in  relation  to  third  persons.  It  is  true 
that  in  Pillans  &  Rose  v.  Van  Mierop  &  Hopkins  (3  Burr.  1664) 


184  FORMATION  OF  CONTRACT.  [Fart  U. 

a  suggestion  was  made  by  Wilmot,  and  the  judges  who  sat  with 
him  in  the  King's  Bench,  that  mere  want  of  consideration  could 
not  be  alleged  in  avoidance  of  a  contract  in  writing.  This  sug- 
gestion was  never  established  as  law;  and  in  the  case  of  Eann  v. 
Hughes  (7  Term  Rep.  350  n.)  the  true  doctrine  of  the  common 
law  was  laid  down.  A  mere  written  contract  is  upon  the  footing 
of  a  parol  contract,  and  a  consideration  must  be  proved.  This  is 
an  inflexible  rule  of  law;  and  the  court  is  not  at  liberty,  if  it  had 
the  disposition,  to  subvert  it.     Ex  nudo  pacto  non  oritur  actio. 

2.  What  is  a  consideration  sufficient  to  uphold  a  contract? 
Here,  too,  the  common  law  furnishes  the  answer;  a  benefit  to  the 
party  promising,  or  a  loss  to  the  party  to  whom  the  promise  is 
made.  The  quantum  of  benefit,  on  the  one  hand,  or  of  loss  on 
the  other,  is  immaterial.  Powell  on  Contracts,  343,  344.  To 
multiply  authorities  on  this  point  is  quite  unnecessary. 

Let  us  now  apply  these  uncontroverted  principles  to  the  case 
before  us.  Could  Henry  Cook  possibly  receive  any  benefit  from 
this  contract?  He  gained  nothing  —  nothing  was  renounced 
hereby.  Was  he  induced  by  any  loss  to  the  promisee?  He 
advanced  nothing;  he  became  liable  for  nothing;  he  did  not 
forego  anything,  by  or  on  the  ground  of  it.  He  had  before,  not 
at  the  request  of  Henry  Cook,  but  of  Jonathan  Cook,  furnished 
the  latter  with  necessaries  for  his  support.  It  is  impossible  to 
discover,  thus  far,  any  consideration  known  to  the  law, 

3.  The  defendant  in  error  still  insists,  that  the  father  being 
poor  and  unable  to  support  himself,  and  the  son  being  possessed 
of  large  property,  a  legal  obligation  rested  on  him  to  pay  for  these 
necessaries  thus  furnished;  and  a  legal  obligation  is  a  good  con- 
sideration for  a  promise.  The  conclusion  is  just,  if  the  premises 
are  true.  But  was  there  this  legal  obligation?  If  it  exist,  it  is 
to  be  found  in  our  statute  providing  for  the  support  of  paupers. 
Stat.  369.  tit.  73,  c.  1.  Provision  is  there  made,  that  poor  and 
impotent  persons,  unable  to  support  themselves,  shall  be  sup- 
ported by  their  children,  if  of  sufficient  ability.  The  manner  in 
which  they  shall  be  compelled  to  furnish  this  support  is  pre- 
Bcribed.  The  selectmen  of  the  town  where  the  poor  persons 
reside,  or  one  or  more  of  their  relations,  may  make  application 
to  the  county  court,  and  the  court  may  order  such  support  to  be 


Chap.  II.  §  4.]  CONSIDERATION.  135 

supplied,  by  the  relations  of  the  poor  persons,  from  the  time  of 
such  application.  The  facts  are  to  be  ascertained  by  the  court. 
The  provision  is  prospective  only.  It  regards  no  supplies  already 
furnished,  or  expenses  already  incurred;  and  the  liability,  the 
legal  obligation,  is  precisely  as  extensive  as  the  law  establishes 
it,  and  no  greater.  By  this  statute,  then,  for  these  reasons,  the 
legal  obligation  alleged  in  support  of  this  contract  does  not  appear. 

That  such  is  the  construction  of  this  statute,  I  cite  the  opinion 
of  the  Supreme  Court  of  Massachusetts  in  Mills  v.  Wyman  (3 
Pick.  Rep.  207,  212)  as  to  a  similar  statute  of  that  State ;  and 
especially  I  rely  on  the  decision  of  this  court  in  Wethersfield  v. 
Montague  et  at,  3  Conn.  Rep.  507.  One  of  the  points  settled  in 
that  case  was,  that  "'  no  assessment  could  be  made,  by  virtue  of 
this  statute,  for  past  expenditures,  the  provisions  of  the  statute 
being  exclusively  prospective."  The  principle  then  is,  that  there 
is  no  legal  obligation  to  pay  past  expenditures ;  which  exonerates 
the  son  in  this  case  from  all  legal  liability  for  the  expenditures 
for  the  father. 

4.  This  opens  to  us  the  only  remaining  point.  The  counsel 
for  the  defendant  in  error  urge,  that  the  son  was  under  a  moral 
obligation  to  support  the  father,  that  this  is  a  sufficient  consid- 
eration to  uphold  the  promise,  and  that,  therefore,  the  son  is 
liable. 

.  It  cannot  be  successfully  contended,  that  in  every  case  where 
a  person  is  under  a  moral  obligation  to  do  an  act,  as,  to  relieve 
one  in  distress  by  personal  exertions,  or  the  expenditure  of 
money,  a  promise  to  that  effect  would  be  binding  in  a  court  of 
law.  Such  an  idea  is  unsupported  by  principle  or  precedent. 
It  is  a  just  rule  of  morality,  that  a  man  should  do  towards  others 
what  he  might  reasonably  expect  from  others  in  like  circum- 
stances. This  rule  is  sanctioned  by  the  highest  authority,  and  is 
very  comprehensive.  An  affectionate  father,  brother,  or  sister 
has  taken  by  the  hand  the  youngest  son  of  the  family,  given  him 
an  education,  and  placed  him  in  a  situation  to  become,  and  he  has 
become,  affluent.  The  father,  brother,  or  sister,  by  the  visitation 
of  Providence,  has  become  poor,  and  impotent,  and  houseless. 
The  son,  rolling  in  riches,  in  the  overflowings  of  his  gratitude 
for  kindness  experienced,  contracts  in  writing  to  discharge  some 


~\ 


186  -  FORMATION  OF  CONTRACT.  [Pabt  II. 

portion  of  the  debt  of  gratitude,  by  giving  to  his  destitute  rela- 
tive some  one  of  his  numerous  houses  for  a  shelter,  and  a  thou- 
sand of  his  many  thousand  dollars  for  his  subsistence;  can  such 
a  promise  be  enforced  in  any  judicial  tribunal?  Municipal  laws 
will  not  decide  what  honor  or  gratitude  ought  to  induce  the  son 
to  do  in  such  a  case,  as  Dr.  Blackstone  remarks  (2  Bla.  Com.  445), 
but  it  must  be  left  to  the  forum  of  conscience. 

It  cannot  be  denied  that  many  distinguished  judges  have  laid 
down  the  principle  that  moral  obligation  is  alone  a  sufficient 
consideration  to  support  a  contract.  Thus  did  Lord  Mansfield, 
in  Cowper,  288,  544.  He  was  followed  by  Mr.  Justice  BuUer,  by 
Lord  Ellenborough,  and  other  judges  in  other  cases.  But  it  is 
an  obvious  remark,  that  the  cases  cited  in  illustration  of  those 
positions  were  all  cases  where  a  prior  legal  obligation  had  existed, 
but  by  reason  of  some  statute,  or  stuBborn  rule  of  law,  it  could 
not  be  enforced :  as  a  promise  to  pay  a  debt  barred  by  bankruptcy, 
or  the  statute  of  limitations,  or  a  promise  by  an  adult  to  pay  a 
debt  contracted  during  minority.  In  all  these  instances  a  good 
consideration  existed,  for  each  had  received  a  benefit. 

All  the  cases  on  this  subject  are  carefully,  and  with  just  dis- 
crimination, revised  in  a  note  in  3  Bos.  &  Pull.  249,  and  the  true 
distinctions  taken.  The  law  of  this  note  has  been  recently 
adopted  in  the  Supreme  Court  of  New  York  in  the  cases  of  Smith 
V.  Ware  (13  Johns.  Kep.  257,  289)  and  Edwards  et  ux.  v.  Davis 
(16  Johns.  Kep.  281,  283  n.),  and  in  a  still  later  case  (in  the  year 
1826)  in  Massachusetts,  viz.,  Mills  v.  Wyman  (3  Pick.  Eep.  207) 
—  a  case  referred  to  above  for  another  purpose.  Ko  stronger 
case  of  moral  obligation  can  be  found.  "  A  son  who  was  of  full 
age  and  had  ceased  to  be  a  member  of  his  father's  family  was 
suddenly  taken  sick  among  strangers,  and  being  poor  and  in 
distress,  was  relieved  by  the  plaintiff,  and  afterwards  the  father 
wrote  to  the  plaintiff,  promising  to  pay  him  the  expenses 
incurred;  it  was  held  that  such  promise  would  not  sustain  an 
action."  I  am  well  satisfied  with  the  very  able  and  sound  reason- 
ing of  the  court  delivered  by  Chief  Justice  Parker  on  that 
occasion. 

I  will  now  advert  to  the  particular  decisions  of  the  English 
courts  cited  at  the  bar  and  relied  on.     Watson  v.  Turner,  Bull. 


Chap.  U.  §  4.]  CONSIDERATION.  13T 

Nisi  Prius,  147.  It  is  no  longer  doubted  that  the  defendants  in 
that  case,  the  overseers  of  the  poor,  were  under  a  legal  obligation 
to  furnish  the  support  for  which  the  promise  was  made.  It  is  a 
case,  therefore,  within  the  rule  in  3  Bos  &  Pull.  249  n.  The  case 
of  Scott  V.  Nelson,  cited  Esp.  Dig.  95,  and  an  anonymous  case  in 
2  Shower,  184,  seem  to  imply  that  a  father  was  holden  liable  on 
a  promise  to  pay  for  supplies  for  his  bastard  child;  but  in  my 
opinion,  it  may  be  safely  inferred  from  the  facts  that  the  sup-  I 
plies  were  furnished  on  request,  which  would  make  a  material  f 
difference.  In  Wing  v.  Mill  (1  Barn.  &  Aid.  104)  the  whole  court 
held  that  a  legal  and  moral  obligation  existed.  In  the  case  of 
Barnes  v.  Hedley  &  Conway  (2  Taunt.  184)  the  court  held,  that 
when  the  parties  to  usurious  securities  stripped  them  of  all  usury, 
and  the  securities  were  given  up  and  cancelled,  by  agreement  of 
the  parties,  and  the  borrower  of  the  money  promised  in  considera- 
tion of  having  received  the  principal,  to  pay  the  same  with  legal 
interest,  the  promise  was  binding.  This  case  rests  upon  the  same 
principles  which  were  recognized  by  this  court  in  the  case  of 
Kilhorun  v.  Bradley  (3  Day  356),  where  the  court  decided  that  if 
a  usurious  security  be  given  up,  and  a  new  security  be  taken  for 
the  principal  sum  due  and  legal  interest,  the  latter  security  will 
be  good.  This  bears  not  at  all  upon  the  case  under  consideration. 
The  money  advanced  was  a  good  consideration  of  the  promise  to 
repay  it,  the  usury  being  expunged.  In  the  case  of  Lee  v,  Mugger- 
idge  et  al.,  executors  of  Mary  Muggeridge,  deceased  (5  Taunt. 
36),  it  was  held  that  a  feme  covert,  having  given  a  bond  for 
money  advanced  to  her  son-in-law,  at  her  request,  was  bound  by 
a  promise  made  by  her  after  she  became  discovert.  Mary,  the 
obligor  in  that  case,  had  a  large  estate  settled  to  her  separate  use. 
In  this  condition  she  executed  a  bond  for  money  advanced  to  her 
son-in-law,  at  her  request.  After  the  death  of  the  husband,  and 
while  single,  she  wrote  a  letter  promising  to  pay  the  amount  thus 
advanced.  The  court,  in  giving  their  opinion,  say  this  is  a 
promise  founded  on  a  moral  obligation,  and  that  it  is  a  good  con- 
sideration. I  should  say  the  promise  was  founded  on  the 
advancement  of  the  money,  at  her  request,  to  her  son-in-law,  and 
as  she  was  incapacitated  to  bind  herself,  by  reason  of  the  cover- 
ture, when  she  received  the  benefit,  and  is  therefore  protected 


138  FORMATION  OF  CONTRACT.  [Pabt  H. 

from  liability  by  a  stubborn  rule  of  law,  yet  if  wlien  this  rule  of 
law  ceases  to  operate  upon  her,  she  will  promise  to  pay,  it  will 
bind  her. 

On  the  whole,  I  am  not  satisfied  that  a  case  can  be  found  in 
the  English  books  in  which  it  has  been  held  that  a  moral 
obligation  is  a  sufficient  consideration  for  an  express  promise, 
though  there  are  many  to  the  contrary,  but  that  it  is  limited  in 
its  application  to  the  cases  where  a  good  and  valuable  considera- 
tion has  once  existed,  as  laid  down  by  the  Supreme  Court  in 
Massachusetts,  once  and  again  adverted  to. 

I  am  therefore  of  opinion  that  there  is  error  in  the  decree 
complained  of,  and  that  the  judgment  be  reversed. 

HosMER,  C.  J.,  was  of  the  same  opinion. 

Peters  and  Lanman,  JJ.,  dissented. 

Brain ARD,  J.,  was  absent. 

Judgment  reversed. 


(it.)  Consideration  need  not  be  adequate  to  the  promise,  but  must 
be  of  some  value  in  the  eye  of  the  law. 

SCHNELL  V.  NELL. 

17  INDIANA,  29,-1861. 

Appeal  from  the  Marion  Common  Pleas. 

Perkins,  J.  Action  by  J.  B.  Nell  against  Zacharias  Schnell 
upon  the  following  instrument : 

"This  agreement  entered  into  this  13th  day  of  February,  1856,  between 
Zach.  Schnell,  of  Indianapolis,  Marion  County,  State  of  Indiana,  as  party  of 
the  first  part,  and  J.  B.  Nell,  of  the  same  place,  Wendelin  Lorenz,  of  Stiles- 
ville,  Hendricks  County,  State  of  Indiana,  and  Donata  Lorenz,  of  Frick- 
inger.  Grand  Duchy  of  Baden,  Germany,  as  parties  of  the  second  part, 
witnesseth :  The  said  Zacharias  Schnell  agrees  as  follows :  whereas  his 
wife,  Theresa  Schnell,  now  deceased,  has  made  a  last  will  and  testament, 
in  which,  among  other  provisions,  it  was  ordained  that  every  one  of  the 
above  named  second  parties  should  receive  the  sum  of  ^200 ;  and  whereas 
the  said  provisions  of  the  will  must  remain  a  nullity,  for  the  reason  that 
no  property,  real  or  personal,  was  in  the  possession  of  the  said  Theresa 
Schnell,  deceased,  in  her  own  name,  at  the  time  of  her  death,  and  all 
property  held  by  Zacharias  and  Theresa  Schnell  jointly  therefore  reverts 


Chap.  II.  §  4.]  CONSIDERATION.  139 

to  her  husband ;  and  whereas  the  said  Theresa  Schnell  has  also  been  a  duti- 
ful and  loving  wife  to  the  said  Zach.  Schnell,  and  has  materially  aided  him 
in  the  acquisition  of  all  property,  real  and  personal,  now  possessed  by  him ; 
for,  and  in  consideration  of  all  this,  and  the  love  and  respect  he  bears  to 
his  wife ;  and,  furthermore,  in  consideration  of  one  cent,  received  by  him 
of  the  second  parties,  he,  the  said  Zach.  Schnell,  agrees  to  pay  the  above 
named  sums  of  money  to  the  parties  of  the  second  part,  to  wit :  $200  to 
the  said  J.  B.  Nell,  $200  to  the  said  Wendelin  Lorenz,  and  $200  to  the 
said  Donata  Lorenz,  in  the  following  instalments,  viz. :  $200  in  one  year 
from  the  date  of  these  presents ;  $200  in  two  years,  and  $200  in  three 
years ;  to  be  divided  between  the  parties  in  equal  portions  of  S66f  each 
year,  or  as  they  may  agree,  till  each  one  has  received  his  full  sum  of  $200. 
"  And  the  said  parties  of  the  second  part,  for,  and  in  consideration  of 
this,  agree  to  pay  the  above  named  sum  of  money  (one  cent),  and  to 
deliver  up  to  said  Schnell,  and  abstain  from  collecting  any  real  or  supposed 
olaims  upon  him  or  his  estate,  arising  from  the  said  last  will  and  tester 
ment  of  the  said  Theresa  Schnell,  deceased. 

"  In  witness  whereof,  the  said  parties  have,  on  this  13th  day  of  Febru- 
ary, 1856,  set  hereunto  their  hands  and  seals. 

"  Zacharias  Schnell,  (seal) 
"  J.  B.  Nell,  (seal) 

"  Wen.  Lorenz.  (seal)" 

The  complaint  contained  no  averment  of  a  consideration  for 
the  instrument  outside  of  those  expressed  in  it ;  and  did  not  aver 
that  the  one  cent  agreed  to  be  paid  had  been  paid  or  tendered. 

A  demurrer  to  the  complaint  was  overruled. 

The  defendant  answered,  that  the  instrument  sued  on  was  given 
for  no  consideration  whatever. 

He  further  answered,  that  it  was  given  for  no  consideration, 
because  his  said  wife,  Theresa,  at  the  time  she  made  the  will 
mentioned,  and  at  the  time  of  her  death,  owned,  neither  sepa- 
rately, nor  jointly  with  her  husband  or  any  one  else  (except  so 
far  as  the  law  gave  her  an  interest  in  her  husband's  property), 
any  property,  real  or  personal,  etc. 

The  will  is  copied  into  the  record,  but  need  not  be  into  this 
opinion. 

The  court  sustained  a  demurrer  to  these  answers,  evidently  en 
the  ground  that  they  were  regarded  as  contradicting  the  instru- 
ment sued  on,  which  particularly  set  out  the  considerations  upon 
which  it  was  executed.  But  the  instrument  is  latently  ambiguous 
on  this  point.     See  Ind.  Dig.,  p.  110. 


140  FORMATION  OP  CONTRACT.  [Part  H. 

The  case  turned  below,  and  must  turn  here,  upon  the  question 
whether  the  instrument  sued  on  does  express  a  consideration  suffi- 
cient to  give  it  legal  obligation,  as  against  Zacharias  Schnell.  It 
fcipecifies  three  distinct  considerations  for  his  promise  to  pay  $600  : 

1.  A  promise,  on  the  part  of  the  plaintiffs,  to  pay  him  one  cent. 

2.  The  love  and  affection  he  bore  his  deceased  wife,  and  the 
fact  that  she  had  done  her  part,  as  his  wife,  in  the  acquisition  of 
property. 

3.  The  fact  that  she  had  expressed  her  desire,  in  the  form  of 
an  inoperative  will,  that  the  persons  named  therein  should  have 
the  sums  of  money  specified. 

The  consideration  of  one  cent  will  not  support  the  promise  of 
Schnell.  It  is  true  that  as  a  general  proposition,  inadequacy 
of  consideration  will  not  vitiate  an  agreement.  Baker  v.  RohertSf 
14  Ind.  552.  But  this  doctrine  does  not  apply  to  a  mere  ex- 
change of  sums  of  money,  of  coin  whose  value  is  exactly  fixed, 
but  to  the  exchange  of  something  of,  in  itself,  indeterminate 
value  for  money  or,  perhaps,  for  some  other  thing  of  indeter- 
minate value.  In  this  case,  had  the  one  cent  mentioned  been 
some  particular  one  cent,  a  family  piece,  or  ancient,  remarkable 
coin,  possessing  an  indeterminate  value,  extrinsic  from  its  simple 
money  value,  a  different  view  might  be  taken.  As  it  is,  the  mere 
promise  to  pay  six  hundred  dollars  for  one  cent,  even  had  the 
portion  of  that  cent  due  from  the  plaintiff  been  tendered,  is  an 
unconscionable  contract,  void,  at  first  blush,  upon  its  face,  if  it 
be  regarded  as  an  earnest  one.  Hardesty  v.  Smith,  3  Ind.  39. 
The  consideration  of  one  cent  is  plainly  in  this  case  merely 
nominal,  and  intended  to  be  so.  As  the  will  and  testament  of 
Schnell's  wife  imposed  no  legal  obligation  upon  him  to  discharge 
her  bequests  out  of  his  property,  and  as  she  had  none  of  her  own, 
his  promise  to  discharge  them  was  not  legally  binding  upon  him 
on  that  ground.  A  moral  consideration  only  will  not  support 
a  promise.  Ind.  Dig.,  p.  13.  And  for  the  same  reason,  a  valid 
consideration  for  his  promise  cannot  be  found  in  the  fact  of  a 
compromise  of  a  disputed  claim ;  for  where  such  claim  is  legally 
groundless,  a  promise  upon  a  compromise  of  it,  or  a  suit  upon  it, 
is  not  legally  binding.  Spahr  v.  Hollingshead,  8  Blackf.  415. 
There  was  no  mistake  of  law  or  fact  in  this  case,  as  the  agree- 


Chap.  II.  §  4.]  CONSIDERATION.  141 

ment  admits  the  will  inopexative  and  void.  The  promise  was 
simply  one  to  make  a  gift.  The  past  services  of  his  wife,  and 
the  love  and  affection  he  had  borne  her,  are  objectionable  as  legal 
considerations  for  Schnell's  promise  on  two  grounds:  1.  They 
are  past  considerations.  Ind.  Dig.,  p.  13.  2.  The  fact  that  Schnell 
loved  his  wife,  and  that  she  had  been  industrious,  constituted  no 
consideration  for  his  promise  to  pay  J.  B.  Nell  and  the  Lorenzes 
a  sum  of  money.  Whether,  if  his  wife,  in  her  lifetime,  had 
made  a  bargain  with  Schnell  that,  in  consideration  of  his 
promising  to  pay,  after  her  death,  to  the  persons  named,  a  sum  of 
money,  she  would  be  industrious  and  worthy  of  his  affection, 
such  a  promise  would  have  been  valid  and  consistent  with  public 
policy,  we  need  not  decide.  Nor  is  the  fact  that  Schnell  now 
venerates  the  memory  of  his  deceased  wife,  a  legal  consideration 
for  a  promise  to  pay  any  third  person  money. 

The  instrument  sued  on,  interpreted  in  the  light  of  the  facts 
alleged  in  the  second  paragraph  of  the  answer,  will  not  support 
an  action.  The  demurrer  to  the  answer  should  have  been  over- 
ruled.    See  Stevenson  v.  Druley,  4  Ind.  519. 

Per  Curiam.  The  judgment  is  reversed,  with  costs.  Cause 
remanded,  etc. 


DEVECMON  V.  SHAW  &  DEVRIES,  Ex'rs. 

69  MARYLAND,  199.  — 1888. 

Bryan,  J.  John  Semmes  Devecmon  brought  suit  against  the 
executors  of  John  S.  Combs,  deceased.  He  declared  in  the 
common  counts  and  also  filed  a  bill  of  particulars.  After  judg- 
ment by  default,  a  jury  was  sworn  to  assess  the  damages  sus- 
tained by  the  plaintiff.  The  evidence  consisted  of  certain 
accounts  taken  from  the  books  of  the  deceased,  and  testimony 
that  the  plaintiff  was  a  nephew  of  the  deceased,  and  lived  for 
several  years  in  his  family,  and  was  in  his  service  as  clerk  for 
several  years.  The  plaintiff  then  made  an  offer  of  testimony, 
which  is  thus  stated  in  the  bill  of  exceptions :  "  That  the  plain- 
tiff took  a  trip  to  Europe  in  1878,  and  that  said  trip  was  taken 
by  said  plaintiff,  and  the  money  spent  on  said  trip  was  spent  by 


142  FORMATION  OF  CONTRACT.  '  [Pakt  H. 

the  said  plaintiff  at  the  instance  and  request  of  said  Combs,  and 
upon  a  promise  from  him  that  he  would  reimburse  and  repay  to 
the  plaintiff  all  the  money  expended  by  him  in  said  trip;  and 
tliat  the  trip  was  so  taken  and  the  money  so  expended  by  the 
said  plaintiff,  but  that  the  said  trip  had  no  connection  with  the 
business  of  said  Combs ;  and  that  said  Combs  spoke  to  the  witness 
of  his  conduct  in  being  thus  willing  to  pay  his  nephew's  expenses 
as  liberal  and  generous  on  his  part."  On  objection,  the  court 
refused  to  permit  the  evidence  to  be  given,  and  the  plaintiff 
excepted. 

It  might  very  well  be,  and  probably  was  the  case,  that  the 
plaintiff  would  not  have  taken  a  trip  to  Europe  at  his  own  ex- 
pense. But  whether  this  be  so  or  not,  the  testimony  would  have 
tended  to  show  that  the  plaintiff  incurred  expense  at  the 
instance  and  request  of  the  deceased,  and  upon  an  express  prom- 
ise by  him  that  he  would  repay  the  money  spent.  It  was  a 
burden  incurred  at  the  request  of  the  other  party,  and  was  cer- 
tainly a  sufficient  consideration  for  a  promise  to  pay.  Great 
injury  might  be  done  by  inducing  persons  to  make  expenditures 
beyond  their  means,  on  express  promise  of  repayment,  if  the 
law  were  otherwise.  It  is  an  entirely  different  case  from  a  prom- 
ise to  make  another  a  present,  or  render  him  a  gratuitous  service. 
It  is  nothing  to  the  purpose  that  the  plaintiff  was  benefited  by 
the  expenditure  of  his  own  money.  He  was  induced  by  this 
promise  to  spend  it  in  this  way,  instead  of  some  other  mode. 
If  it  is  not  fulfilled,  the  expenditure  will  have  been  procured  by 
a  false  pretense. 

As  the  plaintiff,  on  the  theory  of  this  evidence,  had  fulfilled 
his  part  of  the  contract,  and  nothing  remained  to  be  done  but 
the  payment  of  the  money  by  the  defendant,  there  could  be  a 
recovery  in  indebitatus  assumpsit;  and  it  was  not  necessary  to 
declare  on  the  special  contract.  The  fifth  count  in  the  declara- 
tion is  for  "  money  paid  by  the  plaintiff  for  the  defendants'  tes- 
tator in  his  lifetime,  at  his  request."  In  the  bill  of  particulars 
we  find  this  item :  "  To  cash  contributed  by  me,  J.  Semmes 
Devecmon,  out  of  my  own  money,  to  defray  my  expenses  to 
Europe  and  return,  the  said  John  S.  Combs,  now  deceased, 
having  promised  me  in  1878  '  that  if  I  would  contribute  part  of 


Chap.  II.  §  4.]  CONSIDERATION.  14S 

my  own  money  towards  the  trip,  he  would  give  me  a  part  of  his, 
and  would  make  up  to  me  my  part,'  and  the  amount  below  named 
is  my  contribution,  as  follows,"  etc.  It  seems  to  us  that  thia 
statement  is  a  sufficient  description  of  a  cause  of  action  covered 
by  the  general  terms  of  the  lifth  coxmt.  The  evidence  ought  to 
have  been  admitted. 

The  defendants  offered  the  following  prayer,  which  the  court 
granted : 

"  The  defendants,  by  their  attorneys,  pray  the  court  to  instruct 
the  jury  that  there  is  no  sufficient  evidence  in  this  case  to  entitle 
the  plaintiff  to  recover  the  interest  claimed  in  the  bill  of  particu- 
lars, marked  '  Exhibit  Xo.  1,  Bill  of  Particulars.' " 

The  only  evidence  bearing  on  this  question  is  the  account 
taken  from  the  books  of  the  deceased  which  was  offered  in  evi- 
dence by  the  plaintiff.  This  account  showed  on  its  face  a  final 
settlement  of  all  matters  embraced  in  it.  In  the  absence  of  proof 
showing  errors  of  some  kind,  the  parties  must  be  concluded  by 
it  in  all  respects.     We  think  the  prayer  was  properly  granted. 

Judgment  reversed,  and  new  trial  ordered* 


HAMER  V.   SIDWAY. 

124  NEW  YORK,  538.  — 1891. 

Appeal  from  an  order  of  the  General  Term  of  the  Supreme 
Court  which  reversed  a  judgment  in  favor  of  plaintiff  entered  at 
the  trial  at  Special  Term. 

The  action  was  brought  by  plaintiff,  as  assignee,  against  de- 
fendant, as  executor,  upon  a  contract  alleged  to  have  been  made 
between  plaintiff's  remote  assignor  and  defendant's  testator. 

Pakkek,  J.  The  question  which  provoked  the  most  discus- 
sion by  counsel  on  this  appeal,  and  which  lies  at  the  foundation 
of  plaintiff's  asserted  right  of  recovery,  is  whether  by  virtue  of 
a  contract  defendant's  testator  William  E.  Story  became  indebted 
to  his  nephew  William  E.  Story,  2d,  on  his  twenty-first  birthday 
in  the  sum  of  five  thousand  dollars.  The  trial  court  found  as  a 
fact  that  "on  the  20th  day  of  March,  1869,  .  .  .  William  E. 
Story  agreed  to  and  with  William  E.  Story,  2d,  that  if  he  would 


144  FORMATION  OF  CONTRACT.  [Part  U. 

refrain  from  drinking  liquor,  using  tobacco,  swearing,  and  play- 
ing cards  or  billiards  for  money  until  he  should  become  21  years 
of  age,  then  he,  the  said  William  E.  Story,  would  at  that  time 
pay  him,  the  said  William  E.  Story,  2d,  the  sum  of  $5000  for  such 
refraining,  to  which  the  said  William  E.  Story,  2d,  agreed,"  and 
that  he  "  in  all  things  fully  performed  his  part  of  said  agreement." 

The  defendant  contends  that  the  contract  was  without  consid- 
eration to  support  it,  and,  therefore,  invalid.  He  asserts  that 
the  promisee  by  refraining  from  the  use  of  liquor  and  tobacco  was 
not  harmed  but  benefited;  that  that  which  he  did  was  best  for 
him  to  do  independently  of  his  uncle's  promise,  and  insists  that 
it  follows  that  unless  the  promisor  was  benefited,  the  contract 
was  without  consideration.  A  contention  which,  if  well  founded, 
would  seem  to  leave  open  for  controversy  in  many  cases  whether 
that  which  the  promisee  did  or  omitted  to  do  was,  in  fact,  of 
such  benefit  to  him  as  to  leave  no  consideration  to  support  the 
enforcement  of  the  promisor's  agreement.  Such  a  rule  could  not 
be  tolerated,  and  is  without  foundation  in  the  law.  The  Ex- 
chequer Chamber,  in  1875,  defined  consideration  as  follows :  **  A 
valuable  consideration  in  the  sense  of  the  law  may  consist  either  in 
some  right,  interest,  profit,  or  benefit  accruing  to  the  one  party,  or 
some  forbearance,  detriment,  loss,  or  responsibility  given,  suffered, 
or  undertaken  by  the  other."  Courts  "will  not  ask  whether 
the  thing  which  forms  the  consideration  does  in  fact  benefit  the 
promisee  or  a  third  party,  or  is  of  any  substantial  value  to  any 
one.  It  is  enough  that  something  is  promised,  done,  forborne,  or 
suffered  by  the  party  to  whom  the  promise  is  made  as  considera- 
tion for  the  promise  made  to  him."     Anson's  Prin.  of  Con.  63. 

"  In  general,  a  waiver  of  any  legal  right  at  the  request  of  an- 
other party  is  a  sufficient  consideration  for  a  promise."  Par- 
sons on  Contracts,  44A. 

"  Any  damage,  or  suspension  or  forbearance  of  a  right,  will  be 
sufficient  to  sustain  a  promise."     Kent,  Vol.  2,  465,  12th  ed. 

Pollock,  in  his  work  on  contracts,  page  166,  after  citing  the 
definition  given  by  the  Exchequer  Chamber  already  quoted,  says : 
"  The  second  branch  of  this  judicial  description  is  really  the  most 
important  one.  Consideration  means  not  so  much  that  one  party 
is  profiting  as  that  the  other  abandons  some  legal  right  in  the 


( 


Chap.  II.  §  4.]  CONSIDERATION.  146 

present  or  limits  his  legal  freedom  of  action  in  the  future  as  an 
inducement  for  the  promise  of  the  first. " 

Now,  applying  this  rule  to  the  facts  before  us,  the  promisee 
used  tobacco,  occasionally  drank  liquor,  and  he  had  a  legal  right 
to  do  so.  That  right  he  abandoned  for  a  period  of  years  upon 
the  strength  of  the  promise  of  the  testator  that  for  such  forbear- 
ance he  would  give  him  $5000.  We  need  not  speculate  on  the 
effort  which  may  have  been  required  to  give  up  the  use  of  those 
stimulants.  It  is  sufficient  that  he  restricted  his  lawful  freedom 
of  action  within  certain  prescribed  limits  upon  the  faith  of  his 
uncle's  agreement,  and  now  having  fully  performed  the  condi- 
tions imposed,  it  is  of  no  moment  whether  such  performance 
actually  proved  a  benefit  to  the  promisor,  and  the  court  will  not 
inquire  into  it,  but  were  it  a  proper  subject  of  inquiry,  we  see 
nothing  in  this  record  that  would  permit  a  determination  that 
the  uncle  was  not  benefited  in  a  legal  sense.  Few  cases  have 
been  found  which  may  be  said  to  be  precisely  in  point,  but  such 
as  have  been  support  the  position  we  have  taken.  -'^ 

In  Shadwell  v.  Shadwell  (9  C.  B.  N.  S.  169)  an  uncle  wrote 
to  his  nephew  as  follows : 

"  My  Dear  Lancey  —  I  am  so  glad  to  hear  of  your  intended  marriage 
with  Ellen  Nicholl,  and  as  I  promised  to  assist  you  at  starting,  I  am 
happy  to  tell  you  that  I  will  pay  to  you  150  pounds  yearly  during  my 
life  and  until  your  annual  income  derived  from  your  profession  of  a 
chancery  barrister  shall  amount  to  600  guineas,  of  which  your  own 
admission  will  be  the  only  evidence  that  I  shall  require. 

"  Your  affectionate  uncle, 

"  Charles  Shadwell." 

•  It  was  held  that  the  promise  was  binding  and  made  upon  good 
consideration. 

In  Lakota  v.  Newton,  an  unreported  case  in  the  Superior 
Court  of  Worcester,  Mass.,  the  complaint  averred  defendant's 
promise  that  "  if  you  (meaning  plaintiif)  will  leave  off  drinking 
for  a  year  I  will  give  you  $100,"  plaintiff's  assent  thereto,  per- 
formance of  the  condition  by  him,  and  demanded  judgment  there- 
for. Defendant  demurred  on  the  ground,  among  others,  that  the 
plaintiff's  declaration  did  not  allege  a  valid  and  sufficient  consid- 
eration for  the  agreement  of  the  defendant.  The  demurrer  was 
overruled. 


146  FORMATION  OF  CONTRACT.  [Part  II. 

In  Talbott  v.  Stemmons  (a  Kentucky  case  not  yet  reported)/ 
the  step-grandmother  of  the  plaintiff  made  with  him  the  follow- 
ing agreement:  "I  do  promise  and  bind  myself  to  give  my 
grandson,  Albert  R.  Talbott,  $500  at  my  death,  if  he  will  never 
take  another  chew  of  tobacco  or  smoke  another  cigar  during  my 
life  from  this  date  up  to  my  death,  and  if  he  breaks  this  pledge 
he  is  to  refund  double  the  amount  to  his  mother."  The  execu- 
tor of  Mrs.  Stemmons  demurred  to  the  complaint  on  the  ground 
that  the  agreement  was  not  based  on  a  sufficient  consideration. 
The  demurrer  was  sustained  and  an  appeal  taken  therefrom  to 
the  Court  of  Appeals,  where  the  decision  of  the  court  below  was 
reversed.  In  the  opinion  of  the  court  it  is  said  that  "  the  right 
to  use  and  enjoy  the  use  of  tobacco  was  a  right  that  belonged  to 
the  plaintiff  and  not  forbidden  by  law.  The  abandonment  of  its 
use  may  have  saved  him  money  or  contributed  to  his  health; 
nevertheless,  the  surrender  of  that  right  caused  the  promise,  and 
having  the  right  to  contract  with  reference  to  the  subject  matter, 
the  abandonment  of  the  use  was  a  sufficient  consideration  to 
uphold  the  promise."  Abstinence  from  the  use  of  intoxicating 
liquors  was  held  to  furnish  a  good  consideration  for  a  promissory 
note  in  Lindell  v.  Rokes,  60  Mo.  249. 

The  cases  cited  by  the  defendant  on  this  question  are  not  in 
point.  In  Mallory  v.  Gillett  (21  K.  Y.  412),  Belknap  v. 
Bender  (75  Id.  446),  and  Berry  v.  Brown  (107  Id.  659),  the 
promise  was  in  contravention  of  that  provision  of  the  statute  of 
frauds  which  declares  void  all  promises  to  answer  for  the  debts  of 
third  persons  unless  reduced  to  writing.  In  Beaumont  v.  Reeve 
(Shirley's  L.  C.  6)  and  PoHerfield  v.  Butler  (47  Miss.  165)  the 
question  was  whether  a  moral  obligation  furnishes  sufficient 
consideration  to  uphold  a  subsequent  express  promise.  In 
Duvoll  V.  Wilson  (9  Barb.  487)  and  In  re  Wilber  v.  Warren 
(104  N.  Y.  192)  the  proposition  involved  was  whether  an  execu- 
tory covenant  against  incumbrances  in  a  deed  given  in  considera- 
tion of  natural  love  and  affection  could  be  enforced.  In  Van- 
derbilt  v.  Schreyer  (91  N.  Y.  392)  the  plaintiff  contracted  with 
defendant  to  build  a  house,  agreeing  to  accept  in  part  payment 
therefor  a  specific  bond  and  mortgage.     Afterwards  he  refused  to 

1  89  Ky.  222. 


Chap.  II.  §  4.]  CONSIDERATION.  147 

finish  his  contract  unless  the  defendant  would  guarantee  its  pay- 
ment, which  was  done.  It  was  held  that  the  guarantee  could  not 
be  enforced  for  want  of  consideration.  For  in  building  the 
house  the  plaintiff  only  did  that  which  he  had  contracted  to  do. 
And  in  Robinson  v.  Jewett  (116  N.  Y.  40)  the  court  simply  held 
that  "  the  performance  of  an  act  which  the  party  is  under  legal 
obligation  to  perform  cannot  constitute  a  consideration  for  a  new 
contract."  It  will  be  observed  that  the  agreement  which  we 
have  been  considering  was  within  the  condemnation  of  the  stat- 
ute of  frauds,  because  not  to  be  performed  within  a  year,  and  not 
in  writing.  But  this  defense  the  promisor  could  waive,  and  his 
letter  and  oral  statements  subsequent  to  the  date  of  final  per- 
formance on  the  part  of  the  promisee  must  be  held  to  amount  to 
a  waiver.  Were  it  otherwise,  the  statute  could  not  now  be  in- 
voked in  aid  of  the  defendant.  It  does  not  appear  on  the  face 
of  the  complaint  that  the  agreement  is  one  prohibited  by  the 
statute  of  frauds,  and,  therefore,  such  defense  could  not  be 
made  available  unless  set  up  in  the  answer.  Porter  v.  Wormser^ 
94  N.  Y.  431,  450.     This  was  not  done. 

In  further  consideration  of  the  questions  presented,  then,  it 
must  be  deemed  established  for  the  purposes  of  this  appeal,  that 
on  the  31st  day  of  January,  1875,  defendant's  testator  was  in- 
debted to  William  E.  Story,  2d,  in  the  sum  of  $5000,  and  if  this 
action  were  founded  on  that  contract  it  would  be  barred  by  the 
statute  of  limitations  which  has  been  pleaded,  but  on  that  date 
the  nephew  wrote  to  his  uncle  as  follows : 

"Dear  Uncle  —  I  am  now  21  years  old  to-day,  and  I  am  now  my 
own  boss,  and  I  believe,  according  to  agreement,  that  there  is  due  me 
^5000.  I  have  lived  up  to  the  contract  to  the  letter  in  every  sense  of 
the  word." 

A  few  days  later,  and  on  February  sixth  the  uncle  replied,  and, 
80  far  as  it  is  material  to  this  controversy,  the  reply  is  as  follows: 

"Dear  Nephew  —  Your  letter  of  the  31st  ult.  came  to  hand  all  right 
saying  that  you  had  lived  up  to  the  promise  made  to  me  several  yeara 
ago.  I  have  no  doubt  but  you  have,  for  which  you  shall  have  ^5000  as 
I  promised  you.  I  had  the  money  iu  the  bank  the  day  you  was  21  years 
old  that  I  intended  for  you,  and  you  shall  have  the  money  certain.  Now, 
Willie,  I  don't  intend  to  interfere  with  this  money  in  any  way  until  I 


148  FORMATION  OF  CONTRA.CT.  [Pabt  IL 

think  you  are  capable  of  taking  care  of  it,  and  the  sooner  that  time  comes 
the  better  it  will  please  me.  I  would  hate  very  much  to  have  you  start 
out  in  some  adventure  that  you  thought  all  right  and  lose  this  money  in 
one  year.  .  .  .  This  money  you  have  earned  much  easier  than  I  did, 
besides  acquiring  good  habits  at  the  same  time,  and  you  are  quite  wel- 
come to  the  money.     Hope  you  will  make  good  use  of  it.  .  .  . 

"  W.  E.  Story. 
"  P.S.  —  You  can  consider  this  money  on  interest." 

The  trial  court  found  as  a  fact  that  "  said  letter  was  received 
by  said  William  E.  Story,  2d,  who  thereafter  consented  that  said 
money  should  remain  with  the  said  William  E.  Story  in  accord- 
ance with  the  terms  and  conditions  of  said  letter."  And  further, 
"That  afterwards,  on  the  first  day  of  March,  1877,  with  the 
knowledge  and  consent  of  his  said  uncle,  he  duly  sold,  trans- 
ferred, and  assigned  all  his  right,  title,  and  interest  in  and  to  said 
sum  of  $5000  to  his  wife.Libbie  H.  Story,  who  thereafter  duly 
sold,  transferred,  and  assigned  the  same  to  the  plaintiff  in  this 
action." 

We  must  now  consider  the  effect  of  the  letter,  and  the  nephew's 
assent  thereto.  Were  the  relations  of  the  parties  thereafter  that 
of  debtor  and  creditor  simply,  or  that  of  trustee  and  cestui  que 
trust?  If  the  former,  then  this  action  is  not  maintainable,  be- 
<jause  barred  by  lapse  of  time.  If  the  latter,  the  result  must  be 
•otherwise.  No  particular  expressions  are  necessary  to  create  a 
trust.  Any  language  clearly  showing  the  settler's  intention  is 
auflB.cient  if  the  property  and  disposition  of  it  are  definitely 
stated.     Lewin  on  Trusts,  65. 

A  person  in  the  legal  possession  of  money  or  property  acknowl- 
edging a  trust  with  the  assent  of  the  cestui  que  trust,  becomes 
from  that  time  a  trustee  if  the  acknowledgment  be  founded  on  a 
valuable  consideration.  His  antecedent  relation  to  the  subject, 
whatever  it  may  have  been,  no  longer  controls.  2  Story^s  Eq. 
§  972.  If  before  a  declaration  of  trust  a  party  be  a  mere  debtor, 
a  subsequent  agreement  recognizing  the  fund  as  already  in  his 
hands  and  stipulating  for  its  investment  on  the  creditor's  account 
will  have  the  effect  to  create  a  trust.     Day  v.  Roth,  18  N.  Y.  448. 

It  is  essential  that  the  letter  interpreted  in  the  light  of  sur- 
rounding circumstances  must  show  an  intention  on  the  part  of 
the  uncle  to  become  a  trustee  before  he  will  be  held  to  have  be- 


Chap.  II,  §  4.]  CONSIDERATION.  149 

come  such;  but  in  an  effort  to  ascertain  the  construction  which 
should  be  given  to  it,  we  are  also  to  observe  the  rule  that  the 
language  of  the  promisor  is  to  be  interpreted  in  the  sense  in 
which  he  had  reason  to  suppose  it  was  understood  by  the  prom- 
isee. White  V.  Hoyt,  73  N.  Y.  505,  511.  At  the  time  the  uncle 
wrote  the  letter  he  was  indebted  to  his  nephew  in  the  sum  of 
$5000,  and  payment  had  been  requested.  The  uncle,  recognizing 
the  indebtedness,  wrote  the  nephew  that  he  would  keep  the  money 
until  he  deemed  him  capable  of  takiog  care  of  it.  He  did  not 
say  "I  will  pay  you  at  some  other  time,"  or  use  language  that 
would  indicate  that  the  relation  of  debtor  and  creditor  would 
continue.  On  the  contrary,  his  language  indicated  that  he  had 
set  apart  the  money  the  nephew  had  "  earned  "  for  him,  so  that 
when  he  should  be  capable  of  taking  care  of  it  he  should  receive 
it  with  interest.  He  said :  "  I  had  the  money  in  the  bank  the 
day  you  were  21  years  old  that  I  intended  for  you,  and  you  shall 
have  the  money  certain."  That  he  had  set  apart  the  money  is 
further  evidenced  by  the  next  sentence:  "Kow,  Willie,  I  don't 
intend  to  interfere  with  this  money  in  any  way  until  I  think  you 
are  capable  of  taking  care  of  it."  Certainly,  the  uncle  must  have 
intended  that  his  nephew  should  understand  that  the  promise 
not  **  to  interfere  with  this  money  "  referred  to  the  money  in  the 
bank  which  he  declared  was  not  only  there  when  the  nephew  be- 
came 21  years  old,  but  was  intended  for  him.  True,  he  did  not 
use  the  word  "  trust, "  or  state  that  the  money  was  deposited  in 
the  name  of  William  E.  Story,  2d,  or  in  his  own  name  in  trust  for 
him,  but  the  language  used  must  have  been  intended  to  assure  the 
nephew  that  his  money  had  been  set  apart  for  him,  to  be  kept 
without  interference  until  he  should  be  capable  of  taking  care  of 
it,  for  the  uncle  said  in  substance  and  in  effect :  "  This  money  you 
have  earned  much  easier  than  I  did  .  .  .  you  are  quite  welcome 
to.  I  had  it  in  the  bank  the  day  you  were  21  years  old,  and  don't 
intend  to  interfere  with  it  in  any  way  until  I  think  you  are  capa- 
ble of  taking  care  of  it,  and  the  sooner  that  time  comes  the  better 
it  will  please  me."  In  this  declaration  there  is  not  lacking  a 
single  element  necessary  for  the  creation  of  a  valid  trust,  and  to 
that  declaration  the  nephew  assented. 

The  learned  judge  who  wrote  the  opinion  of  the  General  Term, 


150  FORMATION  OF  CONTRACT.  [Part  II. 

seems  to  have  taken  the  view  that  the  trust  was  executed  during 
the  lifetime  of  defendant's  testator  by  payment  to  the  nephew, 
but  as  it  does  not  appear  from  the  order  that  the  judgment  was 
reversed  on  the  facts,  Ave  must  assume  the  facts  to  be  as  found  by 
the  trial  court,  and  those  facts  support  its  judgment. 

The  order  appealed  from  should  be  reversed  and  the  judgment 
of  the  Special  Term  affirmed,  with  costs  payable  out  of  the  estate. 

All  concur.  . 

Order  reversed  and  judgment  of  Special  Term  affirmed. 


a.  First  test  of  reality.  Did  the  promisee  do,  forbear,  suffer,  or 
promise  anything  in  respect  of  his  promise? 

(a)    Motive  must  be  distinguished  from  consideration. 

FINK   V.    COX. 

18  JOHNSON  (N.  Y.),  145.  — 1820. 

Assumpsit  to  recover  the  amount  of  a  promissory  note  given 
by  defendant's  testator  to  his  son,  the  plaintiff.  Verdict  for 
plaintiff,  subject  to  the  opinion  of  the  court  as  to  the  law  of  the 
case. 

Spencer,  C.  J.,  delivered  the  opinion  of  the  court.  The 
question  in  this  case  is,  whether  there  is  a  sufficient  considera- 
tion for  the  note  on  which  this  suit  is  founded.  It  appears  from 
the  declaration  of  the  testator  when  the  note  was  given,  that  he 
intended  it  as  an  absolute  gift  to  his  son,  the  plaintiff;  alleging 
that  the  plaintiff  was  not  so  wealthy  as  his  brothers,  that  he  had 
met  with  losses,  and  that  he  and  his  brothers  had  had  a  contro- 
versy about  a  stall.  Such  were  the  reasons  assigned  for  his 
giving  the  note  to  the  plaintiff. 

There  can  be  no  doubt  that  a  consideration  is  necessary  to  up- 
hold the  promise,  and  that  it  is  competent  for  the  defendant  to 
show  that  there  was  no  consideration.  17  Johns.  Rep.  301; 
Schoonmaker  v.  Roosa  and  De  Witt.  The  only  consideration 
pretended  is  that  of  natural  love  and  affection  from  a  father  to 
a  child ;  and  if  that  is  a  sufficient  consideration,  the  plaintiff  is 
entitled  to  recover,  otherwise  not. 


Chap.  II.  §  4.]  CONSIDERATION.  151 

It  is  conceded  that  the  gift,  in  this  case,  is  not  a  donatio 
causa  mortis,  and  cannot  be  supported  on  that  ground.  In  Pear- 
son V.  Pearson  (7  Johns.  Rep.  26)  the  question  was,  whether 
the  gift  of  a  note  signed  by  the  defendant  to  the  plaintiff  was 
such  a  vested  gift,  though  without  consideration,  as  to  be  valid 
in  law;  we  held  that  it  was  not,  and  that  a  parol  promise  to  pay 
money,  as  a  gift,  was  no  more  a  ground  of  action  than  a  promise 
to  deliver  a  chattel  as  a  gift ;  and  we  referred  to  the  case  of  Noble 
V.  Smith  (2  Johns.  Rep.  52),  where  the  question  underwent  a  full 
discussion  and  consideration.  The  case  of  Grangiac  v.  Arden 
(10  Johns.  Rep.  293)  was  decided  on  the  principle  that  the  gift 
of  the  ticket  had  been  completed  by  delivery  of  possession,  and 
is  in  perfect  accordance  with  the  former  cases. 

It  has  been  strongly  insisted  that  the  note  in  the  present  case, 
although  intended  as  a  gift,  can  be  enforced  on  the  consideration 
of  blood.  It  is  undoubtedly  a  fair  presumption  that  the  testa- 
tor's inducement  to  give  the  note  sprang  from  parental  regard. 
The  consideration  of  blood,  or  natural  love  and  affection,  is 
sufficient  in  a  deed,  against  all  persons  but  creditors  and  bona 
Jide  purchasers ;  and  yet  there  is  no  case  where  a  personal  action 
has  been  founded  on  an  executory  contract,  where  a  consideration 
was  necessary,  in  which  the  consideration  of  blood,  or  natural 
love  and  affection,  has  been  held  sufficient.  In  such  a  case  the 
consideration  must  be  a  valuable  one,  for  the  benefit  of  the 
promisor,  or  to  the  trouble,  loss,  or  prejudice  of  the  promisee. 
The  note  here  manifested  a  mere  intention  to  give  the  one  thou- 
sand dollars.  It  was  executory,  and  the  promisor  had  a  locus 
poenitentice.  It  was  an  engagement  to  give,  and  not  a  gift.  None 
of  the  cases  cited  by  the  plaintiff's  counsel  maintain  the  position, 
that  because  a  parent,  from  love  and  natural  affection,  engages 
to  give  his  son  money,  or  a  chattel,  that  such  a  promise  can  be 
enforced  at  law. 

Judgment  for  the  defendant.^ 

1  Accord :  Whitaker  v.  Whitaker,  52  N.  Y.  368 ;  Schnell  v.  Nell,  17  Ind. 
29,  ante,  p.  138.   Cf.  Smith  v.  Ferine,  121  N.  Y.  376,  384. 


152  FORMATION  OF  CONTRACT.  [Pabt  IL 

(fi)   Consideration  must  move  from  promisee. 

Note. — For  cases  on  the  proposition  that  the  consideration  must  move 
from  the  promisee,  see  cases  under  "Limits  of  Contractual  Obligation," 
post,  Part  ni.  Ch.  I.  §  2. 


b.  Second  test  of  reality.  Was  the  promisee's  act,  forbearance, 
sufferance,  or  promise  of  any  ascertainable  value  9 

(a)  Prima  facie  impossibility. 
BEEBE  V.  JOHNSON. 

19  WENDELL  (N.  Y.),  500.  — 1838. 

This  was  an  action  of  covenant. 

On  the  21st  January,  1833,  Johnson,  for  the  consideration  of 
35000,  conveyed  by  deed  to  Beebe,  the  sole  and  exclusive  right  to 
make,  use,  and  vend  in  Upper  and  Lower  Canada,  in  certain 
counties  of  this  State,  and  in  other  places,  a  threshing  machine 
which  had  been  patented  to  one  Warren,  and  covenanted  to  perfect 
the  patent  right  in  England  as  soon  as  practicable  and  within  a 
reasonable  space  of  time,  so  as  to  secure  to  Beebe  the  entire  control 
of  the  provinces  of  Upper  and  Lower  Canada.  In  April,  1834, 
Beebe  commenced  this  suit,  and  in  his  declaration,  after  setting 
forth  the  contract,  averred,  that  although  a  reasonable  time  for 
the  purpose  had  long  since  elapsed,  that  Johnson  had  not  per- 
fected the  patent  right  in  England,  or  otherwise  secured  to  him 
the  sole  and  exclusive  right  of  making,  using,  and  vending  the 
machine  in  the  provinces  of  Upper  and  Lower  Canada.  He 
further  averred,  that  Johnson  and  himself  being  citizens  of  the 
United  States,  Johnson  could  not  obtain,  either  for  himself  or 
for  Beebe,  the  plaintiff,  from  the  proper  authorities  in  Canada, 
the  exclusive  right  of  vending  the  machine  within  those  prov  inces ; 
and  so,  he  said,  Johnson  had  not  kept  his  covenant.  The  defend- 
ant pleaded  the  general  issue,  and  gave  notice  of  special  matter 
to  be  proved  on  the  trial.  On  the  trial  of  the  cause  the  plaintiff 
read  in  evidence  a  letter  of  the  defendant,  dated  8th  April,  1833, 
in  which  he  admitted,  in  substance,  that  in  the  negotiation 
between  the  parties  the  exclusive  right  of  vending  the  machine 


Chap.  II.  §  4.]  CONSIDERATION.  153 

in  the  Canadas  had  been  estimated  at  $500.  The  plaintiff  also 
proved  by  a  witness,  who  had  been  employed  in  the  Canadas  by 
him  in  vending  the  article,  that  the  exclusive  right  of  vending 
it  there  would,  in  his  opinion,  be  worth  $500.  By  a  written 
stipulation  between  the  parties,  it  was  admitted  that  the  patent 
right  could  not  be  perfected  in  England,  because  the  authority  to 
grant  letters  patent  for  such  improvements  was  vested  in  the 
provinces,  and  that  in  the  provinces  the  exclusive  right  of  vend- 
ing improvements  of  this  nature  can  be  conferred  only  upon  a 
subject  of  Great  Britain,  and  a  resident  of  the  provinces,  and  that 
the  patentee,  the  plaintiff,  and  the  defendant  are  all  citizens  of  the 
United  States,  and  cannot  become  subjects  of  Great  Britain  short 
of  a  residence  in  the  provinces  of  seven  years.  The  jury  found  a 
verdict  for  the  plaintiff  of  $601.23,  being  the  sum  of  $500,  with 
the  interest  thereof  from  the  date  of  the  deed  declared  upon. 
The  defendant's  counsel  having  moved  for  a  nonsuit,  which  was 
overruled,  and  having  excepted  to  the  charge  of  the  judge,  now 
moved  for  a  new  trial.  The  principal  grounds  relied  upon  in 
support  of  the  application  will  appear  from  the  opinion  delivered 
refusing  a  new  trial. 

Nelson,  C.  J.  It  is  supposed  by  the  counsel  for  the  defend- 
ant that  a  legal  impossibility  prevented  the  fulfilment  of  the 
covenant  to  perfect  the  patent  right  in  England,  so  as  to  secure 
the  monopoly  of  the  Canadas  to  the  plaintiff,  and  hence  that  the 
obligation  was  dispensed  with,  so  that  no  action  can  be  main- 
tained. There  are  authorities  which  go  that  length,  Co.  Litt.  206, 
6.;  Shep.  Touch.  164;  2  Co.  Litt.  26;  Piatt,  on  Cov.  569;  but  if 
the  covenant  be  within  the  range  of  possibility,  however  absurd 
or  improbable  the  idea  of  the  execution  of  it  may  be,  it  will  be  ' 
upheld:  as  where  one  covenants  it  shall  rain  to-morrow,  or  that 
the  Pope  shall  be  at  Westminster  on  a  certain  day.  To  bring  the 
case  within  the  rule  of  dispensation,  it  must  appear  that  the  thing 
to  be  done  cannot  by  any  means  be  accomplished;  for,  if  it  is  only  I 
improbable,  or  out  of  the  power  of  the  obligor,  it  is  not  in  law 
deemed  impossible.  3  Comyn's  Dig.  93;  1  Moll.  Abr.  419.  Now 
it  is  clear  that  the  fulfilment  in  this  case  cannot  be  considered  an 
impossibility  within  the  above  exposition  of  the  rule;  because, 
for  anything  we  know  to  the  contrary,  the  exclusive  right  to 


164  FORMATION  OF  CONTRACT.  [Part  II 

make,  use,  and  vend  the  machine  in  the  Canadas,  might  have 
been  secured  in  England  by  act  of  Parliament  or  otherwise;  at 
least,  there  is  nothing  in  all  this  necessarily  impossible.  These 
provinces  are  a  part  of  the  British  Empire,  and  subject  to  the 
power  of  the  Parliament  at  home;  which  body  might  very  well 
grant  the  privilege  the  defendant  covenanted  to  procure.  Cer- 
tainly we  are  unable  to  say  the  government  cannot  or  would  not 
by  any  means  grant  it.  There  is,  then,  nothing  in  the  case  to 
take  it  out  of  the  rule  in  Paradine  v.  Jane  (Aleyn,  27)  as 
expounded  by  Chambre,  J.,  in  Beale  v.  Thompson  (3  Bos.  &  Pull. 
420),  namely,  if  a  party  enter  into  an  absolute  contract  without 
any  qualification  or  exception,  and  receives  from  the  party  with 
whom  he  contracts  the  consideration  of  such  engagement,  he  must 
abide  by  the  contract,  and  either  do  the  act  or  pay  damages ;  his 
liability  arising  from  his  own  direct  and  positive  undertaking. 
6  T.  B.  750;  8  Id.  267,  Lavorence,  J.;  10  East,  533;  4  Carr.  & 
Payne,  295;  ISelw.SU. 

It  has  also  been  said  that  the  action  cannot  be  maintained,  as 
the  covenant  contemplated  the  violation  of  the  laws  of  England. 
We  are  unable  to  perceive  the  force  of  this  objection,  as  the  ful- 
filment of  the  covenant  necessarily  required  the  procurement  of 
lawful  authority  to  make  and  vend  the  machine  in  the  Canadas. 
It  is  difficult  to  understand  how  this  could  be  accomplished  by 
other  than  lawful  means.  That  it  might  be  by  such,  we  have 
already  considered  not  impossible. 

Again,  it  was  said  the  contract  was  void  because  it  contem- 
plated a  renunciation  of  citizenship  by  the  defendant.  Whether, 
if  the  fact  was  admitted,  the  consequence  would  follow,  we  need 
not  stop  to  consider,  because  it  is  very  clear  that  no  such  step  is 
necessarily  embraced  in  the  covenant.  For  aught  we  know,  the 
patent  might  be  procured  without  such  renunciation;  and  if  it 
were  considered  unlawful  to  contract  for  expatriation,  inasmuch 
as  this  agreement  does  not  necessarily  contemplate  it,  we  would 
be  bound  to  hold  that  the  defendant  assumed  to  procure  the 
patent  without  it.  But  even  in  England,  the  common  law  rule 
against  the  expatriation  of  the  subject  is  so  far  modified  that 
naturalization  abroad  for  commercial  purposes  is  recognized,  and 
is  of  course  lawful.     1  Comyn,  677;  8  T.  R.Sl;  1  Bos.  &  Pull. 


€hap.  II.  §  4.] 


CONSIDERATION. 


166 


430,  440,  444;  2  Kent's  Comm.  49;  1  Peter's  C.  C.  B.  159.  In  the 
case  of  Wilson  v.  Marryat  (8  T.  K.  31,  and  1  Bos.  &  Pull.  430)  it 
was  decided  that  Collet,  a  natural-born  subject  of  Great  Britain, 
having  become  a  citizen  of  the  United  States,  according  to  our 
laws,  was  entitled  to  all  the  advantages  of  an  American  citizen 
under  the  treaty  of  1794.  There  the  defendant  undertook  to 
avoid  a  policy  of  insurance  procured  by  the  plaintiff  for  the  bene- 
fit of  Collet  upon  an  American  ship  and  cargo,  of  which  he  was 
master,  on  the  ground  that  he  was  a  British  subject,  and  therefore 
the  trade  in  which  he  was  engaged  illegal,  being  in  violation  of 
the  privileges  of  the  East  India  Company,  which  trade  was  secured 
to  American  citizens  by  the  treaty  of  1794. 

New  trial  denied. 


STEVENS  V.  COON. 

1  PINNEY    (Wis.),  356.  — 1843. 

Dunn,  C.  J.  Error  is  brought  in  this  case  to  reverse  a  judg- 
ment of  the  District  Court  of  Jefferson  County. 

Coon,  plaintiff  below,  brought  his  action  of  assumpsit  against 
Stevens,  defendant  below,  to  recover  damages  on  a  liability 
growing  out  of  a  contract,  which  is  in  the  words,  etc.,  following, 
viz. : 

«  AsTOR,  March  23,  1839. 

"In  consideration  of  C.  J.  Coon  entering  the  west  half  of  the  north- 
west quarter  of  section  35,  in  town  13,  range  13,  I  bind  myself  that  the 
said  eighty  acres  of  land  shall  sell,  on  or  before  the  1st  October  next,  for 
two  hundred  dollars  or  more,  and  the  said  Coon  agrees  to  give  me  on»- 
half  of  the  amount  over  two  hundred  dollars  said  land  may  sell  for  in 
consideration  of  my  warranty. 


"  T  agree  to  the  above  contract. 


"  Hamilton  Stevens. 


"  C.  J.  CooN." 


At  the  August  term  of  the  said  Jefferson  County  District 
Court,  in  the  year  1840,  the  said  defendant  Stevens  pleaded  the 
general  issue  which  was  joined  by  the  said  plaintiff  Coon,  and 
after  several  continuances  the  case  was  tried  at  the  October  term, 
1842.     On  the  trial,  the  above  contract,  and  the  receiver's  receipt 


Or 

i 

r 


9 


? 


166  FORMATION  OF  CONTRACT.  [Part  IL 


J 


J 


to  said  plaintiff  Coon,  for  the  purchase  money  for  said  tract  of 
Q*  land  described  in  said  contract,  were  read  in  evidence  to  the  juryj 

^  and  Abraham  Vanderpool,  a  witness,  testified  "  that  he  had  visited 

that  part  of  the  country  where  the  land  lies,  specified  in  said 
writing,  and  was  upon  the  same,  as  he  has  no  doubt,  and  estimated 
the  present  value  of  the  same  at  $1.50  per  acre,  and  that  in 
October,  1839,  it  might  be  worth  $1.25  an  acre."  Upon  this 
evidence  and  testimony  the  plaintiff  rested  his  case. 

Under  the  construction  put  on  the  contract  read  in  evidence, 
the  jury  found  for  the  plaintiff  $116.50  in  damages,  and  judg- 
^   '    3  ment  was   entered  thereon.     There   is   manifest   error   in   this 

decision  of  the  court.     From  an  inspection  of  the  contract,  it  is 
obvious  that  it  is  not  such  an  one  as  is  obligatory  on  either 
party.     There   is   no   reciprocity   of   benefit,  and   it  binds   the 
y      ^  defendant  below  to  the  performance  of  a  legal  impossibility,  so 

"•-^  palpable  to  the  contracting  parties  that  it  could  not  have  been 

>  seriously  intended  by  the  parties  as  obligatory  on  either.     The 

undertaking  of  the  defendant  below  is,  "  that  plaintiff's  tract  of 
land  shall  sell  for  a  certain  sum  by  a  given  day."  Is  it  not 
legally  impossible  for  him  to  perform  this  undertaking?  Cer- 
tainly, no  man  can  in  legal  contemplation  force  the  sale  of 
another's  property  by  a  given  day,  or  by  any  day,  as  of  his  own 
act.  The  plaintiff  was  well  apprised  of  the  deficiency  of  his 
contract  on  the  trial,  as  the  testimony  of  his  witness  was  entirely 
apart  from  the  contract  sued  on,  and  was  directed  in  part  to  a 
different  contract,  and  such  an  one  as  the  law  would  have  recog- 
nized. If  the  contract  had  been  that  the  tract  of  land  would  be 
worth  $200  by  a  given  day,  then  it  could  have  been  recovered  on, 
if  it  did  not  rise  to  that  value  in  the  time.  1  Comyn  on  Con- 
tracts, 14,  16,  18 ;  Comyn' s  Dig.,  title  "  Agreement "  ;  1  Pothier  on 
Obligations,  71;  6  Peter sdorf  s  Abridg.  218;  2  Sand.  137  (d).  The 
District  Court  should  not  have  entered  judgment  on  the  finding 
of  the  jury  in  this  case.  The  construction  of  the  contract  by  the 
District  Court  was  erroneous. 

Judgment  reversed  with  costs.* 

V  /J    -■•:•'  .■>'■--■  ^ 

1  Cf .  Mtrrill  v.  Pacifeer,  80  la.  542,  post^.  340 }  Kitchen  v.  Loudenback,  48 
Oh.  St.  177. 


^ 


Chap.  II  §  4.]  CONSIDERATION.  167 

(J3)    Uncertainty. 
SHERMAN  V.   KITSMILLER,   Adm'r. 
17  SERGEANT  &  RAWLE  (Penn.),  45.  — 1827- 

Duncan,  J.     The  declaration  contains  four  counts : 

1.  On  the  special  promise  to  give  Elizabeth  Koons  one  hundred 
acres  of  land,  in  consideration  that  she  should  live  with  the 
intestate,  as  his  housekeeper,  until  her  marriage,  with  an  aver- 
ment that  she  did  live  with  him,  and  keep  his  house  until  her 
marriage. 

2.  That  he  would  give  her  one  hundred  acres  of  land,  if  she 
lived  with  him  until  her  marriage,  and  married  the  plaintiff, 
George  Sherman,  with  an  averment  that  she  did  live  with  him 
until  she  intermarried  with  George  Sherman. 

3.  Is  a  promise  to  give  her  one  hundred  acres  of  land,  if  she 
married  George  Sherman,  with  an  averment  that  she  intermarried 
with  George  Sherman. 

4.  Is  a  quantum  meruit  for  work,  labor,  and  services. 

The  error  assigned  is,  in  that  part  of  a  long  charge  in  which 
the  court  say,  "There  can  be  no  recovery,  unless  there  was  a 
legal  promise,  seriously  made;  if  a  promise  is  so  vague  in  its 
terms  as  to  be  incapable  of  being  understood,  and  of  being  carried 
into  effect,  it  cannot  be  enforced.  If  George  Sherman  had  refer- 
ence to  no  particular  lands,  if  he  did  not  excite  or  intend  to 
excite,  a  hope  or  expectation  in  Elizabeth  Koons,  that  after  her 
marriage  with  George  Sherman  she  should  get  any  land,  such 
promise  would  not  be  so  perfect  as  to  furnish  the  ground  of  an 
action  for  damages.  But  if  George  Sherman  was  seized  of  several 
tracts  in  the  vicinity,  and  he  promised  her  one  hundred  acres,  in 
such  a  manner  as  to  excite  an  expectation  in  her  that  it  was  a 
particular  part  of  his  lands  so  held  by  him,  though  not  particu- 
larly describing  or  specifying  its  value,  or  by  whom;  and  if,  in 
pursuance  of  such  promise,  she  did  marry  George  Sherman,  then 
the  action  might  be  sustained." 

Now,  let  us  put  the  case  of  the  plaintiffs  in  the  most  favorable 
light,  without  regarding  the  form  of  the  declaration,  and  admit 
that  the  proof  met  the  allegation,  the  special  promise  of  the  one 


168  FORMATION  OF  CONTRACT.  [i-ABT  li. 

hundred  acres  of  land,  the  consideration  of  the  promise,  marriage, 
and  its  execution,  and  living  with  the  defendant's  intestate  until 
the  marriage,  the  charge  of  the  court  was,  in  the  particular  com- 
plained of,  more  favorable  to  the  plaintiffs  than  their  case 
warranted.  It  should  have  been,  on  the  question  put  to  the 
court,  that  the  promise  could  not  support  the  action;  that  the 
defendant's  intestate  did  not  assume  to  convey  any  certain  thing, 
to  convey  any  certain  or  particular  land,  or  that  could,  with 
reference  to  anything  said  by  him,  refer  to  anything  certain. 
Whereas  the  court  submitted  to  the  jury  whether  it  did  refer  to 
anything  certain,  viz.,  lands  of  the  intestate  in  the  vicinity;  and 
that  without  one  spark  of  evidence  to  authorize  the  jury  to  make 
such  an  inference  or  draw  such  conclusion.  And  if  the  verdict 
had  been  for  the  plaintiffs,  on  either  of  these  three  counts,  the 
judgment  would  have  been  reversed  for  tliis  error.  The  jury  have 
found  that  the  promise  referred  to  nothing  certain,  no  particular 
lands  anywhere  of  which  the  promisor  was  seized.  Except  the 
count  on  the  quantum  meruit,  for  the  reasonable  allowance  for 
the  services  of  Elizabeth  Koons,  it  was  not  an  action  of 
indebitatus  assumpsit,  but  an  action  on  the  special  contract  —  an 
action  to  recover  damages  sustained  by  the  plaintiff  for  the 
breach  of  a  promise  to  convey  one  hundred  acres  of  land, 
an  action  for  not  specifically  executing  the  contract.  There 
can  be  no  implied  promise,  because,  whatever  the  undertaking 
was  as  to  the  one  hundred  acres,  it  was  express;  the  action 
is  brought  on  the  express  promise,  and  that  only  lies  where 
a  man  by  express  words  assumes  to  do  a  certain  thing.  Com. 
Dig.,  title  "Assumpsit  upon  an  Express  Promise,"  A.  3.  Not  that 
this  means  an  absolute  certainty,  but  a  certainty  to  a  common 
intent,  giving  the  words  a  reasonable  construction.  But  the 
words  must  show  the  undertaking  was  certain;  for,  in  assumpsit 
for  non-payment  of  money,  it  is  necessary  to  reduce  the  amount 
to  a  certainty;  or,  on  a  quantum  meruit,  by  an  averment,  where 
the  amount  does  not  otherwise  appear.  Express  promises  or 
contracts  ought  to  be  certain  and  explicit,  to  a  common  intent 
at  least.  1  Com.  on  Cont.  They  may  be  rendered  certain  by  a 
reference  to  something  certain,  and  the  cases  to  be  found  in  the 
books  as  to  the  nature  of  this  reference  are  generally  on  promises 


Chap.  II.  §  4.]  CONSIDERATION.  169 

of  marriage ;  as,  where  A,  in  consideration  that  B  would  marry  his 
daughter,  promised  to  give  with  her  a  child's  portion,  and  that  at 
the  time  of  his  death  he  would  give  to  her  as  much  as  any  of  his 
other  children,  except  his  eldest  son,  —  this  was  holden  to  be  a 
good  promise ;  for,  although  a  child^s  portion  is  altogether  uncer- 
tain, yet  what  the  rest  of  the  children,  except  the  eldest,  got,  reduces 
it  to  a  sufficient  certainty.  Silvester's  Case,  Popham,  148;  2 
Roll.  Rep.  104.  But  if  a  citizen  of  London  promises  a  child's 
portion,  that  of  itself  is  sufficiently  certain;  for,  by  the  custom 
there,  it  is  certain  how  much  each  child  shall  have.  2  Roll.  Rep. 
104;  1  Lev.  88.  Now  here,  the  court  instructed  the  jury,  that  if 
they  could  find  this  promise  to  refer  to  anything  certain,  any 
land  in  particular,  the  action  could  be  maintained.  This  was 
leaving  it  to  the  jury  more  favorably  for  the  plaintiffs  than  ought 
to  have  been  done;  for  the  jury  should  have  been  instructed, 
that  as  there  was  nothing  certain  in  the  promise,  nothing  referred 
to,  to  render  it  certain,  the  action  could  not  be  maintained.  The 
contract  was  an  express  one, —  nothing  could  be  raised  by  impli- 
cation,—  no  other  contract  could  be  implied.  By  the  statute  of 
frauds  and  perjuries,  such  a  promise  would  be  void  in  England, 
not  being  in  writing;  and,  although  that  provision  is  not  incor- 
porated in  our  act  on  the  subject,  this  would  be  matter  of  regret, 
if  such  loose  speeches  should  be  held  to  amount  to  a  solemn 
binding  promise,  obliging  the  speaker  to  convey  one  hundred 
acres  of  his  homestead  estate,  or  pay  the  value  in  money.  If  a 
certain  explicit,  serious  promise  was  made  with  her,  though  not 
in  writing,  if  marriage  was  contracted  on  the  faith  of  it,  and  the 
promise  was  certain  of  some  certain  thing,  it  would  be  binding. 
There  would,  in  the  present  case,  be  no  specific  performance 
decreed  in  a  court  of  chancery;  the  promisor  himself  would  not 
know  what  to  convey,  nor  the  promisee  what  to  demand.  If  it 
had  been  a  promise  to  give  him  one  hundred  pieces  of  silver,  this 
would  be  too  vague  to  support  an  action;  for  what  pieces?  —  fifty- 
cent  pieces  or  dollars?  —  what  denomination?  One  hundred  cows 
or  sheep  would  be  sufficiently  certain,  because  the  intention  would 
be,  that  they  should  be  at  least  of  a  middling  quality ;  but  one 
hundred  acres  of  land,  without  locality,  without  estimation  of 
value,  without  relation  to  anything  which  could  render  it  certain, 


160  FORMATION  OF  CONTRACT.  [Pabt  U. 

does  appear  to  me  to  be  the  most  vague  of  all  promises-,  and,  if 
any  contract  can  be  void  for  its  uncertainty,  this  must  be.  One 
hundred  acres  on  the  Eocky  Mountain,  or  in  the  Conestoga  Manor 
—  one  hundred  acres  in  the  mountain  of  Hanover  County,  Vir- 
ginia, or  in  the  Conewango  rich  lands  of  Adams  County  —  one 
hundred  acres  of  George  Sherman's  mansion-place  at  eighty 
dollars  per  acre,  or  one  hundred  acres  of  his  barren  lands  at 
five  dollars. 

This  vague  and  void  promise,  incapable  of  specific  execution, 
because  it  has  nothing  specific  in  it,  would  not  prevent  the  plain- 
tiffs from  recovering  in  a  quantum  meruit  for  the  value  of  this 
young  woman's  services  until  her  marriage.  If  this  promise 
had  been  that,  in  consideration  of  one  hundred  pounds,  the 
defendant's  testator  promised  to  convey  her  one  hundred  acres  of 
land,  chancery  would  not  decree  a  specific  performance,  or  decree 
a  conveyance  of  any  particular  land ;  yet  the  party  could  recover 
back  the  money  he  had  paid  in  an  action.  As,  where  a  young 
man,  at  the  request  of  his  uncle,  lived  with  him,  and  his  uncle 
promised  to  do  by  him  as  his  own  child,  and  he  lived  and  worked 
with  him  above  eleven  years;  and  his  uncle  said  his  nephew 
should  be  one  of  his  heirs,  and  spoke  of  advancing  a  sum  of 
money  to  purchase  a  farm  for  him  as  a  compensation  for  his 
services,  but  died  without  doing  anything  for  his  nephew,  or 
making  him  any  compensation,  it  was  held  that  an  action  on  an 
implied  assumpsit  would  lie  against  the  executors  for  the  work 
and  labor  performed  by  the  nephew  for  the  testator.  Jacobson  v. 
The  Executors  ofLe  Orange,  3  Johns.  199.  In  Conrad  v.  Conrad's 
Administrators  (4  Dall.  Pa.  130)  a  plantation  was  bought  by  the 
plaintiff,  an  illegitimate  son  of  the  defendant's  intestate,  on  a 
special  agreement  that  if  the  plaintiff  would  live  with  the  intes- 
tate, and  work  his  plantation  for  six  years,  he  would  give  and 
convey  to  him  one  hundred  acres  of  the  land.  This  was  held  a 
good  promise,  because  it  was  certain  —  one  hundred  acres  of  the 
plantation  on  which  the  father  lived.  But  in  this  case  the  jury 
have  negatived  all  idea  of  an  agreement  to  give  Miss  Koons  one 
hundred  acres  of  any  particular  kind  or  quality  of  land,  of  any 
certain  description,  on  which  any  value  could  be  put.  In  2 
Yeates,  522,  in  an  action  on  a  promise  to  convey  a  tract  of  land 


Chap.  II.  §  4.]  CONSIDERATION.  161 

in  Northumberland  County  to  the  plaintiff,  the  promise  was  in 
the  first  instance  gratuitous,  but  the  plaintiff  had  paid  the 
scrivener  to  draw  the  conveyance,  which  was  held  to  be  a 
sufficient  consideration  for  the  promise;  the  action  was  for 
damages  for  not  conveying  it.  No  evidence  was  given  of  the 
value  of  the  land.  The  court  stated  the  difficulty  of  giving 
damages  for  not  conveying  lands  of  the  value  of  which  nothing 
appeared.  The  plaintiff's  counsel  admitted  the  want  of  evidence 
of  the  value  of  the  land  was  an  incurable  defect.  If  the  defect  of 
evidence  of  value  would  be  incurable,  the  defect  of  all  allegation 
or  proof  of  anything  by  which  the  value  could  be  regulated, 
anything  to  afford  a  clue  to  the  jury  by  which  to  discover  what 
was  intended  to  be  given,  any  measure  of  damages,  would  be 
fatal.  The  promise  is  as  boundless  as  the  terrestrial  globe.  The 
party  would  lie  at  the  mercy  of  the  jury  —  there  would  be  the 
same  reason  for  ten  thousand  dollars  damages  as  ten  cents. 
The  court  could  not  set  aside  the  verdict  in  any  case,  either  on 
account  of  extravagance  or  smallness  of  damages,  for  there  is 
nothing  by  which  to  measure  them;  but  the  arbitrary  discretion 
or  the  caprice  of  the  jury  must  decide  them,  without  evidence  and 
without  control.  It  cannot  be  compared  to  actions  of  slander, 
where  the  jury  have  a  wide  range,  and  must  exercise  some  lati- 
tude,—  it  is  an  action  on  an  express  promise,  which  the  law  says 
must  be  to  perform  something  either  certain  to  a  common  intent, 
or  by  a  reference  to  something  which  can  render  it  certain.  In 
contracts  which  can  be  enforced  specifically,  or  where  damages 
are  to  be  given  for  their  non-performance,  there  is  always  a 
measure  of  damages;  in  actions  affecting  the  reputation,  the 
person,  or  the  liberty  of  a  man,  they  must  depend,  in  some 
measure,  on  the  direction  of  the  jury.  If  the  jury  go  beyond  the 
standard,  the  value  ascertained  by  evidence  of  the  thing  con- 
tracted for,  or  under  its  value,  the  court  will  set  aside  the 
verdict,  but  in  the  vindictive  class  of  actions,  the  damages  must 
be  outrageous  to  justify  the  interference  of  the  court, —  seldom, 
if  ever,  for  smallness  of  damages.  There  is  a  great  difference 
between  damages  which  can  be  ascertained,  as  in  assumpsit, 
trover,  etc.,  where  there  is  a  measure,  and  personal  torts,  as  false 
imprisonment,  slander,  malicious  prosecution,  where  damages  are 


162  FORMATION  OF  CONTRACT.  [Pabt  H. 

matter  of  opinion.  To  say  that  nominal  damages,  at  least,  ought 
to  be  given,  is  taking  for  granted  the  very  matter  in  controversy; 
for  the  legal  question  is,  was  there  an  actionable  promise  —  a 
promise  to  do  anything  certain,  or  certain  to  a  common  intent,  or 
where,  by  reference  to  anything,  it  would  be  rendered  certain? 
The  jury  have  negatived  all  this. 

I  am  therefore  of  opinion  that  there  was  no  error  in  the  opin- 
ion of  the  court,  by  which  the  plaintiffs  have  been  endamaged; 
that  the  law  was  laid  down  more  favorably  for  them  than  the 
evidence  warranted. 

Judgment  affirmed. 


(y)  Forbearance  to  sue. 
PENNSYLVANIA   COAL   CO.  v.  BLAKE. 

85  NEW  YORK,  226.— 1881. 

Action  to  foreclose  a  mortgage.  Judgment  in  favor  of  plain- 
tiff. Appeal  from  decision  of  the  General  Term  of  the  Supreme 
Court  affirming  judgment. 

In  March,  1873,  plaintiff  agreed  with  B.  &  Co.  that  if  B.  &  Co. 
would  give  their  notes  secured  by  a  mortgage  on  the  separate 
estate  of  B.'s  wife,  the  defendant,  it  would  grant  an  extension  of 
time  on  a  debt  then  due  from  B.  &  Co.  to  plaintiff.  The  notes 
were  given  in  pursuance  of  the  agreement,  and  about  three  weeks 
later  defendant  executed  the  mortgage  in  question.  Defendant 
testified  that  she  never  received  any  consideration  for  executing 
the  mortgage,  that  she  never  requested  an  extension  of  time  for 
B.  &  Co.  from  plaintiff,  nor  did  she  know  whether  or  not  an 
extension  had  ever  been  given. 

FoLGEK,  C.  J.  The  first  point  made  by  the  appellant  is,  that 
the  mortgage  given  by  her  was  without  consideration,  and  is 
void. 

It  is  so,  that  the  appellant  took  no  money  consideration,  nor 
any  strictly  personal  benefit,  for  the  giving  of  the  mortgage  by 
her.  It  was  made  for  the  benefit  of  others  than  her,  entirely  as 
a  security  for  debts  owing  by  them,  and  to  procure  for  them  fur- 


Chap.  II.  §  4.] 


CONSIDERATION. 


168 


> 


ther  credit  and  favor  in  business.  In  other  words,  the  lands  of 
the  appellant  became  the  surety  for  the  liabilities  of  the  business 
firm  of  which  her  husband  was  a  member.  It  is  so,  also,  that 
the  contract  of  surety  needs  a  consideration  to  sustain  it,  as  well 
as  any  other  contract.  Bailey  v.  Freeman,  4  Johns.  280;  Leon- 
ard V.  Vredenburgh,  8  Id.  29.  But  that  need  not  be  something 
passing  from  the  creditor  to  the  surety.  Benefit  to  the  principal 
debtor,  or  harm  or  inconvenience  to  the  creditor,  is  enough  to 
form  a  consideration  for  the  guaranty;  and  the  consideration  in 
that  shape  may  be  executory  as  well  as  executed  at  the  time. 
McNaught  v.  McClaughry,  42  K.  Y.  22;  8  Johns.,  supra.  Nowi 
here  was  an  agreement  by  the  plaintiff  to  extend  the  payment  of 
part  of  the  debt  owing  by  the  principal  debtor  for  a  definite  time, 
if  the  debtor  would  procure  the  mortgage  of  the  appellant  as  a 
security  for  the  ultimate  payment  of  the  amount  of  the  debt  thus 
extended.  Sage  v.  Wilcox,  6  Conn.  81 ;  Breed  v.  Hillhouse,  7  Id. 
623.  Though  the  actual  execution  of  the  mortgage  by  the  appel- 
lant was  on  a  day  subsequent  to  that  of  the  agreement  between 
the  creditor  and  the  principal  debtors,  and  subsequent  to  the 
dates  of  the  extension  notes,  the  mortgage  and  the  notes  were  made 
in  pursuance  of  that  agreement,  in  consideration  of  it  and  to 
carry  it  out.  The  findings  are  full  and  exact  on  this  point,  and 
are  sustained  by  the  testimony.  There  is  no  proof  that  the 
actual  delivery  of  the  notes  and  mortgage  was  not  cotemporane- 
ous;  though  the  dates  of  the  notes  and  the  mortgage  and  the 
entry  of  credit  in  the  books  of  the  plaintiff  do  not  correspond. 
All  was  done  in  pursuance  of  one  agreement,  and  the  plaintiff 
was  not  bound  to  forbearance  until  the  mortgage  was  delivered. 
It  was  not  until  then  that  the  agreement  to  forbear  was  fixed  and 
the  consideration  of  benefit  to  the  principals  was  had.  It  was 
not,  therefore,  a  past  consideration. 

*  *  «  »  « 

It  follows  that  the  judgment  appealed  from  should  be  affirmed. 
All  concur.     Judgment  affirmed. 


^o^ao,    ^  tr</^WV    t^A^ 


164  FORMATION  OF  CONTRACT.  [Part  IL 

FOSTER  V.   METTS  &  CO. 

65  MISSISSIPPI,  7T.  — 1877. 

Action  upon  promissory  note.     Defendants  demurred;  demur- 
rer sustained.     Error  to  the  Circuit  Court.     Two  hundred  dollars 
belonging  to  the  plaintiff  in  error,  Foster,  were  stolen  from  the 
United  States  mail  by  a  carrier  employed  by  the  defendants  in 
error,  Metts  &  Co.,  who  were  contractors  for  carrying  the  mail 
from  Louisville  to  Artesia.     At  first,  Metts  &  Co.  denied  any 
liability  to  Foster  for  the  loss,  but  finally,  upon  consideration 
that  Foster  would  wait  a  few  months  for  payment,  Metts  &  Co. 
gave  to  him  their  promissory  note  for  the  amount  lost.     The 
note  not  being  paid  at  maturity,  this  action  was  brought  upon  it. 
Campbell,  J.    .  .  .     In  this  case  the  money  was  stolen  by  the 
mail-carrier.     As  to  that,  he  certainly  was  not  the  agent  of  the 
contractors  for  whom  he  was  riding,  and,  if  they  were  liable  for 
his  acts  within  the  scope  of  his  employment,  they  were  not  lia- 
I  ble  for  his  wilful  wrongs  and  crimes.     McCoy  v.  McKowen,  26 
'Miss.  487;  New  Orleans,  Jackson  &  Great  Northern  R.  R.  Co. v. 
Harrison,  48  Miss.  112;  Foster  v.  Essex  Bank,  17  Mass.  479; 
Wiggins  v.  Hathaway,  6  Barb.  632;  Story  on  Ag.,  sec.  309. 

As  the  defendants  in  error  were  not  liable  for  the  money  "ex- 
tracted" from  the  mail  by  the  carrier,  they  did  not  make  them- 
selves liable  by  giving  their  promissory  note  for  it.     It  is  without 
consideration.     The  compromise  of  doubtful  rights  is  a  suffi- 
cient consideration  for  a  promise  to  pay  money,  but  compromise 
implies  mutual  concession.     Here  there  was  none  on  the  part  of 
the  payee  of  the  note.     His  forbearance  to  sue  for  what  he  could 
not  recover  at  law  or  in  equity  was  not  a  sufficient  consideration 
for  the  note.     Newell  v.  Fisher,  11  Smed.  &  M.  431 ;  Sullivan  v. 
Collins,   18  Iowa,   228;    Palfrey  v.  Railroad  Co.,  4  Allen,  55; 
Allen  V.  Prater,  35  Ala.  169;  Edwards  v.  Baugh,  11  Mee.  &  W. 
641;    Longridge  v.   Dorville,    5  Barn.   &   Aid.  117;   1  Pars,  on 
Con.  440;    Smith  on  Con.  157;  1  Add.  on  Con.  28,  sec.  14;  1 

HUl  on  Con.  266,  sec.  20. 

Judgment  affirmed. 


e^cxo-"^^ 


fj^->r<^  <L^fy^^^y\^^i^r^JJUAJr'^ 


Chat.  U.  §  4.]  CONSIDERATION.  165 

(8)  Compromise. 

RUSSELL  V.    COOK. 

3  HILL  (N.Y.),  504.  — 1842. 

Error  to  the  Onondaga  common  pleas.  Russell  recovered  judg- 
ment before  a  justice  against  Cook  and  Smith  on  a  promissory- 
note  made  by  them,  payable  to  Sanford  B.  Palmer  or  bearer,  for 
$68.34,  with  interest,  and  bearing  date  April  4,  1836.  The 
note  fell  due  in  July,  1837,  and  was  transferred  to  the  plaintiff 
after  that  time.  The  defendants  insisted  that  the  note  was  with- 
out consideration. 

CowEN,  J.  The  defendants  below  admitted  the  execution  of 
the  note  j  and  the  burthen  of  showing  that  it  was  without  con- 
sideration lay  on  them.  They  accordingly  proved  that  several 
years  before  suit  brought,  they  undertook  with  Palmer  &  Noble 
to  transport  from  Manlius  to  Albany  certain  barley  in  which 
they  (Palmer  &  Noble)  had  a  special  property,  and  which  they 
were  bound  to  see  delivered  at  Albany  to  Taylor,  The  defend- 
ants were  common  carriers  by  their  boat  on  the  canal,  which, 
owing  to  its  accidentally  striking  a  stone  in  the  canal,  of  which 
the  defendants  could  not  be  perfectly  aware,  was  broken,  sunk, 
and  the  water  let  in  upon  the  barley,  by  which  it  was  much 
injured.  A  dispute  arose  between  the  parties  whether  the  de- 
fendants were  liable,  and  this  was  compromised  by  Palmer  & 
Noble  agreeing  to  discount  one  half  of  their  claim,  and  the  de- 
fendants agreeing  to  pay  the  other.  The  half  which  fell  upon 
the  defendants  was  secured  by  several  promissory  notes,  of  which 
the  note  in  question  was  one.  The  estimate  of  damages  was 
deliberately  and  fairly  made.  Palmer  &  Noble  were  guilty  of 
no  fraud;  the  defendants  were  fully  aware  of  all  the  facts;  and 
there  was  no  mistake  in  the  case.  This  is  the  defense,  as  made 
out  by  the  defendants'  own  testimony.  The  court  below  sub- 
mitted to  the  jury  whether  the  notes  were  made  without  consid- 
eration, and  the  jury  found  for  the  defendants. 

I  am  of  opinion  that  the  court  below  erred  in  omitting  to 
charge  the  jury  that  the  plaintiff  was  entitled  to  recover.  No 
one  would  think  of  denying,  that  at  least  the  dispute  between  the 


166  FORMATION  OF  CONTRACT.  [Part  II. 

parties  was  doubtful,  and  that  probably  the  law  was  against  the 
defendants  on  the  facts  disclosed  by  their  evidence.  It  is 
enough,  however,  that  it  was  doubtful,  and  that  the  notes  were 
given  in  pursuance  of  an  agreement  to  compromise,  in  no  way 
impeached  for  want  of  fairness.  To  show  that  this  is  so,  I  shall 
do  little  more  than  refer  to  Chit,  on  Cont.  43,  44,  ed.  of  1842, 
and  the  notes,  where  cases  are  cited  which  refuse  to  open  an 
agreement  of  this  kind,  under  circumstances  much  stronger  in 
favor  of  the  defendant  than  exist  here  on  the  most  liberal  con- 
struction which  the  defense  can  pretend  to  claim.  The  case  of 
O^Keson  v.  Barclay  (2  Pennsyl.  R.  531)  sustained  a  promissory 
note  given  on  the  settlement  of  a  slander  suit  for  words  not 
actionable.  In  such  cases  it  matters  not  on  which  side  the 
right  ultimately  turns  out  to  be.  The  court  will  not  look 
behind  the  compromise.  Taylor  v.  Patrick,  1  Bibb,  168; 
Fisher  v.  May^s  Heirs,  2  Id.  448.  It  is  not  necessary,  how- 
ever, in  the  present  case  to  go  farther  than  was  done  in 
Longridge  v.  Dorville,  5  Barn.  &  Aid.  117.  There  the  ship 
Carolina  Matilda  had  run  foul  of  the  ship  Zenobia  in  the 
Thames,  and  the  former  was  arrested  and  detained  by  pro- 
cess from  the  admiralty  to  secure  the  payment  of  the 
damage.  The  agents  for  the  owners  of  the  Carolina  Matilda 
stipulated  with  the  agents  for  the  owner  of  the  Zenobia  that,  on 
the  latter  relinquishing  their  claim  on  the  Carolina  Matilda,  the 
damages  should  be  paid  on  due  proof  of  them,  if  they  did  not 
exceed  £180.  The  proceedings  in  the  admiralty  being  with- 
drawn, an  action  was  brought  on  the  promise.  The  Carolina 
Matilda  had  a  regular  Trinity-house  pilot  on  board  when  the 
collision  took  place;  and  there  was  some  doubt  on  the  law, 
therefore,  whether  the  owners  were  liable.  Held,  that  the  com- 
promise being  of  a  claim  thus  doubtful,  the  defendants  were 
absolutely  bound,  without  regard  to  the  question  of  actual  lia- 
bility. Abbott,  C.  J.,  said,  "The  parties  agree  to  put  an  end 
to  all  doubts  on  the  law  and  the  fact,  on  the  defendants'  engag- 
ing to  pay  a  stipulated  sum."  "The  parties  agreed  to  waive  all 
questions  of  law  and  fact."  Indeed,  such  is  the  intent  of  every 
compromise ;  and  the  best  interests  of  society  require  that  such 
should  be  the  effect 


Chap.  II.  §  4.]  CONSIDERATION.  167 

I  therefore  prefer  putting  the  case  on  that  ground,  though  I 

feel  very  little  doubt  that  the  defendants  were  liable  to  Palmer 

&  Noble  for  the  whole  damages,  instead  of  the  half  for  which 

they  were  let  off. 

Judgment  reversed.* 


(e)  Gratuitous  undertakings. 
THORNE  V.   DEAS. 

4  JOHNSON  (N.Y.),84.  — 1809. 

This  was  an  action  on  the  case,  for  a  nonfeasance,  in  not  caus- 
ing insurance  to  be  made  on  a  certain  vessel,  called  the  Sea 
Nymph,  on  a  voyage  from  New  York  to  Camden,  in  North 
Carolina. 

The  plaintiffs  were  copartners  in  trade,  and  joint  owners  of 
one  moiety  of  a  brig  called  the  Sea  Nymph,  and  the  defendant 
was  sole  owner  of  the  other  moiety  of  the  same  vessel.  The  brig 
sailed  in  ballast,  the  1st  December,  1804,  on  a  voyage  to  Camden, 
in  North  Carolina,  with  William  Thorne,  one  of  the  plaintiffs, 
on  board,  and  was  to  proceed  from  that  place  to  Europe  or  the 
"West  Indies.  The  plaintiffs  and  defendant  were  interested  in  the 
voyage,  in  proportion  to  their  respective  interests  in  the  vessel. 
On  the  day  the  vessel  sailed,  a  conversation  took  place  between 
William  Thorne,  one  of  the  plaintiffs,  and  the  defendant,  relative 
to  the  insurance  of  the  vessel,  in  which  W,  Thorne  requested  the 
defendant  that  insurance  might  be  made ;  to  which  the  defendant 
jeplied,  "  that  he  (Thorne)  might  make  himself  perfectly  easy  on 

1  Orandin  v,  Qrandin,  49  N.  J.  L.  608,  514  (1887)  :  "The  compromise  of 
a  disputed  claim  made  bona  fide  is  a  good  consideration  for  a  promise, 
whether  the  claim  be  in  suit,  or  litigation  has  not  been  actually  commenced, 
«ven  though  it  should  ultimately  appear  that  the  claim  was  wholly  unfounded 
—  the  detriment  to  the  party  consenting  to  a  compromise,  arising  from  the 
alteration  in  his  position,  forms  the  real  consideration  which  gives  validity 
to  the  promise.  The  only  elements  necessary  to  a  valid  agreement  of  com- 
promise are  the  reality  of  the  claim  made  and  the  bona  fides  of  the  compro- 
mise. Cook  V.  Wright,  1  B.  &  S.  569-570  ;  Callisher  v,  Bischoffsheim,  L.  R. 
(5  Q.  B.)  449 ;  Ockford  v.  Barelli,  25  L.  T.  604  ;  Miles  v.  N.  Z.  &c.  Est.  Co., 
32  Ch.  Div.  267,  283,  291,  298."  See  Bellows  v.  Sowles,  67  Vt.  164,  ante, 
p.  110 ;  Schnell  v.  Nell,  17  Ind.  29,  ante,  p.  138. 


168  FORMATION  OF  CONTRACT.  [Part  II. 

the  subject,  for  that  the  same  should  be  done."  About  ten  days 
after  the  departure  of  the  vessel  on  her  voyage,  the  defendant 
said  to  Daniel  Thome,  one  of  the  plaintiffs,  "  Well,  we  have  saved 
the  insurance  on  the  brig."  D.  Thome  asked,  "How  so?  or 
whether  the  defendant  had  heard  of  her  arrival?  "  To  which  the 
defendant  answered,  "No;  but  that,  from  the  winds,  he  presumed 
that  she  had  arrived,  and  that  he  had  not  yet  effected  any  insur- 
ance." On  this,  D.  Thome  expressed  his  surprise,  and  observed, 
"  that  he  supposed  that  the  insurance  had  been  effected  immedi- 
ately, by  the  defendant,  according  to  his  promise,  otherwise  he 
would  have  had  it  done  himself,  and  that,  if  the  defendant  would 
not  have  the  insurance  immediately  made,  he  would  have  it 
effected."  The  defendant  replied,  that  "he  (D.  Thorne)  might 
make  himself  easy,  for  he  would  that  day  apply  to  the  insurance 
oflBces,  and  have  it  done." 

The  vessel  was  wrecked  on  the  21st  December,  on  the  coast  of 
North  Carolina.  No  insurance  had  been  effected.  No  abandon- 
ment was  made  to  the  defendant  by  the  plaintiffs. 

The  defendant  moved  for  a  nonsuit  on  the  ground  that  the 
promise  was  without  consideration  and  void;  and  that,  if  the 
promise  was  binding,  the  plaintiffs  could  not  recover,  without  a 
previous  abandonment  to  the  defendant.  These  points  were 
reserved  by  the  judge. 

A  verdict  was  taken  for  the  plaintiffs,  for  one-half  of  the  cost 
of  the  vessel,  with  interest,  subject  to  the  opinion  of  the  court  on 
the  points  reserved. 

Kent,  C.  J.,  delivered  the  opinion  of  the  court.  The  chief 
objection  raised  to  the  right  of  recovery  in  this  case  is  the  want 
of  a  consideration  for  the  promise.  The  offer,  on  the  part  of  the 
defendant,  to  cause  insurance  to  be  effected,  was  perfectly  volun- 
tary. Will,  then,  an  action  lie,  when  one  party  entrusts  the 
performance  of  a  business  to  another,  who  undertakes  to  do  it 
gratuitously,  and  wholly  omits  to  do  it?  If  the  party  who  makes 
this  engagement  enters  upon  the  execution  of  the  business,  and 
does  it  amiss,  through  the  want  of  due  care,  by  which  damage 
ensues  to  the  other  party,  an  action  will  lie  for  this  misfeasance. 
But  the  defendant  never  entered  upon  the  execution  of  his  un- 
dertaking, and  the  action. is  brought  for  the  nonfeasance.      Sir 


Chap.  n.  §  4.]  CONSIDERATION.  160 

William  Jones,  in  his  Essay  on  the  Law  of  Bailments,  considers 
this  species  of  undertaking  to  be  as  extensively  binding  in  the 
English  law  as  the  contract  of  mandatum  in  the  Roman  law; 
and  that  an  action  will  lie  for  damage  occasioned  by  the  non- 
performance of  a  promise  to  become  a  mandatary,  though  the 
promise  be  purely  gratuitous.  This  treatise  stands  high  with  the 
profession,  as  a  learned  and  classical  performance,  and  I  regret 
that,  on  this  point,  I  find  so  much  reason  to  question  its  accuracy. 
I  have  carefully  examined  all  the  authorities  to  which  he  refers. 
He  has  not  produced  a  single  adjudged  case,  but  only  some  dicta 
(and  those  equivocal)  from  the  Year  Books,  in  support  of  his 
opinion;  and  was  it  not  for  the  weight  which  the  authority  of  so 
respectable  a  name  imposes,  I  should  have  supposed  the  question 
too  well  settled  to  admit  of  an  argument. 

A  short  review  of  the  leading  cases  will  show  that,  by  the 
common  law,  a  mandatary,  or  one  who  undertakes  to  do  an  act 
for  another  without  reward,  is  not  answerable  for  omitting  to  do 
the  act,  and  is  only  responsible  when  he  attempts  to  do  it,  and 
does  it  amiss.  In  other  words,  he  is  responsible  for  a  mis- 
feasance, but  not  for  a  nonfeasance,  even  though  special  damages 
are  averred.  Those  who  are  conversant  with  the  doctrine  of  man- 
datum  in  the  civil  law,  and  have  perceived  the  equity  which 
supports  it  and  the  good  faith  which  it  enforces,  may,  perhaps, 
feel  a  portion  of  regret  that  Sir  William  Jones  was  not  successful 
in  his  attempt  to  engraft  this  doctrine,  in  all  its  extent,  into  the 
English  law.  I  have  no  doubt  of  the  perfect  justice  of  the 
Roman  rule,  on  the  ground  that  good  faith  ought  to  be  observed, 
because  the  employer,  placing  reliance  upon  that  good  faith  in  the 
mandatary,  was  thereby  prevented  from  doing  the  act  himself, 
or  employing  another  to  do  it.  This  is  the  reason  which  is  given 
in  the  Institutes  for  the  rule:  Mandatum  non  suscipere  cuilibet 
liberum  est;  susceptum  autem  consummandum  est,  aut  quamprimum 
renunciandum,  ut  per  semetipsum  aut  per  alium,  eandem  rem  man- 
dator exequatur.  Inst.  lib.  3,  27,  11.  But  there  are  many  rights 
of  moral  obligation  which  civil  laws  do  not  enforce,  and  are, 
therefore,  left  to  the  conscience  of  the  individual,  as  rights  of 
imperfect  obligation;  and  the  promise  before  us  seems  to  have 
been  so  left  by  the  common  law,  which  we  cannot  alter,  and 
which  we  are  bound  to  pronounce. 


170  FORMATION  OF  CONTRACT.  [Pakt  II. 

The  earliest  case  on  this  subject  is  that  of  Watton  v.  Brinth 
{Year  Book,  2  Hen.  IV.  3  6),  in  which  it  appears  that  the  defend- 
ant promised  to  repair  certain  houses  of  the  plaintiff,  and  had 
neglected  to  do  it,  to  his  damage.  The  plaintiff  was  nonsuited, 
because  he  had  shown  no  covenant;  and  Brincheley  said,  that  if 
the  plaintiff  had  counted  that  the  thing  had  been  commenced,  and 
afterwards,  by  negligence,  nothing  done,  it  had  been  otherwise. 
Here  tlie  court  at  once  took  the  distinction  between  nonfeasance 
and  misfeasance.  No  consideration  was  stated  and  the  court 
required  a  covenant  to  bind  the  party. 

In  the  next  case,  11  Hen.  IV.  33  a,  an  action  was  brought 
against  a  carpenter,  stating  that  he  had  undertaken  to  build  a 
house  for  the  plaintiff  within  a  certain  time,  and  had  not  done 
it.  The  plaintiff  was  also  nonsuited,  because  the  undertaking  was 
not  binding  without  a  specialty;  but,  says  the  case,  if  he  had 
undertaken  to  build  the  house,  and  had  done  it  illy  or  negligently, 
an  action  would  have  lain,  without  deed.  Brooke  {Action  sur  le 
Case,  pi.  40)  in  citing  the  above  case,  says,  that  "  it  seems  to  be 
good  law  to  this  day;  wherefore  the  action  upon  the  case  which 
shall  be  brought  upon  the  assumption,  must  state  that  for  such  a 
sum  of  money  to  him  paid,  etc.,  and  that  in  the  above  case,  it  is 
assumed,  that  there  was  no  sum  of  money,  therefore  it  was  a 
nudum  pactum.^' 

The  case  of  3  Hen.  VI.  36  b  is  one  referred  to,  in  the  Essay  on 
Bailments,  as  containing  the  opinion  of  some  of  the  judges,  tnat 
fluch  an  action  as  the  present  could  be  maintained.  It  was  an 
action  against  Watkins,  a  mill-wright,  for  not  building  a  mill 
according  to  promise.  There  was  no  decision  upon  the  question, 
and  in  the  long  conversation  between  the  counsel  and  the  court, 
there  was  some  difference  of  opinion  on  the  point.  The  counsel 
for  the  defendant  contended  that  a  consideration  ought  to  have 
been  stated;  and  of  the  three  judges  who  expressed  any  opinion, 
one  concurred  with  the  counsel  for  the  defendant,  and  another 
(Babington,  C.  J.)  was  in  favor  of  the  action,  but  he  said  noth- 
ing expressly  about  the  point  of  consideration,  and  the  third 
(Cokain,  J.)  said,  it  appeared  to  him  that  the  plaintiff  had  so 
declared,  for  it  shall  not  be  intended  that  the  defendant  would 
build  the  mill  for  nothing.     So  far  is  this  case  from  giving  coun- 


Chap.  II.  §4.]  CONSIDERATION.  171 

tenance  to  the  present  action,  that  Brooke  {Action  sur  le  Case,  pi. 
7,  and  Contract,  pi.  6)  considered  it  as  containing  the  opinion  of 
the  court,  that  the  plaintiffs  ought  to  have  set  forth  what  the 
miller  was  to  have  for  his  labor,  for  otherwise  it  was  a  nude  pact; 
and  in  Coggs  v.  Bernard,  Mr.  Justice  Gould  gave  the  same 
exposition  of  the  case. 

The  general  question  whether  assumpsit  would  lie  for  a  non- 
feasance agitated  the  courts  in  a  variety  of  cases  afterwards, 
down  to  the  time  of  Henry  VII.  14  Hen.  VI.  18  h,  pi.  58 ;  19  Hen. 
VI.  49  a,  pi.  5;  20  Hen.  VI  34  a,  pi.  4;  2  Hen.  VII  11,  pi.  9; 
21  Hen.  VII.  41  a,  pi.  66.  There  was  no  dispute  or  doubt,  but 
that  an  action  upon  the  case  lay  for  a  misfeasance  in  the  breach 
of  a  trust  undertaken  voluntarily.  The  point  in  controversy  was, 
whether  an  action  upon  the  case  lay  for  a  nonfeasance,  or  non- 
performance of  an  agreement,  and  whether  there  was  any  remedy 
where  the  party  had  not  secured  himself  by  a  covenant  or 
specialty.  But  none  of  these  cases,  nor,  as  far  as  I  can  discover, 
do  any  of  the  dicta  of  the  judges  in  them  go  so  far  as  to  say,  that 
an  assumpsit  would  lie  for  the  non-performance  of  a  promise, 
without  stating  a  consideration  for  the  promise.  And  when,  at 
last,  an  action  upon  the  case  for  the  non-performance  of  an  under- 
taking came  to  be  established,  the  necessity  of  showing  a  con- 
sideration was  explicitly  avowed. 

Sir  William  Jones  says,  that  "  a  case  in  Brooke,  made  complete 
from  the  Year  Book  to  which  he  refers,  seems  directly  in  point." 
The  case  referred  to  is  21  Hen.  VII.  41,  and  it  is  given  as  a  loose 
note  of  the  reporter.  The  chief  justice  is  there  made  to  say,  that 
if  one  agree  with  me  to  build  a  house  by  such  a  day,  and  he  does 
not  build  it,  I  have  an  action  on  the  case  for  this  nonfeasance, 
equally  as  if  he  had  done  it  amiss.  Nothing  is  here  said  about  a 
consideration;  but  in  the  next  instance  which  the  judge  gives  of 
a  nonfeasance  for  which  an  action  on  the  case  lies,  he  states  a 
consideration  paid.  This  case,  however,  is  better  reported  in 
Keilway,  78,  pi.  5,  and  this  last  report  must  have  been  overlooked 
by  the  author  of  the  Essay.  Frowicke,  C.  J.,  there  says,  "that 
if  I  covenant  with  a  carpenter  to  build  a  house,  and  pay  him  201. 
to  build  the  house  by  a  certain  day,  and  he  does  not  do  it,  I  have 
a  good  action  upon  the  case,  by  reason  of  the  payment  of  my  money  ; 


172  FORMATION  OF  CONTRACT.  [Part  IL 

and  without  payment  of  the  money  in  this  case,  no  remedy.  And 
yet,  if  he  make  the  house  in  a  bad  manner,  an  action  upon  the 
case  lies  j  and  so  for  the  nonfeasance,  if  the  money  be  paid,  action 
upon  the  case  lies." 

There  is,  then,  no  just  reason  to  infer,  from  the  ancient  authori- 
ties, that  such  a  promise  as  the  one  before  us  is  good,  without 
showing  a  consideration.  The  whole  current  of  the  decisions 
runs  the  other  way,  and,  from  the  time  of  Henry  VII.  to  this 
time,  the  same  law  has  been  uniformly  maintained. 

The  doctrine  on  this  subject,  in  the  Essay  on  Bailments,  is 
true,  in  reference  to  the  civil  law,  but  is  totally  unfounded  in 
reference  to  the  English  law ;  and  to  those  who  have  attentively 
examined  the  head  of  Mandates,  in  that  Essay,  I  hazard  nothing 
in  asserting  that  that  part  of  the  treatise  appears  to  be  hastily 
and  loosely  written.  It  does  not  discriminate  well  between  the 
cases ;  it  is  not  very  profound  in  research,  and  is  destitute  of  true 
legal  precision. 

But  the  counsel  for  the  plaintiffs  contended,  that  if  the  general 
rule  of  the  common  law  was  against  the  action,  this  was  a  com- 
mercial question,  arising  on  a  subject  of  insurance,  as  to  which  a 
different  rule  had  been  adopted.  The  case  of  Wilkinson  v.  Cover- 
dale  (1  Esp.  Kep.  75)  was  upon  a  promise  to  cause  a  house  to  be 
insured,  and  Lord  Kenyon  held,  that  the  defendant  was  answer- 
able only  upon  the  ground  that  he  had  proceeded  to  execute  the 
trust,  and  had  done  it  negligently.  The  distinction,  therefore, 
if  any  exists,  must  be  confined  to  cases  of  marine  insurance.  In 
Smith  V.  Lascelles  (2  Term  Rep.  188)  Mr.  Justice  Buller  said  it 
was  settled  law,  that  there  were  three  cases  in  which  a  merchant, 
in  England,  was  bound  to  insure  for  his  correspondent  abroad. 

1.  Where  the  merchant  abroad  has  effects  in  the  hands  of  his 
correspondent  in  England,  and  he  orders  him  to  insure. 

2.  Where  he  has  no  effects,  but,  from  the  course  of  dealing 
between  them,  the  one  has  been  used  to  send  orders  for  insurance, 
and  the  other  to  obey  them. 

3.  Where  the  merchant  abroad  sends  bills  of  lading  to  his 
correspondent  in  England,  and  engrafts  on  them  an  order  to 
insure,  as  the  implied  condition  of  acceptance,  and  the  other 
accepts. 


Ohap.  II.  §  4.]  CONSIDERATION.  178 

The  case  itself,  which  gave  rise  to  these  observations,  and  the 
two  cases  referred  to  in  the  note  to  the  report,  were  all  instances 
of  misfeasance,  in  proceeding  to  execute  the  trust,  and  in  not 
executing  it  well.  But  I  shall  not  question  the  application  of 
this  rule,  as  stated  by  Buller,  to  cases  of  nonfeasance,  for  so  it 
seems  to  have  been  applied  in  Webster  v.  De  Tastet,  1  Term 
Rep.  157.  They  have,  however,  no  application  to  the  present 
case.  The  defendant  here  was  not  a  factor  or  agent  to  the  plain- 
tiffs, within  the  purview  of  the  law  merchant.  There  is  no  color 
for  such  a  suggestion.  A  factor,  or  commercial  agent,  is  employed 
by  merchants  to  transact  business  abroad,  and  for  which  he  is 
entitled  to  a  commission  or  allowance.  Malyne,  81 ;  Beawes,  44. 
In  every  instance  given,  of  the  responsibility  of  an  agent  for 
not  insuring,  the  agent  answered  to  the  definition  given  of  a 
factor,  who  transacted  business  for  his  principal,  who  was  absent, 
or  resided  abroad;  and  there  were  special  circumstances  in  each 
of  these  cases,  from  which  the  agent  was  to  be  charged;  but  none 
of  those  circumstances  exist  in  this  case.  If  the  defendant  had 
been  a  broker,  whose  business  it  was  to  procure  insurances  for 
others,  upon  a  regular  commission,  the  case  might,  possibly,  have 
been  different.  I  mean  not  to  say,  that  a  factor  or  commercial 
agent  cannot  exist,  if  he  and  his  principal  reside  together  at  the 
same  time,  in  the  same  place;  but  there  is  nothing  here  from 
which  to  infer  that  the  defendant  was  a  factor,  unless  it  be  the 
business  he  assumed  to  perform,  viz.,  to  procure  the  insurance  of 
a  vessel,  and  that  fact  alone  will  not  make  him  a  factor.  Every 
person  who  undertakes  to  do  any  specific  act,  relating  to  any 
subject  of  a  commercial  nature,  would  equally  become,  quoad  hoc, 
a  factor;  a  proposition  too  extravagant  to  be  maintained.  It  is 
very  clear,  from  this  case,  that  the  defendant  undertook  to  have 
the  insurance  effected,  as  a  voluntary  and  gratuitous  act,  without 
the  least  idea  of  entitling  himself  to  a  commission  for  doing  it. 
He  had  an  equal  interest  in  the  vessel  with  the  plaintiffs,  and 
what  he  undertook  to  do  was  as  much  for  his  own  benefit  as 
theirs.  It  might  as  well  W  said,  that  whenever  one  partner 
promises  his  copartner  to  do  any  particular  act  for  the  common 
benefit,  he  becomes,*  in  that  instance,  a  factor  to  his  copartner, 
and  entitled  to  a  commission.     The  plaintiffs  have,  then,  failed 


174  FORMATION  OF  CONTRACT.  [Part  IL 

in  their  attempt  to  bring  this  case  within  the  range  of  the  decis- 
ions, or  within  any  principle  which  gives  an  action  against  a 
commercial  agent,  who  neglects  to  insure  for  his  correspondent. 
Upon  the  whole  view  of  the  case,  therefore,  we  are  of  opinion 
that  the  defendant  is  entitled  to  judgment. 

Judgment  for  the  defendant.* 


c.  Third  test  of  reality.  Does  the  promisee  do,  forbear,  suffer,  or 
promise  more  than  that  to  which  he  is  legally  bound? 

(a)    Delivering  property  wrongfully  withheld. 
TOLHUEST  V.   POWERS. 

133  NEW  YORK;  460.  — 1892. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court,  which  affirmed  a  judgment  in  favor  of  defendant,  entered 
upon  the  report  of  a  referee. 

This  action  was  brought  to  recover  a  balance  of  an  account 
originally  due  plaintiffs  from  one  Clinton  M.  Ball  for  services  in 
the  construction  and  fitting  of  a  dynamo  and  other  electrical 
appliances,  which  it  was  claimed  defendant  had  agreed  to  pay. 

Finch,  J.  We  agree  with  the  prevailing  opinion  of  the  Gen- 
eral Term  that  there  was  no  consideration  to  support  the  promise 
of  Powers  to  pay  Ball's  debt  to  the  plaintiffs.  The  latter  origi- 
nally constructed  a  dynamo  for  which  Ball  became  indebted  to 
them,  and  after  all  payments  he  remained  so  indebted  when  the 
machine  was  ready  for  delivery.  The  builders,  of  course,  had  a 
lien  upon  it  for  the  unpaid  balance,  but  waived  and  lost  their  lien 
by  a  delivery  to  Ball  without  payment.  He,  being  then  the 
owner  and  holding  the  title  free  from  any  incumbrance,  sold  the 
dynamo  to  Crane  on  a  contract  apparently  contingent  upon 
the  successful  working  of  the  machine.  It  did  not  work  success- 
fully and  was  sent  back  to  plaintiffs  to  be  altered,  with  a  view  of 
correcting  its  imperfections.     At  this  point  occurred  the  first 

^See  McCauley  v.  Davidson,  10  Minn.  418;  Melbourne  ^c.  S.  Co.  v. 
Louisville  ^c.  E.  Co.,  88  Ala.  443. 


Chap.  II.  §  4.]  CONSIDERATION.  175 

intervention  of  the  defendant  Powers.  He  had  not  then  obtained, 
so  far  as  the  case  shows,  any  interest  in  the  machine,  and  the 
complete  title  was  either  in  Crane  or  Ball,  or  in  both;  but  when 
the  plaintiffs  hesitated  about  entering  upon  the  new  work  until 
their  charges  for  it  should  be  made  secure.  Powers  agreed  to  pay 
them.  The  true  character  of  that  promise  is  immaterial,  for, 
when  the  work  was  done,  Powers  did  pay  according  to  his  con- 
tract. Thereafter,  Ball  and  Powers  requiring  a  delivery  of  the 
dynamo,  the  plaintiffs  undertook  or  threatened  to  retain  the 
possession  till  the  original  debt  should  be  paid.  That  they  had 
no  right  to  do.  Their  primary  lien  was  lost  by  the  delivery,  and 
they  acquired  no  new  one  by  reason  of  the  repairs  which  were 
paid  for.  Such  refusal  to  surrender  the  possession  was  an  abso- 
lute wrong  without  any  color  of  right  about  it.  After  demand 
their  refusal  was  a  trespass,  and  according  to  their  own  evidence 
the  sole  consideration  for  the  promise  which  they  claim  that 
Powers  made  to  pay  the  old  debt  of  Ball  was  their  surrender  of 
possession.  To  that  they  were  already  bound,  and  parted  with 
nothing  by  the  surrender.  They  gave  up  no  right  which  they 
had  against  any  one,  but  extorted  the  promise  by  a  threat  of  what 
would  have  been,  if  executed,  a  wrongful  conversion.  Doing 
what  they  were  already  bound  to  do  furnished  no.  consideration 
for  the  promise. 

It  is  said,  however,  that  Ball  made  no  demand,  and  until  he 
did,  the  plaintiffs  were  not  bound  to  deliver  the  possession,  and 
that  the  delivery  was  to  Powers  and  not  to  Ball.  But  there  was 
certainly  a  request  to  ship  the  machine  and  so  part  with  the 
possession,  and  both  the  request  and  the  shipment  were  with  the 
concurrence  of  Ball.  It  was  that  very  request  that  brought  up 
the  subject  of  the  old  debt,  and  Ball  stood  by,  plainly  assenting, 
at  least  by  omitting  any  dissent  or  objection.  The  shipment  of 
Powers  by  name  made  it  none  the  less  a  delivery  to  Ball,  whose 
concurrrence  is  explicitly  found.  Surely,  after  what  happened, 
the  latter  could  not  have  maintained  an  action  for  conversion  on 
the  ground  that  there  had  been  no  delivery  to  him.  The  undis- 
puted fact  is  that  the  plaintiffs  were  seeking  to  withhold  a 
delivery  to  the  owner  without  the  least  right  of  refusal.  There 
was  no  harm  to  plaintiffs  and  no  benefit  conferred  on  Powers. 


176  FORMATION  OF  CONTRACT.  [Part  U. 

The  former  parted  with  nothing  of  their  own,  and  the  latter 
gained  nothing,  for  the  shipment  to  him  was  a  delivery  to  Ball, 
the  owner,  since  made  with  his  concurrence,  and  Powers  obtained 
no  right  or  interest  in  the  property  as  the  result  of  the  delivery. 
He  simply  took  it,  if  he  took  at  all,  which  is  doubtful,  as  the 
agent  or  bailee  of  the  owner,  and  acquired  no  right  in  it  until  a 
later  period.  Until  the  mortgage  made  subsequently,  his  advances 
for  repairs  constituted  only  an  unsecured  debt  against  Ball.  The 
turning  point  of  the  appellant's  argument  is  the  unwarranted 
assumption  that  the  plaintiffs  agreed  to  deliver,  and  did  deliver, 
the  dynamo  to  one  whom  they  knew  not  to  be  the  owner  without 
the  assent  of  Ball,  who  was  the  owner,  but  who,  nevertheless, 
stood  by  and  made  no  objection.  No  fair  construction  of  the 
evidence  will  sustain  the  appellant's  theory. 

The  judgment  should  be  affirmed,  with  costs.     All  concur. 

Judgment  affirmed. 


(^)  Performance  of  public  duty. 

SMITH  V.   WHILDIN. 
10  PENNSYLVANIA  STATE,  39.  — 1848. 

In  error  from  the  Common  Pleas  of  Philadelphia. 

Assumpsit  on  the  common  counts.     The  plaintiff,  who  was  a^ 
constable  in  Philadelphia,  proved  that  the  defendant  had  offered 
him  a  reward  of  $100  for  the  arrest  of  one  M.  Crossin,  against 
whom  warrants  had  been  issued  on  a  charge  for  obtaining  goods 
under  false  pretenses. 

Coulter,  J.  There  was  no  consideration  for  the  promise,  and 
the  court  below  therefore  misconceived  the  law.  It  is  the  duty 
of  a  constable  to  pursue,  search  for,  and  arrest  offenders  against 
whom  criminal  process  is  put  into  his  hands.  It  is  stated  in 
Com.  Digest  (title  Justice  of  the  Peace,  B.  79)  that  the  duty 
of  a  constable  requires  him  to  do  his  utmost  to  discover,  pursue, 
and  arrest  felons.  The  office  of  constable  is  created  not  for  the 
private  emolument  of  the  holder,  but  to  conserve  the  public 
peace,  and  to  execute  the  criminal   law  of  the  country.     He  is 


Chaf.  II.  §  4.]  CONSIDERATION.  177 

not  tlie  :ijent  or  employee  o^"  the  private  prosecutor,  but  tli'3 
minister  of  the  law,  doing  the  work  of  the  public,  which  he  is 
bound  to  do  faithfully  for  the  fee  prescribed  by  law,  to  be  paid 
as  the  law  directs.  And  it  would  be  against  public  policy  as  well 
as  against  law  to  hold  otherwise. 

There  are  things  which  a  constable  is  not  oflBcially  bound  to 
do,  such  as  to  procure  evidence,  and  the  like,  and  for  this  he 
may  perhaps  be  allowed  to  contract.  And  this  is  the  full  extent 
of  the  principle  in  the  case  cited  from  11  Ad.  and  El.  856.  But 
it  has  been  held  that  even  a  sailor  cannot  recover  for  extra  work 
on  a  promise  by  the  master  to  pay  for  extra  work  in  managing 
the  ship  in  peril,  the  sailor  being  bound  to  do  his  utmost  inde- 
pendently of  any  fresh  contract.  Stilk  v.  Myrick,  2  Camp.  317, 
and  the  cases  there  cited. 

It  would  open  a  door  to  profligacy,  chicanery,  and  corruption, 
if  the  officers  appointed  to  carry  out  the  criminal  law  were  per- 
mitted to  stipulate  by  private  contract ;  it  would  open  a  door  to 
the  escape  of  offenders  by  culpable  supineness  and  indifference  on 
the  part  of  those  officers,  and  compel  the  injured  persons  to  take 
upon  themselves  the  burden  of  public  prosecutions.  It  ought  not 
to  be  permitted.  Constables  must  do  their  utmost  to  discover, 
pursue,  and  arrest  offenders  within  their  township,  district,  or 
jurisdiction,  without  other  fee  or  reward  than  that  given  by  the 
law  itself. 

Judgment  reversed,  and  a  venire  de  novo  awarded.^ 


(y)  Promise  to  perform  existing  contract. 
COYNER  V.   LYXDE. 

10  INDIANA,  282.  — 1858. 

Hanna,  J.  The  appellant  was  the  plaintiff,  and  the  appellees 
the  defendants.     The  plaintiff  was  a  contractor  with  the  Rich- 

1  In  McCandle.ss  v.  Alleghany  Bessemer  Steel  Co.  (152  Pa.  St.  139  [1893]) 
a  sheriff  recovered  money  expended  by  him  for  expense  of  deputies  selected 
by  him  at  request  of  defendants,  for  their  special  benefit,  and  upon  the  faith 
of  their  promise  to  make  good  the  amount  thus  advanced. 


178  FORMATION  OF  CONTRACT.  [Part  IL 

luond  and  Newcastle  Railroad  Company,  for  the  construction  of 
a  portion  of  said  road.  The  defendants  undertook,  and  agreed 
with  the  plaintiff,  to  complete  a  portion  of  that  contract,  to  wit, 
to  grade  the  road,  for  which  they  were  to  receive  from  the  com- 
pany the  same  rates  per  yard,  etc.,  that  the  plaintiff  was  to  have 
received,  and  said  defendants  were  to  pay  the  plaintiff  a  certain 
portion  of  the  sum  so  received,  to  wit,  so  much  per  yard,  etc.,  as 
a  premium,  or  for  the  privilege  of  said  contract.  This  suit  is 
for  that  sum,  which  was  to  have  been  thus  paid  by  defendants  to 
plaintiff. 

The  court  overruled  the  demurrer  to  the  sixth  paragraph  of 
the  defendants'  answer,  and  gave  and  refused  certain  instructions 
directed  to  the  points  involved  in  that  paragraph.  Of  these 
rulings  the  plaintiff  complains. 

The  sixth  paragraph  is,  in  substance,  that  after  the  plaintiff 
and  defenhmts  had  entered  into  the  agreement  sued  on,  it  was 
ascertained  that  the  prices  at  which  plaintiff  had  undertaken 
with  the  company  to  do  the  work  were  greatly  inadequate ;  that 
it  would  be  a  losing  business  to  prosecute  the  work ;  that  uj)on. 
such  discovery,  the  defendants  determined  to  abandon  the  con- 
tract, and  leave  the  plaintiff  to  perform  it;  that  the  plaintiff, 
knowing  he  would  suffer  loss  to  complete  the  same  himself  at 
the  prices,  "  in  view  of  said  facts,  and  to  induce  the  defendants 
to  go  on  with  said  work,  and  not  throw  the  same  on  the  hands 
of  said  plaintiff,  he,  said  plaintiff,  agreed  that  if  said  defendants 
would  agree  to  continue  to  prosecute  said  work  to  final  comple- 
tion, and  procure  additional  and  extra  pay  from  said  company, 
which,  with  the  amount  agreed  to  be  paid  plaintiff,  would  enable 
them  to  complete  said  work,  and  save  him  from  prosecuting  the 
same,  he,  the  said  plaintiff,  then  and  there  agreed  to  release  and 
acquit  them  from  said  payment,"  etc. ;  that  relying  on  this  prom- 
ise, and  an  agreement  of  the  company  to  pay  them  an  additional 
compensation,  they  completed  said  work. 

It  is  insisted  by  the  plaintiff  that  there  was  not,  nor  is  there 
alleged  to  be,  any  consideration  for  this  new  promise,  and  it  was 
therefore  void ;  whilst,  by  the  defendants,  it  is  argued  that  the 
contract  was,  in  effect,  abandoned,  and  the  work  afterwards  re- 
sumed because  of  the  new  promise,  and  that  such  resumption 


Chap.  II.  §  4.]  CONSIDERATION.  179 

of  work  was  a  sufficient  consideration  for  the  new  agreement  to 
pay  a  different  sum,  to  wit,  the  whole,  instead  of  a  part,  of  the 
original  contract  price. 

Whether  the  contract  between  the  plaintiff  and  the  defendants 
was  abandoned  or  not  by  the  defendants,  was  a  question  to  which 
the  attention  of  the  jury  was  fairly  called  by  the  instructions,  and 
the  law  stated  to  them  upon  such  a  state  of  facts,  if  found.  Under 
these  circumstanci'S,  we  cannot  disturb  their  finding,  especially  as 
the  whole  evidence  is  not  in  the  record.  Mills  v.  Riley,  7  Ind. 
K.  138. 

From  the  verdict  of  the  jury,  it  is  evident  that  they  must  have 
come  to  the  conclusion  that  the  contract  had  been  abandoned.  If 
it  was  abandoned,  the  plaintiff  had  his  election,  either  to  sue  the 
defendants  for  non-performance,  or  to  obtain  the  completion  of 
the  work  by  a  new  arrangement.  If,  in  making  such  new  arrange- 
ment or  agreement,  new  or  additional  promises  were  made  to  the 
defendants  dependent  upon  the  completion  of  the  work,  and  the 
defendants,  in  consideration  of  such  promises,  completed  the 
work,  we  do  not  see  anything  to  prevent  such  promises  from  being 
binding.  Munroe  v.  Perkins,  9  Pick.  302;  14  Johns.  330.  Such 
new  agreement  might  embrace  in  its  terras,  and  definitely  or  by 
legitimate  implication  dispose  of,  any  right  of  action  which  the 
plaintiff  had,  under  the  previous  contract,  against  the  defendants 
for  failure  to  perform,  or  for  portions  of  the  sum  due  for  work 
done,  so  far  as  it  had  progressed.  4  Ind.  R.  75;  7  Id.  597. 
Whether  a  new  agreement  was  made,  and  if  so,  whether  the  de- 
fendants were  absolved  thereby  from  the  payment  of  the  bonus 
previously  agreed  upon,  were  also  questions  of  fact  for  the  jury, 
and  were,  so  far  as  we  can  see,  properly  submitted  to  them,  and 
we  cannot  disturb  their  verdict  thereon. 

In  the  case  cited  in  14  Johns.,  the  plaintiff  undertook,  by  agree- 
ment under  seal,  to  construct  a  certain  cart-way  for  the  sum  of 
$900.  After  progressing  with  the  work,  he  ascertained  that 
the  price  was  inadequate,  and  determined  to  abandon  the  contract ; 
whereupon  the  defendant  agreed  verbally  to  release  him  from  the 
contract  and  pay  him  by  the  day  if  he  would  complete  the 
work,  which  he  did ;  and  in  a  suit  for  work  and  labor,  the  second 
contract  was  considered  binding.     So  the  case  in  9  Pickering  ^^■a3 


180  FORMATION  OF  CONTRACT.  [Part  II. 

for  work  and  labor,  etc.,  in  the  erection  of  a  hotel.  Defense,  a 
special  contract,  etc.  Reply,  waiver  of  the  contract,  and  new 
promise,  etc.  And  although,  so  far  as  can  be  gathered  from  the 
opinion,  the  evidence  of  an  abandonment  of  the  original  contract 
was  not  by  any  means  strong,  yet  the  verdict  of  the  jury  is  ad- 
verted to  as  settling  that  question.     See  also  7  Ind.  R.  138. 

As  the  evidence  is  not  in  the  record,  the  presumption  which  we 
have  often  decided  would  arise  in  reference  to  instructions  given 
and  refused,  would  prevent  us  from  saying  that  the  instructions 
given  in  this  case  were  improper ;  and  so,  also,  as  to  the  ruling 
of  the  court  in  refusing  those  that  were  asked.  9  Ind.  R.  115  j 
Id.  230 ;  Id.  286 ;  8  Id.  602 ;  7  Id.  531. 

Per  Curiam.     The  judgment  is  affirmed  with  costs.^ 


ENDRISS   V.   BELLE  ISLE  ICE   CO. 

49  MICHIGAN,  279.  — 1882. 

Assumpsit.     Plaintiff  brings  error. 

Graves,  C.  J.  The  ice  company  agreed  with  plaintiff,  who  is 
a  brewer,  to  furnish  him  with  the  ice  he  would  require  for  his 
brewery  during  the  season  of  1880  at  $1.75  per  ton,  or  in  case 
of  scarcity,  $2  per  ton.  The  parties  proceeded  under  the  con- 
tract until  May,  at  which  time  the  ice  company  refused  further 
performance  and  so  notified  the  plaintiff.  Shortly  afterwards 
the  parties  arranged  that  the  ice  company  should  furnish  ice  at 
$6  per  ton;  but  this  was  soon  modified  by  reducing  the  price 
to  $4  per  ton.  This  arrangement,  it  seems,  was  carried  out. 
The  plaintiff,  however,  brought  this  suit  to  recover  damages  for 
the  breach  of  the  original  contract,  and  his  contention  was  that 
when  the  ice  company  broke  that  contract  the  law  made  it  his 
duty  to  use  reasonable  efforts  to  mitigate  the  damages,  and 
hence  to  provide  himself  with  ice  on  the  best  practicable 
terms,  and  without  regard  to  the  individuality  of  the  party  of 
whom  it  could  or  might  be  obtained,  and  that  acting  in  accord- 

»  Accord:  Stewart y.  Keteltas,  36  N.Y.  388  ;  Thomas  v.  Barnes,  156  Mass. 
581 ;  Os/borne  v.  O'BeiUy^  42  N.  J.  Eq,  467 ;  Moore  v,  Detroit  Loc.  Works, 
14  Mich.  266. 


Ohap.  n.  §4.]  CONSroERATION.  181 

ance  with  that  duty,  he  made  a  new  contract  with  the  ice  com- 
pany, and  one  wholly  distinct  from  that  which  the  company 
refused  to  perform,  at  $4,  and  without  waiving  or  impairing 
his  right  to  hold  the  ice  company  for  its  violation  of  the  original 
contract. 

The  ice  company  claimed,  on  the  other  hand,  that  the  second 
arrangement  was  merely  a  modification  by  consent  of  the  first, 
and  that  it  left  open  no  ground  of  action  on  account  of  the  refusal 
of  the  company  to  perform  the  contract  as  it  was  originally  made. 

The  trial  judge  was  of  opinion  that  the  evidence  was  all  one 
way,  and  that  it  afforded  no  room  for  argument  in  favor  of  the 
position  of  the  plaintiff,  and  he  ordered  a  verdict  for  the  de- 
fendant.    We  are  not  able  to  concur  in  this  view. 

We  think  the  circumstances  raised  a  question  for  the  jury, 
and  that  it  should  have  been  left  to  them  to  construe  and  weigh 
the  evidence,  and  at  length  decide  between  the  conflicting 
theories.  Goebel  v.  Linn  (47  Mich.  489)  has  no  application. 
The  suit  there  was  on  a  note,  and  the  question  was  on  the  exist- 
ence of  legal  consideration,  and  whether  the  defense  of  duress 
was  compatible  with  admitted  facts. 

The  judgment  should  be  reversed  with  costs  and  a  new  trial 
granted. 

The  other  Justices  concurred.^ 


LINGENFELDER  et  al.   Executors  v.   WAINWRIGHT 
BREWmG  CO. 

103  MISSOURI,  578.  — 1890. 

Appeal  from  St.  Louis  City  Circuit  Court. 

Action  by  the  executors  of  Jungenfeld  for  services  performed 
by  him.  Jungenfeld,  an  architect,  was  employed  by  defendants 
to  plan  and  superintend  the  construction  of  brewery  buildings. 
He  was  also  president  of  the  Empire  Refrigerating  Company,  and 
largely  interested  therein.  The  De  La  Vergne  Ice  Machine 
Company  was  a  competitor  in  business.     Against  Jungenfeld's 

1  See  Bogera  v.  Bogera,  139  Mass.  440.  Cf.  Widiman  v.  Brown,  83  Mich. 
241. 


182  FORMATION  OF  CONTRACT.  [Fart  II 

wishes  Wainwright  awarded  the  contract  for  the  refrigerating 
plant  to  the  De  La  Vergne  Company.  The  brewery  was  at  that 
time  in  process  of  erection  and  most  of  the  plans  were  made. 
When  Jungenfeld  heard  that  the  contract  was  awarded,  he  took 
his  plans,  called  off  his  superintendent  on  the  ground,  and 
notified  Wainwright  that  he  would  have  nothing  more  to  do 
with  the  brewery.  The  defendants  were  in  great  haste  to  have 
their  new  brewery  completed  for  divers  reasons.  It  would  be 
hard  to  find  an  architect  in  Jungenfeld's  place,  and  the  making 
of  new  plans  and  arrangements  when  another  architect  was 
found  would  involve  much  loss  of  time.  Under  these  circum- 
stances Wainwright  promised  to  give  Jungenfeld  five  per  cent 
on  the  cost  of  the  De  La  Vergne  ice  machine  if  he  would  resume 
work.  Jungenfeld  accepted,  and  fulfilled  the  duties  of  superin- 
tending architect  till  the  completion  of  the  brewery. 

Gantt,  p.  J.  ...  Was  there  any  consideration  for  the  prom- 
ise of  Wainwright  to  pay  Jungenfeld  five  per  cent  on  the  refrig- 
erator plant?  If  there  was  not,  plaintiff  cannot  recover  the 
$3449,75,  the  amount  of  that  commission.  The  report  of  the 
referee,  and  the  evidence  upon  which  it  is  based,  alike  show  that 
Jungenfeld's  claim  to  this  extra  compensation  is  based  upon 
Wainwright's  promise  to  pay  him  this  sum  to  induce  him,  Jun- 
genfeld, to  complete  his  original  contract  under  its  original  terms. 

It  is  urged  upon  us  by  respondents  that  this  was  a  new  con- 
tract. 'New  in  what?  Jungenfeld  was  bound  by  his  contract  to 
design  and  supervise  this  building.  Under  the  new  promise  he 
was  not  to  do  anything  more  or  anything  different.  What  bene- 
fit was  to  accrue  to  Wainwright  ?  He  was  to  receive  the  same 
service  from  Jungenfeld  under  the  new  that  Jungenfeld  was 
bound  to  tender  under  the  original  contract.  What  loss,  trouble, 
or  inconvenience  could  result  to  Jungenfeld  that  he  had  not 
already  assumed?  No  amount  of  metaphysical  reasoning  can 
change  the  plain  fact  that  Jungenfeld  took  advantage  of  Wain- 
wright's necessities,  and  extorted  the  promise  of  five  per  cent  on 
the  refrigerator  plant,  on  the  condition  of  his  complying  with  his 
contract  already  entered  into.  Kor  had  he  even  the  flimsy  pre- 
text that  Wainwright  had  violated  any  of  the  conditions  of  the 
contract  on  his  part. 


Chap.  II.  §  4.]  CONSIDERATION.  183 

Jungenfeld  himself  put  it  upon  the  simple  proposition,  that 
"  if  he,  as  an  architect,  put  up  the  brewery,  and  another  company 
put  up  the  refrigerator  machinery,  it  would  be  a  detriment  to 
the  Empire  Refrigerating  Company,"  of  which  Jungenfeld  was 
president.  To  permit  plaintiff  to  recover  under  such  circum- 
stances would  be  to  offer  a  premium  upon  bad  faith,  and  invite 
men  to  violate  their  most  sacred  contracts,  that  they  may  profit 
by  their  own  wrong. 

"That  a  promise  to  pay  a  man  for  doing  that  which  he  is 
already  under  contract  to  do  is  without  consideration,"  is  con- 
ceded by  respondents.  The  rule  has  been  so  long  imbedded 
in  the  common  law  and  decisions  of  the  highest  courts  of 
the  various  States  that  nothing  but  the  most  cogent  reasons 
ought  to  shake  it.  Harris  v.  Carter,  3  E.  &  B.  559;  Stilk 
V.  Myrick,  2  Camp.  317;  1  Chitty  on  Contracts  (11  Amer.  ed.),  60; 
Bartlett  v.  Wyman,  14  Johns.  260;  Reynolds  v.  Nugent,  25  Ind. 
328;  Ayres  v.  Railroad,  52  Iowa,  478;  Festerman  v.  Parker,  10 
Ired.  474;  Eblin  v.  Miller,  78  Ky.  371;  Sherwin  &  Co.  v.  Brig- 
ham,  39  Ohio  St.  137;  Overdeer  v.  Wiley,  30  Ala.  709;  Jones  v. 
Miller,  12  Mo.  408;  Kick  v.  Merry,  23  Mo.  72;  Laidlou  v.  Hatch, 
75  111.  11;  Wimer  v.  Overseers  of  the  Poor,  104  Penn.  St.  317; 
Cohh  V.  Cowdery,  40  Vermont,  25;  Vanderbilt  v.  Schreyer,  91 
N.  Y.  392. 

But  '*  it  is  carrying  coals  to  New  Castle  "  to  add  authorities  on 
a  proposition  so  universally  accepted  and  so  inherently  just  and 
right  in  itself.  The  learned  counsel  for  respondents  do  not  con- 
trovert the  general  proposition.  Their  contention  is,  and  the 
Oircuit  Court  agreed  with  them  that,  when  Jungenfeld  declined 
to  go  further  on  his  contract,  the  defendant  then  had  the  right 
to  sue  for  damages,  and  not  having  elected  to  sue  Jungenfeld, 
but  having  acceded  to  his  demand  for  the  additional  compensation, 
defendant  cannot  now  be  heard  to  say  his  promise  is  without 
consideration.  "While  it  is  true  Jungenfeld  became  liable  in 
damages  for  the  obvious  breach  of  his  contract,  we  do  not  think 
it  follows  that  defendant  is  estopped  from  showing  its  promise 
was  made  without  consideration. 

It  is  true  that  as  eminent  a  jurist  as  Judge  Cooley,  in  Ooebel 
V.  Linn  (47  Michigan,  489),  held  that  an  ice  company  which  had 


184  FORMATION  OF  CONTRACT.  [Part  U. 

agreed  to  furnisli  a  brewery  with  all  the  ice  they  might  need  for 
their  business  from  November  8,  1879,  until  January  1,  1881,  at 
$1.75  per  ton,  and  afterwards  in  May,  1880,  declined  to  deliver 
any  more  ice  unless  the  brewery  would  give  it  f  3  per  ton,  could 
recover  on  a  promissory  note  given  for  the  increased  price.  Pro- 
found as  is  our  respect  for  the  distinguished  judge  who  delivered 
that  opinion,  we  are  still  of  the  opinion  that  his  decision  is  not 
in  accord  with  the  almost  universally  accepted  doctrine  and  is 
not  convincing,  and  certainly  so  much  of  the  opinion  as  holds 
that  the  payment  by  a  debtor  of  a  part  of  his  debt  then  due 
would  constitute  a  defense  to  a  suit  for  the  remainder  is  not  the 
law  of  this  State,  nor  do  we  think  of  any  other  where  the  com- 
mon law  prevails. 

The  case  of  Bishop  v.  Busse  (69  111.  403)  is  readily  distinguisha- 
ble from  the  case  at  bar.  The  price  of  brick  increased  very  con- 
siderably, and  the  owner  changed  the  plan  of  the  building  so  as 
to  require  nearly  double  the  number;  owing  to  the  increased 
price  and  change  in  the  plans,  the  contractor  notified  the  party 
for  whom  he  was  building,  that  he  could  not  complete  the  house 
at  the  original  prices,  and,  thereupon,  a  new  arrangement  was 
made,  and  it  is  expressly  upheld  by  the  court  on  the  ground  that 
the  change  in  the  buildings  was  such  a  modification  as  necessi- 
tated a  new  contract.  Nothing  we  have  said  is  intended  as 
denying  parties  the  right  to  modify  their  contracts,  or  make  new 
contracts,  upon  new  or  different  considerations  and  binding  them- 
selves thereby. 

What  we  hold  is  that,  when  a  party  merely  does  what  he  has 
already  obligated  himself  to  do,  he  cannot  demand  an  additional 
compensation  therefor,  and  although  by  taking  advantage  of  the 
necessities  of  his  adversary  he  obtains  a  promise  for  more,  the 
law  will  regard  it  as  nudum  pactum,  and  will  not  lend  its  process 
to  aid  in  the  wrong. 

So  holding,  we  reverse  the  judgment  of  the  Circuit  Court  of  St. 
Louis,  to  the  extent  that  it  allow  the  plaintiffs  below,  respond- 
ents here,  the  sum  of  $3449.75,  the  amount  of  commission  at 
five  per  cent  on  the  refrigerator  plant;  and,  at  the  request  of 
both  sides,  we  proceed  to  enter  the  judgment  here,  which,  in  our 
opinion,  the  Circuit  Court  of  St.  Louis  should  have  entered,  and 


Chap.  II.  §  4.]  CONSIDERATION.  185 

accordingly  it  is  adjudged  that  the  report  of  the  referee  be  in 
all  things  approved,  and  that  defendant  have  and  recover  of 
plaintiffs  as  executors  of  Edmund  Jungenfeld  the  sum  of  $1492.17 
so  found  by  the  referee  with  interest  from  March  9,  1887.  All 
the  judges  of  this  division  concur.^ 


JOHNSON'S  ADM'R  v.    SELLERS'  ADM'R, 

33  ALABAMA,  265.  — 1868. 

Appeal  from  the  Circuit  Court  of  Wilcox. 

Johnson  contracted  to  teach  school  at  Camden,  the  trustees  of 
the  school  understanding  that  he  also  engaged  to  bring  his  wife 
with  him  as  a  teacher.  Johnson  contended  that  he  did  not  con- 
sider that  he  had  made  a  contract  to  bring  her.  The  evidence 
tended  to  show  that  thereafter  Sellers  agreed  to  pay  Johnson 
$2500  if  he  would  bring  Mrs.  Johnson  with  him  to  teach  at 
Camden. 

Walker,  J.  The  counsel  for  the  appellant  only  contends, 
that  the  first,  fourth,  ninth,  and  tenth  charges  given  are  errone- 
ous ;  and  we  will,  therefore,  confine  our  attention  to  them.  Upon 
the  first  charge  it  is  not  necessary  that  we  should  pass,  as  the 
question  made  upon  it  will  not  probably  again  arise. 

(1.)  The  court  erred  in  giving  the  fourth  charge.  The  contract- 
ing parties  are  not  bound  beyond  the  stipulations  of  the  contract. 
One  of  the  parties  is  not  bound  to  perform  an  act,  not  within  the 
stipulations  of  the  contract,  because  it  was  understood  by  the 
other  party  that  he  would  perform  it,  and  he  knew  of  that  under- 
standing. The  effect  of  the  charge  was,  to  hold  Johnson  bound 
to  bring  his  wife  with  him,  although  he  did  not  contract  to  do 
so,  because  it  was  known  to  him  that  the  trustees  understood  that 
he  was  to  bring  her  with  him  to  teach  in  the  school.  In  the  giving 
of  that  charge  the  court  erred.     Sanford  v.  Uoioard,  29  Ala.  684. 

(2.)  The  ninth  and  tenth  charges  assert  the  proposition,  that  if 
Johnson  contracted  to  bring  and  associate  his  wife  with  him  in 
teaching  the  school,  and  then  refused  to  comply  with  that  con- 
tract, a  promise  by  Sellers  to  give  him  $2500,  in  order  to  induce 

1  See  Qoldsborough  v.  Oahle,  140  111.  269. 


186  FORMATION  OF  CONTRACT.  [Part  H. 

him  to  comply,  would  be  without  consideration.  In  our  judg- 
ment, these  charges  are  correct.  Johnson,  by  his  contract,  was 
legally  bound  to  bring  his  wife  to  teach  in  the  school,  if  the  con- 
tract was  such  as  the  charge  supposes.  He  had  no  right  to 
violate  that  contract,  and  compensate  the  injur^  party  in 
damages.  It  is  true,  the  law  would  not  interpose  to  compel  the 
performance  of  the  contract;  but  this  is  not  because  he  had  a 
right  to  violate  his  contract,  but  because  the  law  supposes  the 
injury  done  by  the  violation  of  it  can  be  sufficiently  compen- 
sated in  damages.  A  man  may  commit  a  trespass,  for  which  the 
law  would  merely  give  an  action  to  recover  damages ;  but  it  does 
not  therefore  follow,  that  he  had  a  right  to  commit  the  trespass, 
being  responsible  for  the  damages,  or  that  a  promise  made  to 
induce  him  either  to  commit  or  not  to  commit  it  would  be  valid. 
Renfro  v.  Heard,  14  Ala.  23. 

If  two  parties  make  a  contract,  one  of  them  may  waive  the 
performance  of  the  contract  by  the  other,  and  assume  some  new 
and  additional  obligation  as  the  consideration  of  the  performance 
by  the  other.  Such  obligation  would  be  binding.  Within  this 
principle  fall  the  cases  of  Stoudenmeier  v.  Williamson,  29 
Ala.  558;  Munroe  v.  Perkins,  9  Pick.  298;  and  Lattimore 
V.  Harsen,  14  Johns.  330  ;  also,  Spangler  v.  Springer,  22 
Penn.  St.  R,  454;  Whiteside  v.  Jennings,  19  Ala.  784;  Thom- 
<ison  V.  Dill,  30  Ala.  444.  Those  cases  rest  upon  the  ground, 
that  it  is  competent  for  the  parties  to  a  contract  to  modify  or 
rescind  it,  or  to  waive  their  rights  growing  out  of  it  as  origi- 
nally made,  and  engraft  upon  it  new  terms.  Here,  while  there 
is  a  subsisting  contract  with  the  trustees,  and  a  subsisting  obliga- 
tion to  perform  it,  the  proposition  of  the  appellant  is,  that  a 
promise  by  a  third  party  to  induce  its  performance,  or  rather 
to  prevent  its  breach,  was  supported  by  a  valid  consideration. 
We  do  not  think  the  law  so  regards  such  a  promise. 

We  deem  it  proper  to  remark,  that  the  testimony  found  in  the 
bill  of  exceptions  does  not  conclusively  show  whether  Johnson's 
contract  was  to  bring  his  wife  to  teach  in  the  school  with  him ; 
and  that  that  question  of  fact  should  be  left  to  the  determination 
of  the  jury  upon  the  evidence.  The  court  could  not  assume  that 
the  resolution  for  the  election  of  Johnson  as  principal  on  the 


Chap.  II.  §  4.]  CONSIDERATION.  187 

17th  August,  1850,  contains  all  the  terms  of  the  contract.  The 
question,  what  was  the  contract,  must  be  left  to  the  decision  of 
the  jury,  upon  that  and  the  other  evidence  in  the  case. 

The  judgment  of  the  court  below  is  reversed,  and  the  cause  is 
remanded.^ 


(S)   Payment  of  smaller  sum  in  satisfaction  of  larger. 
JAFFRAY   V.    DAVIS. 

124  NEW  YORK,  164.  — 1891. 

Potter,  J.  The  facts  found  by  the  trial  court  in  this  case 
were  agreed  upon.*  They  are  simple  and  present  a  familiar  ques- 
tion of  law.  The  facts  are  that  defendants  were  owing  plaintiffs 
on  the  8th  day  of  December,  1886,  for  goods  sold  between  that 
date  and  the  May  previous  at  an  agreed  price,  the  sum  of  $7714.37, 
and  that  on  the  27th  of  the  same  December,  the  defendants  deliv- 
ered to  the  plaintiffs  their  three  promissory  notes,  amounting  in 
the  aggregate  to  three  thousand  four  hundred  and  sixty-two 
twenty-four  one-hundredths  dollars  secured  by  a  chattel  mortgage 
on  the  stock,  fixtures,  and  other  property  of  defendants,  located 
in  East  Saginaw,  Michigan,  which  said  notes  and  chattel  mort- 
gage were  received  by  plaintiffs  under  an  agreement  to  accept 
same  in  full  satisfaction  and  discharge  of  said  indebtedness. 
"That  said  notes  have  all  been  paid  and  said  mortgage  dis- 
charged of  record." 

The  question  of  law  arising  from  these  facts  and  presented  to 
this  court  for  its  determination  is  whether  such  agreement,  with 
full  performance,  constitutes  a  bar  to  this  action,  which  was 
brought  after  such  performance  to  recover  the  balance  of  such 
indebtedness  over  the  sum  so  secured  and  paid. 

One  of  the  elements  embraced  in  the  question  presented  upon 
this  appeal  is,  viz.,  whether  the  payment  of  a  sum  less  than  the 
amount  of  a  liquidated  debt  under  an  agreement  to  accept  the 
same  in  satisfaction  of  such  debt  forms  a  bar  to  the  recovery  of 

1  Accord :  Davenport  v.  First  Congregational  Society,  33  Wis.  387  ;  Schiiler 
v.  Myton,  48  Kans.  282;  Brownlee  v.  Lowe,  117  Ind.  420;  Bobinson  v. 
Jetoett,  116  N.  Y.  40. 


188  FORMATION  OF  CONTRACT.  [Part  II. 

tiie  balance  of  the  debt.  This  single  question  was  presented 
to  the  English  court  in  1602,  when  it  was  resolved  (if  not 
decided)  in  PinneVs  case  (5th  Co.  R.  117)  "that  payment  of  a 
lesser  sum  on  the  day  in  satisfaction  of  a  greater,  cannot  be  any 
satisfaction  for  the  whole,"  and  that  this  is  so,  although  it  was 
agreed  that  such  payment  should  satisfy  the  whole.  This  simple 
question  has  since  arisen  in  the  English  courts  and  in  the  courts 
of  this  country  in  almost  numberless  instances,  and  has  received 
the  same  solution,  notwithstanding  the  courts,  while  so  ruling, 
have  rarely  failed,  upon  any  recurrence  of  the  question,  to  criti- 
cise and  condemn  its  reasonableness,  justice,  fairness,  or  honesty. 
No  respectable  authority  that  I  have  been  able  to  find  has,  after 
such  unanimous  disapproval  by  all  the  courts,  held  otherwise  than 
as  held  in  PinneVs  case,  supra,  and  Cumber  v.  Wane,  1  Str.  426. 
Fodkes  v.  Beer,  L.  R.  9  App.  Cas.  605;  36  English  Reports,. 
194;  Goddard  v.  O'Brien,  L.  R.  9  Q.  B.  Div.  37;  Vol.  21, 
Am.  Law  Register,  637,  and  notes. 

The  steadfast  adhesion  to  this  doctrine  by  the  courts  in  spite 
of  the  current  of  condemnation  by  the  individual  judges  of  the 
court,  and  in  the  face  of  the  demands  and  conveniences  of  a  much 
greater  business  and  more  extensive  mercantile  dealings  and 
operations,  demonstrates  the  force  of  the  doctrine  of  stare  decisis. 
But  the  doctrine  of  stare  decisis  is  further  illustrated  by  the 
course  of  judicial  decisions  upon  this  subject;  for  while  the 
courts  still  hold  to  the  doctrine  of  the  Pinnel  and  Cumber  v. 
Wane  cases,  supra,  they  have  seemed  to  seize  with  avidity  upon 
any  consideration  to  support  the  agreement  to  accept  the  lesser 
sum  in  satisfaction  of  the  larger,  or  in  other  words,  to  extract  if 
possible  from  the  circumstances  of  each  case  a  consideration  for 
the  new  agreement,  and  to  substitute  the  new  agreement  in  place 
of  the  old,  and  thus  to  form  a  defense  to  the  action  brought  upon 
the  old  agreement.  It  will  serve  the  purpose  of  illustrating  the 
adhesion  of  the  court  to  settled  law  and  at  the  same  time  enable 
us  perhaps  more  satisfactorily  to  decide  whether  there  was  a 
good  consideration  to  support  the  agreement  in  this  case,  to  refer 
to  the  consideration,  in  a  few  of  the  numerous  cases,  which  the 
courts  have  held  to  be  sufficient  to  support  the  new  agreement. 

Lord  Blackburn  said  in  his  opinion  in  Foakes  v.  Beer,  supra^ 


Chap.  II.  §  4.]  CONSIDERATION.  189 

and  while  maintaining  the  doctrine,  "that  a  lesser  sum  cannot 
be  a  satisfaction  of  a  greater  sum,"  **but  the  gift  of  a  horse, 
hawk  or  robe,  etc.,  in  satisfaction  is  good,"  quite  regardless  of 
the  amount  of  the  debt.  And  it  was  further  said  by  him  in  the 
same  opinion,  "  that  payment  and  acceptance  of  a  parcel  before 
the  day  of  payment  of  a  larger  sum  would  be  a  good  satisfaction 
in  regard  to  the  circumstance  of  time, "  "  and  so  if  I  am  bound 
in  twenty  pounds  to  pay  you  ten  pounds  at  Westminster,  and 
you  request  me  to  pay  you  five  pounds  at  the  day  at  York,  and 
you  will  accept  it  in  full  satisfaction  for  the  whole  ten  pounds, 
it  is  a  good  satisfaction."  It  was  held  in  Goddard  v.  O'Brien 
(L.  R.  9  Q.  B.  Div.  37;  21  Am.  L.  Reg.  N.  S.  637) :  "A,  being 
indebted  to  B  in  125  pounds  7s.  &  9d.  for  goods  sold  and  deliv- 
ered, gave  B  a  check  (negotiable,  I  suppose)  for  100  pounds  paya- 
ble on  demand,  which  B  accepted  in  satisfaction,  was  a  good 
satisfaction."  Huddleston,  B.,  in  Goddard  v.  O'Brien,  supra, 
approved  the  language  of  the  opinion  in  Sibree  v.  Tripp  (15  M.  & 
W.  26),  "  that  a  negotiable  security  may  operate,  if  so  given  and 
taken,  in  satisfaction  of  a  debt  of  a  greater  amount;  the  circum- 
stance of  negotiability  making  it  in  fact  a  different  thing  and  more 
advantageous  than  the  original  debt  which  was  not  negotiable." 

It  was  held  in  Bull  v.  Bull  (43  Conn.  455),  "  and  although  the 
claim  is  a  money  demand  liquidated  and  not  doubtful,  and  it 
cannot  be  satisfied  with  a  smaller  sum  of  money,  yet  if  any  other 
personal  property  is  received  in  satisfaction,  it  will  be  good  no 
matter  what  the  value." 

And  it  was  held  in  Cumber  v.  Wane,  supra,  that  a  creditor 
can  never  bind  himself  by  simple  agreement  to  accept  a  smaller 
sum  in  lieu  of  an  ascertained  debt  of  a  larger  amount,  such 
agreement  being  nudum  pacttim,  but  if  there  be  any  benefit  or 
even  any  legal  possibility  of  benefit  to  the  creditor  thrown  in, 
that  additional  weight  will  turn  the  scale  and  render  the  consid- 
eration suificient  to  support  the  agreement. 

It  was  held  in  Le  Page  v.  McCrea  (1  Wend.  164)  and  in  Boyd 
V.  Hitchcock  (20  Johns.  76)  that  "giving  further  security  for 
part  of  a  debt  or  other  security,  though  for  a  less  sum  than  the 
debt,  and  acceptance  of  it  in  full  of  all  demands,  make  a  valid 
accord  and  satisfaction." 


190  FORMATION   OF  CONTRACT.  [Pakt  II. 

That  "  if  a  debtor  gives  his  creditor  a  note  indorsed  by  a  third 
party  for  a  less  sum  than  the  debt  (no  matter  how  much  less), 
but  in  full  satisfaction  of  the  debt,  and  it  is  received  as  such, 
the  transaction  constitutes  a  good  accord  and  satisfaction."  Var- 
ney  v.  Conei-y,  3  East  R.  25.  And  so  it  has  been  held,  "  where  by 
mode  or  time  of  part  payment,  different  than  that  provided  for 
in  the  contract,  a  new  benefit  is  or  may  be  conferred  or  a  burden 
imposed,  a  new  consideration  arises  out  of  the  transaction  and 
gives  validity  to  the  agreement  of  the  creditor  "  {Rose  v.  Hall, 
26  Conn.  392),  and  so  "payment  of  less  than  the  whole  debt, 
if  made  before  it  is  due  or  at  a  different  place  from  that  stipu- 
lated, if  received  in  full,  is  a  good  satisfaction."  Jones  v.  Bul- 
litt, 2  Lit.  49;  Ricketts  v.  Hall,  2  Bush.  249;  Smith  v.  Brown, 
3  Hawks.  (N.  C.)  580;  Jones  v.  Perkins,  29  Miss.  139;  Schivei- 
der  V.  Lang,  29  Minn.  254;  43  Am.  R.  202. 

In  Watson  v.  Elliott  (57  N.  H.  511-513)  it  was  held,  "it  is 
enough  that  something  substantial,  which  one  party  is  n^t  bound 
by  law  to  do,  is  done  by  him  or  something  which  he  has  a  right 
to  do  he  abstains  from  doing  at  the  request  of  the  other  party," 
[and  this]  is  held  a  good  satisfaction. 

It  has  been  held  in  a  number  of  cases  that  if  a  note  be  surren- 
dered (by  the  payee  to  the  maker),  the  whole  claim  is  discharged 
and  no  action  can  afterwards  be  maintained  on  such  instrument 
for  the  unpaid  balance.  Ellsworth  v.  Fogg,  35  Vt.  355 ;  Kent  v. 
Reynolds,  8  Hun,  559. 

It  has  been  held  that  a  partial  payment  made  to  another, 
though  at  the  creditor's  instance  and  request,  is  a  good  discharge 
of  the  whole  debt.  Harper  v.  Graham,  20  Ohio,  106.  "The 
reason  of  the  rule  is  that  the  debtor  in  such  case  has  done  some- 
thing more  than  he  was  originally  bound  to  do,  or  at  least  some- 
thing different.  It  may  be  more  or  it  may  be  less,  as  a  matter  of 
fact." 

It  was  held  by  the  Supreme  Court  of  Pennsylvania  in  Mechan- 
ics' Bank  v.  Huston  (Feb.  13, 1882,  11  W.  Notes  of  Cases,  389),  the 
decided  advantage  which  a  creditor  acquires  by  the  receipt  of  a 
negotiable  note  for  a  part  of  his  debt,  by  the  increased  facili- 
ties of  recovering  upon  it,  the  presumption  of  a  consideration  for 
it,  the  ease  of  disposing  of  it  in  market,  etc.,  was  held  to  fur- 


Chap.  II.  §  4.]  CONSIDERATION.  191 

nish  ample  reason  why  it  should  be  a  valid  discharge  of  a  larger 
account  or  open  claim  unnegotiable. 

It  has  been  held  that  a  payment  in  advance  of  the  time,  if 
agreed  to,  is  full  satisfaction  for  a  larger  claim  not  yet  due. 
Brooks  V.  White,  2  Met.  283;  Bowker  v.  Cliilds,  3  Allen,  434. 

In  some  States,  notably  Maine  and  Georgia,  the  legislature, 
in  order  to  avoid  the  liavshness  of  the  rule  under  consideration, 
have  by  statute  changed  the  law  upon  that  subject  by  providing, 
"no  action  can  be  maintained  upon  a  demand  which  has  been 
cancelled  by  the  receipt  of  any  sum  of  money  less  than  the  amount 
legally  due  thereon,  or  for  any  good  and  valuable  consideration 
however  small."     Citing  Weymouth  v.  Babcock,  42  Maine,  42. 

And  so  in  Gray  v.  Barton  (55  N".  Y.  68),  where  a  debt  of  $820 
upon  book  account  was  satisfied  by  the  payment  of  $1  by  calling 
the  balance  a  gift,  —  though  the  balance  was  not  delivered  except 
by  fiction,  and  the  receipt  was  in  the  usual  form  and  was  silent 
upon  the  subject  of  a  gift ;  and  this  case  was  followed  and  referred 
to  in  Fen-y  v.  Stephens,  66  N.  Y.  321. 

So  it  was  held  in  Mitchell  v.  Wlieaton  (46  Conn.  315;  33  Am. 
R.  24)  that  the  debtor's  agreement  to  pay  and  the  payment  of 
$150  with  the  costs  of  the  suit  upon  a  liquidated  debt  of  $299 
satisfied  the  principal  debt. 

These  cases  show  in  a  striking  manner  the  extreme  ingenuity 
and  assiduity  which  the  courts  have  exercised  to  avoid  the  opera- 
tion of  the  "rigid  and  rather  unreasonable  rule  of  the  old  law," 
as  it  is  characterized  in  Johnston  v.  Brannan  (5  Johns.  268-272), 
or  as  it  is  called  in  Kellogg  v.  Richards  (14  Wend.  116),  "tech- 
nical and  not  very  well  supported  by  i"eason,"  or  as  may  be  more 
practically  stated,  a  rule  that  "a  bar  of  gold  worth  $100  will 
discharge  a  debt  of  $500,  while  400  gold  dollars  in  current  coin 
will  not."  See  note  to  Goddard  v.  O'Brien,  supra,  in  Am.  Law 
Register,  New  Series,  Vol.  21,  pp.  640,  641. 

The  state  of  the  law  upon  this  subject,  under  the  modification 
of  later  decisions  both  in  England  and  in  this  country,  would 
seem  to  be  as  expressed  in  Goddard  v.  O'Brien  (Queen's  Bench 
Division,  supra):  "The  doctrine  in  Cumb&i'  v.  Wane  is  no  doubt 
very  much  qualified  by  Sibree  v.  Tripp,  and  I  cannot  find  it 
better  stated  than  in  1st  Smith's  Leading  Cases  (7th  ed.),  595: 


192  FORMATION  OF  CONTRACT.  [Pabt  H. 

*  The  general  doctrine  in  Cumber  v.  Wane,  and  the  reason  of  all 
the  exceptions  and  distinctions  which  have  been  engraved  on  it, 
may  perhaps  be  summed  up  as  follows,  viz. :  That  a  creditor 
cannot  bind  himself  by  a  simple  agreement  to  accept  a  smaller 
sum  in  lieu  of  an  ascertained  debt  of  larger  amount,  such  an 
agreement  being  nudum  pactum.  But  if  there  be  any  benefit  or 
even  any  legal  possibility  of  benefit  to  the  creditor  thrown  in, 
that  additional  weight  will  turn  the  scale  and  render  the  consid- 
eration sufficient  to  support  the  agreement. '  "  Bull  v.  Bull,  43 
Conn.  455;  Msher  v.  May,  2  Bibb.  449;  Reed  v.  Bartlett,  19  Pick. 
273 ;  Union  Bank  v.  Geary,  5  Peters,  99-114 ;  Le  Page  v.  JMcCrea, 

1  Wend.  164;  Boyd  v.  Hitchcock,  20  Johns.  76;  Brooks  v.  Wiite, 

2  Mete.  283;  Jones  v.  Perkins,  29  Miss.  139-141;  Hall  v.  Smith, 
15  Iowa,  584;  Babcock  v.  Hawkins,  23  Vt.  561. 

In  the  case  at  bar  the  defendants  gave  their  promissory  notes 
upon  time  for  one-half  of  the  debt  they  owed  plaintiffs,  and  also 
gave  plaintiffs  a  chattel  mortgage  on  the  stock,  fixtures,  and  other 
personal  property  of  the  defendants  under  an  agreement  with 
plaintiffs,  to  accept  the  same  in  full  satisfaction  and  discharge  of 
said  indebtedness.  Defendants  paid  the  notes  as  they  became 
due,  and  plaintiffs  then  discharged  the  mortgage.  Under  the 
cases  above  cited,  and  upon  principle,  this  new  agreement  was 
supported  by  a  sufficient  consideration  to  make  it  a  valid  agree- 
ment, and  this  agreement  was  by  the  parties  substituted  in  place 
of  the  former.  The  consideration  of  the  new  agreement  was  that 
the  plaintiffs,  in  place  of  an  open  book  account  for  goods  sold,  got 
the  defendants'  promissory  notes,  probably  negotiable  in  form, 
signed  by  defendants,  thus  saving  the  plaintiffs  perhaps  the  trouble 
or  expense  of  proving  their  account,  and  got  security  upon  all 
the  defendants*  personal  property  for  the  payment  of  the  sum 
specified  in  the  notes,  where  before  they  had  no  security. 

It  was  some  trouble,  at  least,  and  perhaps  some  expense  to  the 
defendants  to  execute  and  deliver  the  security,  and  they  deprived 
themselves  of  the  legal  ownership,  or  of  any  exemptions  or  the 
power  of  disposing  of  this  property,  and  gave  the  plaintiffs  such 
ownership  as  against  the  defendants,  and  the  claims  thereto  of 
defendants'  creditors,  if  there  were  any. 

It  seems  to  me,  upon  principle  and  the  decisions  of  this  State 


Chap.  U.  §  4.]  CONSIDERATION.  193 

{save,  perhaps,  Keeler  v.  Salisbury,  33  N.  Y.  653,  and  Platts  v. 
Walrath,  Lalor's  Supp.  59,  which  I  will  notice  further  on),  and 
of  quite  all  of  the  other  States,  the  transactions  between  the  plain- 
tiffs and  the  defendants  constitute  a  bar  to  this  action.  All  that 
is  necessary  to  produce  satisfaction  of  the  former  agreement  is  a 
sufficient  consideration  to  support  the  substituted  agreement. 
The  doctrine  is  fully  sustained  in  the  opinion  of  Judge  Andrews 
in  Allison  v.  Abendroth  (108  N.  Y.  470),  from  which  I  quote: 
"  But  it  is  held  that  where  there  is  an  independent  consideration, 
or  the  creditor  receives  any  benefit  or  is  put  in  a  better  position, 
or  one  from  which  there  may  be  legal  possibility  of  benefit  to 
which  he  was  not  entitled  except  for  the  agreement,  then  the 
agreement  is  not  nudum  pactum,  and  the  doctrine  of  the  common 
law  to  which  we  have  adverted  has  no  application."  Upon  this 
•distinction  the  cases  rest  which  hold  that  the  acceptance  by  the 
creditor  in  discharge  of  the  debt  of  a  different  thing  from  that 
contracted  to  be  paid,  although  of  much  less  pecuniary  value  or 
amount,  is  a  good  satisfaction,  as,  for  example,  a  negotiable  in- 
strument binding  the  debtor  and  a  third  person  for  a  smaller  sum. 
Curlewis  v.  Clark,  3  Exch.  375.  Following  the  same  principle, 
it  is  held  that  when  the  debtor  enters  into  a  new  contract  with 
the  creditor  to  do  something  which  he  was  not  bound  to  do  by 
the  original  contract,  the  new  contract  is  a  good  accord  and  satis- 
faction if  so  agreed.  The  case  of  accepting  the  sole  liability  of 
one  of  two  joint  debtors  or  copartners  in  satisfaction  of  the  joint 
or  copartnership  debt  is  an  illustration.  This  is  held  to  be  a 
good  satisfaction,  because  the  sole  liability  of  one  of  two  debtors 
"  may  be  more  beneficial  than  the  joint  liability  of  both,  either 
in  respect  of  the  solvency  of  the  parties,  or  the  convenience 
of  the  remedy."  Thompson  v.  Percival,  5  B.  &  Adol.  925.  In 
perfect  accord  with  this  principle  is  the  recent  case  in  this  court 
of  Luddington  v.  Bell  (77  N.  Y.  138),  in  which  it  was  held  that 
the  acceptance  by  a  creditor  of  the  individual  note  of  one  of  the 
members  of  a  copartnership  after  dissolution  for  a  portion  of  the 
copartnerhsip  debt  was  a  good  consideration  for  the  creditor's 
agreement  to  discharge  the  maker  from  further  liability.  Par- 
dee V.  Wood,  8  Hun,  584;  Douglass  v.  White,  3  Barb.  Chy. 
621-624. 
o 


194  FORMATION  OF   CONTRACT.  [Part  II. 

Notwithstanding  these  later  and  decisive  authorities,  the  plain- 
tiffs contend  that  [despite]  the  giving  of  the  defendants'  notes  with 
the  chattel  mortgage  security  and  the  payment,  such  consideration 
was  insufficient  to  support  the  new  or  substituted  agreement,  and 
cites  as  authority  for  such  contention  the  cases  of  Platts  v.  Wal- 
rath  (Lalor's  Supp.  59)  and  Keeler  v.  Salisbury  (33  N.  Y.  648). 

Platts  V.  Walrath  arose  in  justice  court,  and  the  debt  in  con- 
troversy was  put  forth  as  a  set-off.  The  remarks  of  the  judge  in 
the  former  case  were  quite  obiter,  for  there  were  various  subjects, 
in  dispute  upon  the  trial,  and  from  which  the  justice  might  have 
reached  the  conclusion  that  he  did.  The  judge  in  the  opinion 
relied  upon  says :  "  Looking  at  the  loose  and  secondary  character 
of  the  evidence  as  stated  in  the  return,  it  was  perhaps  a  question 
of  fact  whether  any  mortgage  at  all  was  given;  or,  at  least, 
whether,  if  given,  it  was  not  in  terms  a  mere  collateral  security 
for  the.  large  note, "  "  even  the  mortgagee  was  left  to  parol  proof. 
Did  it  refer  to  and  profess  to  be  a  security  for  the  note  of  $1500, 
or  that  sum  less  the  fifty  dollars  agreed  to  be  thrown  off, 
etc.,  etc.?" 

There  is  so  much  confusion  and  uncertainty  in  the  case  that  it 
was  not  thought  advisable  to  publish  the  case  in  the  regular 
series  of  reports.  The  case  of  Keeler  v.  Salisbury,  supra,  is  not 
to  be  regarded  as  an  authority  upon  the  question  or  as  approving 
the  case  of  Platts  v.  Wdhath,  supra.  In  the  case  of  Keeler  v. 
Salisbury,  the  debtor's  wife  had  joined  in  the  mortgage  given  by 
her  husband,  the  debtor,  to  effect  the  compromise,  thus  releasing 
lier  inchoate  right  of  dower.  The  court  held  that  fact  consti- 
tuted a  sufficient  consideration  to  support  the  new  agreement, 
tiiough  the  court  in  the  course  of  the  opinion  remarked  that  it 
had  been  held  that  the  debtor's  mortgage  would  not  be  sufficient, 
and  referred  to  Platts  v.  Walrath.  But  the  court  did  not  other- 
wise indicate  any  approval  of  that  case,  and  there  was  no  occa- 
sion to  do  so,  for,  as  before  stated,  the  court  put  its  decision  upon 
the  fact  that  the  wife  had  joined  in  the  mortgage. 

In  view  of  the  peculiar  facts  in  these  two  cases  and  the  nu- 
merous decisions  of  this  and  other  courts  hereinbefore  referred  to, 
I  do  not  regard  them  as  authorities  against  the  defendants'  con- 
tention that  the  plaintiffs'  action  for  the  balance  of  the  original 


Chap.  II.  §  4.]  CONSIDERATION.  196 

debt  is  barred  by  reason  of  the  accord  and  satisfaction,  and  that 
the  judgment  should  be  reversed,  with  costs.     All  concur. 

Judgment  reversed. 


(e)  Composition  with  creditors. 
WILLIAMS  V.   CAEKINGTON. 

1  HILTON  (N.  Y.  C.  P.) ,  515.  — 1857. 

Action  for  debt.  Defense,  accord  and  satisfaction  by  composi- 
tion.   Appeal  from  judgment  of  Marine  Court  in  favor  of  plaintiff. 

Defendant  having  made  a  composition  with  several  of  his 
creditors  at  forty  cents  on  the  dollar,  made  a  similar  agreement 
with  plaintiffs  by  which  he  agreed  to  pay  them  forty  cents  on  the 
dollar,  and  did  pay  them  such  amount,  and  received  a  receipt  in 
full  of  their  account.  Defendant  at  the  same  time  gave  to  plain- 
tiffs a  sealed  instrument  by  which  he  bound  himself  to  pay  to- 
them  an  additional  forty  per  cent  as  soon  as  his  compromise 
should  be  effected,  on  condition  that  plaintiffs  sign  a  paper  pur- 
porting to  compromise  his  indebtedness  to  them  for  forty  per 
cent.  The  composition  was  never  completed,  and  plaintiffs  bring 
this  action.  There  was  no  evidence  that  plaintiffs  ever  executed 
a  composition  deed,  or  that  other  creditors  were  induced  to  enter 
into  a  compromise  in  consequence  of  the  agreement  with  plaintiffs. 

Daly,  J.  It  was  essential,  in  this  case,  to  show  that  other 
creditors  had  consented  to  accept  the  forty  per  cent  in  discharge 
of  their  claims  in  consequence  of  the  plaintiffs'  consenting  to  do 
so.  The  consideration  which  supports  such  an  agreement,  when 
it  is  not  under  seal,  is  the  mutual  understanding,  among  all  who 
become  parties  to  it,  that  each  is  to  take  the  composition  agreed 
upon,  and  forbear  further  to  press  or  insist  upon  their  claims. 
It  is  said  in  Good  v.  Cheesman  (2  Barn.  &  Adolph.  328),  by  Lord 
Tenterden,  "  that  a  creditor  shall  not  bring  an  action  where  others 
have  been  induced  to  join  him  in  a  composition  with  the  debtor; 
each  party  giving  the  rest  reason  to  believe  that,  in  consequence 
of  such  engagement,  his  demand  will  not  be  enforced.  This  is, 
in  fact,  a  new  agreement,  substituted  for  the  original  contract 


196  FORMATION  OF  CONTRACT.  [Part  II. 

with  the  debtor;  the  consideration  to  each  creditor  being  the 
engagement  of  the  others  not  to  press  their  individual  claims." 
It  must  appear  that  the  act  of  the  plaintiff,  in  accepting  the  forty 
per  cent,  operated  as  an  inducement  to  other  creditors  to  do  the 
same,  otherwise  it  is  but  the  acceptance  of  a  lesser  sum  for  a 
greater,  which  is  no  satisfaction.  Thus  in  Lowe  v.  Equitar 
(7  Price,  604)  the  plaintiff  agreed  with  the  defendant  to  execute 
a  deed  of  composition  with  the  other  creditors,  and  take  the 
benefit  of  the  composition  with  them,  in  consideration  that  the 
defendant  would  also  deliver  to  him  a  picture  of  the  value  of 
£500.  The  picture  was  delivered  and  accepted  by  the  plaintiff 
in  full  satisfaction  of  his  claim,  and  the  defendant  and  all  the 
other  creditors,  except  the  plaintiff,  signed  the  composition  deed. 
The  plaintiff  sued  for  the  original  debt,  and  a  plea  setting  up 
these  facts  was  held  to  be  no  bar.  I  am  inclined  to  think,  from 
the  report  of  this  case,  that  the  picture  was  accepted  in  lieu  of, 
or  as  a  payment  of  the  composition,  and  if  so,  it  was  a  case,  in  its 
essential  features,  like  the  present.  Where  creditors  meet  to- 
gether, and  the  terms  of  the  composition  are  arranged,  as  was  the 
case  in  Cockshott  v.  Bennett  (2  Term  Rep.  763),  or  as  in  Good  v. 
dheesman,  supra,  put  their  names  to  an  agreement  or  memoran- 
dum of  the  term,  all  the  creditors  present  at  such  meeting,  or  all 
who  sign  the  writing,  enter  into  a  mutual  engagement,  each  with 
the  other,  to  accept  the  amount  proposed  by  way  of  compromise, 
:and  to  forbear  further  to  insist  upon  their  claims.  Where  cred- 
itors thus  mutually  agree  with  each  other,  the  beneficial  considera- 
tion to  each  creditor  is  the  engagement  of  the  rest  to  forbear.  A 
fund  is  thereby  secured  for  the  general  advantage  of  all;  and  if 
any  one  of  the  parties  were  allowed  afterwards  to  enforce  his 
whole  claim,  it  would  operate  to  the  detriment  of  the  other 
creditors  who  have  relied  upon  his  agreement  to  forbear,  and 
might  even  deprive  them  of  the  sum  it  was  mutually  agreed  they 
should  receive,  by  putting  it  out  of  the  power  of  the  debtor  to 
carry  out  the  composition.  I  know  of  no  case,  however,  in  which 
an  acceptance,  by  a  creditor  from  his  debtor,  of  a  certain  sum  in 
discharge  of  his  debt,  where  other  creditors  have  done  the  same, 
has  been  held  to  be  a  satisfaction,  unless  there  was  something  in 
the  case  to  show  that  the  other  creditors  acted  with  the  knowl- 


Chap.  II.  §4.]  CONSIDERATION.  197 

edge  of  his  concurrence,  and  it  could  be  assumed  that  their  agree- 
ment necessarily  contemplated  and  was  founded  in  the  benefit 
and  advantage  to  be  derived  from  his  agreement  also  to  forbear 
—  in  the  language  of  Lord  Tenterden,  that  they  "  were  induced  to 
join  him  in  the  composition."  It  is  very  probable,  in  this  case, 
that  such  was  the  fact  —  very  probable  that  the  plaintiffs  signed 
the  composition,  but  nothing  of  the  kind  appears  in  the  evidence. 
For  all  that  appears  in  the  testimony,  the  other  creditors  may 
have  accepted  the  forty  per  cent  without  knowing  that  the  plain- 
tiffs had  received  that  sum,  or  had  agreed  to  accept  it.  We  would 
not  be  justified  in  presuming,  upon  this  evidence,  that  they  did, 
against  what  must  be  regarded  as  a  direct  finding  by  the  judge 
below,  that  they  did  not.  We  would  have  to  hold  that  the 
judgment  he  gave  was  against  evidence,  and  we  could  not,  I 
think,  go  that  length. 

The  judgment  must  be  affirmed;  but  as  the  question  is  not 
very  fully  discussed  by  either  party  upon  the  written  argument 
submitted,  and  as  it  is  of  a  good  deal  of  practical  importance,  I 
think  the  defendant  should  be  allowed,  if  he  wishes  it,  to  carry 
the  case  to  the  Court  of  Appeals. 

[Ingbaham,  F.  J.,  also  read  for  affirmance.] 

Brady,  J.,  dissented. 

Judgment  affirmed. 


PERKINS   V.   LOCKWOOD. 

100  MASSACHUSETTS,  249.  — 1868. 

Action  on  a  promissory  note  upon  which  was  the  following 
indorsement : 

"  December  14,  1864.  Received  on  the  within  note  $10.38,  being  the 
first  instalment  towards  $15.94,  being  ten  per  cent  of  said  note,  which 
when  paid  is  to  be  in  full  satisfaction  and  settlement  of  the  within  note, 
provided  that  no  other  creditor  shall  receive  more  than  ten  per  cent  on 
his  claim  against  Lockwood  &  Connell,  and  provided  also  that  if  any 
creditor  shall  receive  more  than  ten  per  cent,  an  amount  equal  to  such 
percentage  shall  be  paid  onthe  within  note." 

Wells,  J.  An  agreement  to  accept,  in  satisfaction  and  dis- 
charge of  a  liquidated  debt,  a  sum  less  than  the  full  amount  due, 


198  FORMATION  OF  CONTRACT.  [Part  U. 

is  not  valid,  unless  there  exist  some  consideration  to  support  it 
other  than  the  payment  or  promise  of  the  debtor  to  pay  such  less 
sum.  Harriman  v.  Harriman,  12  Gray,  341.  The  note  or  col- 
lateral promise  of  another  person  -will  support  the  agreement. 
Brooks  V.  White,  2  Met.  283.  For  a  like  reason,  when  such  an 
agreement  forms  part  of  a  composition  in  which  several  creditors 
join,  mutually  stipulating  to  withdraw  or  withhold  suits  and  that 
they  will  release  to  their  common  debtor  a  part  of  their  claims 
upon  payment  of  a  certain  other  part,  the  agreement  becomes 
binding  between  each  creditor  and  the  debtor.  Eaton  v.  Lincoln, 
13  Mass.  424;  Steinman  v.  Magnus,  11  East,  390.  The  reason  is, 
that  the  rights  and  interests  of  other  parties  become  involved  in 
the  arrangement,  and  this  affords  a  new  and  legal  consideration 
for  the  promise.  It  would  be  contrary  to  good  faith  for  a  cred- 
itor who  has  secured  the  advantage  of  such  an  arrangement  to 
disregard  its  obligations  by  proceeding  to  enforce  the  balance  of 
his  demand ;  and  the  debtor  is  entitled  to  avail  himself  of  this 
consideration  in  defense.  Good  v.  Chessman,  2  B.  &  Ad.  328; 
Boyd  V.  Hind,  1  H.  &  N.  938. 

In  this  case,  the  exceptions  do  not  show  that  there  was  any  such 
mutual  agreement  between  the  creditors.  The  defense  indicated 
by  the  most  important  ruling  of  the  court  appears  to  be  based 
entirely  upon  the  legal  effect  of  the  agreement  between  the  plain- 
tiff and  defendant  as  indorsed  upon  the  notes  in  suit.  That 
agreement  affects  no  other  party.  Its  reference  to  the  like  settle- 
ment of  other  debts  is  merely  in  the  nature  of  a  condition 
attached  to  the  plaintiff's  promise  to  discharge  the  notes.  It 
does  not  make  it  any  the  more  binding.  The  defendant's  under- 
taking, that  he  would  not  pay  others  more  than  the  plaintiff, 
would  not  prevent  others  from  enforcing  their  claims  in  full,  and 
is  not  such  a  promise  as  would  afford  any  consideration  for  the 
agreement  of  the  plaintiff.  It  is  neither  a  benefit  to  the  plaintiff 
nor  disadvantage  to  the  defendant.  So  far  as  the  exceptions 
show,  the  release  of  their  claims  by  the  other  creditors  had  no 
connection  with  this  agreement.  The  agreement  itself  shows  no 
legal  consideration  to  give  it  effect  as  a  contract. 

As  we  understand  the  exceptions,  the  court  below  ruled  that  the 
agreement  indorsed  upon  the  notes  constituted  of  itself  "  a  legal 


Chap.  II.  §  4  ]  CONSIDERATION.  199 

and  valid  contract,  binding  on  the  plaintiff."     This  we  think 
was  clearly  wrong;  and  for  this  cause  the 

Exceptions  are  sustained. 

Note.  — For  cases  holding  mutual  subscriptions  a  sufficient  consideration 
for  each  other,  see  Lathrop  v.  Knapp,  27  Wis.  214  ;  Higert  v.  Indiana  Ashury 
University^  53  Ind.  326  ;  Christian  College  v.  Hendley,  49  Cal.  347.  Contra : 
Trustees  v.  Stewart,  1  N.  Y.  581 ;  First  Pres.  Ch.  v.  Cooper,  112  N.  Y.  517 ; 
Cottage  Street  M.  E.  Ch.  v.  Kendall,  121  Mass.  528  j  University  of  Des 
Moines  v.  Livingstone,  67  la.  307. 


(in.)   Consideration  must  be  legal. 

Note.  — For  cases  on  legality  of  consideration,  see  cases  on  "  Legality  of 
Object,"  post,  Part  II.  Ch.  V. 


{iv.)  Consideration  may  be  executory  or  executed,  it  must  not  be 
past. 

DEAEBOEN  v.  BOWMAN. 

3  METCALF  (Mass.),  155.  — 1841. 

Assumpsit  on  a  note  in  these  terms:  "June  17,  1839.  I 
promise  to  pay  Dearborn  &  Bellows  sixty  dollars  in  ninety  days, 
value  received.     Bowman."     Defense,  want  of  consideration. 

Shaw,  C.  J.  The  defense  to  the  action  to  recover  the  amount 
of  this  note  is  want  of  consideration.  It  is  manifest  from  the 
note  itself,  that  it  is  not  a  negotiable  instrument,  being  payable 
neither  to  order  nor  to  bearer;  indeed,  it  appears  by  the  case, 
that  the  defendant  declined  making  it  negotiable.  But  total  want 
of  consideration  is  a  good  defense  even  to  an  action  on  a  negotia- 
ble note,  when  brought  by  the  promisee  against  the  maker. 
Then  the  question  is,  whether  upon  the  facts  shown,  any  con- 
sideration appears  for  this  promise.  The  note  was  given  in 
consequence  of  services  before  that  time  performed  by  the  plain- 
tiffs, in  printing  and  circulating  extra  papers  and  documents, 
previously  to  an  election  of  state  senators,  at  which  the  defendant 
was  a  candidate.  Such  services  imposed  no  obligation,  legal  or 
moral,  on  the  defendant ;  and  it  would  be  somewhat  dangerous  to 


200  FORMATION  OF  CONTRACT.  [Pabt  IL 

hold  that  they  created  any  honorary  obligation  on  him  to  pay  for 
them.  Nor  would  it  be  aided  in  a  legal  view,  by  a  previous  cus- 
tom, if  proved,  for  candidates  to  contribute  to  the  payment  of 
similar  expenses,  whether  successful  or  otherwise  in  the  election. 

Nor  were  these  services  performed  at  the  request  of  the 
defendant.  On  the  contrary,  it  appears  by  the  evidence  that  they 
were  performed  by  General  Staples,  chairman  of  the  county 
committee,  who  alone  was  responsible  for  the  payment,  and 
between  whom  and  the  defendant  there  was  no  privity,  nor  even 
any  communication,  until  long  after  the  services  had  been  per- 
formed. The  rule  of  law  seems  to  be  now  well  settled  —  though 
it  may  have  formerly  been  left  in  doubt  —  that  the  past  perform- 
ance of  services  constitutes  no  consideration  even  for  an  express 
promise,  unless  they  were  performed  at  the  express  or  implied 
request  of  the  defendant,  or  unless  they  were  done  in  performance 
of  some  duty  or  obligation  resting  on  the  defendant.  Mills  v. 
Wyman,  3  Pick.  207 ;  Loomis  v.  Newhall,  15  Pick.  159 ;  Dodge  v. 
Adams,  19  Pick.  429.  As  the  services  performed  by  the  plaintiffs 
were  not  done  at  the  request  of  the  defendant,  as  they  were  not 
done  in  the  fulfilment  of  any  duty  or  obligation  resting  on  him, 
there  was  no  consideration  to  convert  the  express  promise  of  the 
defendant  into  a  legal  obligation. 

Another  ground,  however,  was  taken  in  behalf  of  the  plaintiffs, 
which  was,  that  the  discharge  by  the  plaintiffs,  of  their  legal 
demand  against  Staples,  was  a  good  consideration  for  the  defend- 
ant's promise  to  them.  If  such  discharge  was  in  fact  given,  and 
given  at  the  defendant's  request,  or  if  the  defendant  had  promised 
to  pay  if  they  would  discharge  Staples  pro  tanto,  and  they  did 
discharge  him,  it  would  have  been  a  good  consideration  for  the 
defendant's  promise.  But  there  is  no  evidence  to  establish 
the  fact. 

The  court  are  of  opinion  that  there  was  no  legal  consideration 
for  the  defendant's  promise,  and  that  no  action  can  be  maintained 
upon  it. 

Plaintiffs  nonsuit. 


Chap.  U.  §  4.]  CONSIDERATION.  201 

MILLS  V.  WYMAN. 

3  PICKERING  (Mass.)  ,  207.  — 1826. 

Action  of  assumpsit  to  recover  compensation  for  the  board  and 
care  of  defendant's  adult  son  who  fell  sick  among  strangers,  and 
was  provided  for  under  these  circumstances  by  the  plaintilf,  the 
defendant  having  afterwards  written  to  the  plaintiff  promising  to 
pay  him  for  expenses  incurred. 

Parker,  C.  J.  General  rules  of  law  established  for  the  pro- 
tection and  security  of  honest  and  fair-minded  men,  who  may 
inconsiderately  make  promises  without  any  equivalent,  will 
sometimes  screen  men  of  a  different  character  from  engagements 
which  they  are  bound  in  foro  conscientice  to  perform.  This  is  a 
defect  inherent  in  all  human  systems  of  legislation.  The  rule 
that  a  mere  verbal  promise,  without  any  consideration,  cannot  be 
enforced  by  action,  is  universal  in  its  application,  and  cannot  be 
departed  from  to  suit  particular  cases  in  which  a  refusal  to  per- 
form such  a  promise  may  be  disgraceful. 

The  promise  declared  on  in  this  case  appears  to  have  been  made 
without  any  legal  consideration.  The  kindness  and  services 
towards  the  sick  son  of  the  defendant  were  not  bestowed  at  hia 
request.  The  son  was  in  no  respect  under  the  care  of  the 
defendant.  He  was  twenty-five  years  old,  and  had  long  left  his 
father's  family.  On  his  return  from  a  foreign  country,  he  fell 
sick  among  strangers,  and  the  plaintiff  acted  the  part  of  the  good 
Samaritan,  giving  him  shelter  and  comfort  until  he  died.  The 
defendant,  his  father,  on  being  informed  of  this  event,  influenced 
by  a  transient  feeling  of  gratitude,  promises  in  writing  to  pay  the 
plaintiff  for  the  expenses  he  had  incurred.  But  he  has  deter- 
mined to  break  this  promise,  and  is  willing  to  have  his  case 
appear  on  record  as  a  strong  example  of  particular  injustice 
sometimes  necessarily  resulting  from  the  operation  of  general 
rules. 

It  is  said  a  moral  obligation  is  a  sufficient  consideration  to 
support  an  express  promise,  and  some  authorities  lay  down  the 
rule  thus  broadly;  but  upon  examination  of  the  cases  we  are 
satisfied  that  the  universality  of  the  rule  cannot  be  supported,. 


202  FORMATION  OF  CONTRACT.  [Part  II. 

and  that  there  must  have  been  some  pre-existing  obligation,  which 
has  become  inoperative  by  positive  law,  to  form  a  basis  for  an 
effective  promise.  The  cases  of  debts  barred  by  the  statute  of 
limitations,  of  debts  incurred  by  infants,  of  debts  of  bankrupts, 
are  generally  put  for  illustration  of  the  rule.  Express  promises 
founded  on  such  pre-existing  equitable  obligations  may  be  en- 
forced; there  is  a  good  consideration  for  them;  they  merely 
remove  an  impediment  created  by  law  to  the  recovery  of  debts 
honestly  due,  but  which  public  policy  protects  the  debtors  from 
being  compelled  to  pay.  In  all  these  cases  there  was  originally 
a  quid  pro  quo;  and  according  to  the  principles  of  natural  justice, 
the  party  receiving  ought  to  pay ;  but  the  legislature  has  said  he 
shall  not  be  coerced ;  then  comes  the  promise  to  pay  the  debt  that 
is  barred,  the  promise  of  the  man  to  pay  the  debt  of  the  infant,  of 
the  discharged  bankrupt  to  restore  to  his  creditor  what  by  the  law 
he  had  lost.  In  all  these  cases  there  is  a  moral  obligation  founded 
upon  an  antecedent  valuable  consideration.  These  promises, 
therefore,  have  a  sound  legal  basis.  They  are  not  promises  to 
pay  something  for  nothing;  not  naked  pacts;  but  the  voluntary 
revival  or  creation  of  obligation  which  before  existed  in  natural 
law,  but  which  has  been  dispensed  with,  not  for  the  benefit  of  the 
party  obliged  solely,  but  principally  for  the  public  convenience. 
If  moral  obligation,  in  its  fullest  sense,  is  a  good  substratum  for 
an  express  promise,  it  is  not  easy  to  perceive  why  it  is  not  equally 
good  to  support  an  implied  promise.  What  a  man  ought  to  do, 
generally  he  ought  to  be  made  to  do,  whether  he  promise  or 
refuse.  But  the  law  of  society  has  left  most  of  such  obligations 
to  the  interior  forum,  as  the  tribunal  of  conscience  has  been  aptly 
called.  Is  there  not  a  moral  obligation  upon  every  son  who  has 
become  af&uent  by  means  of  the  education  and  advantages 
bestowed  upon  him  by  his  father,  to  relieve  that  father  from 
pecuniary  embarrassment,  to  promote  his  comfort  and  happiness, 
and  even  to  share  with  him  his  riches,  if  thereby  he  will  be  made 
happy?  And  yet  such  a  son  may,  with  impunity,  leave  such  a 
father  in  any  degree  of  penury  above  that  which  will  expose  the 
community  in  which  he  dwells  to  the  danger  of  being  obliged  to 
preserve  him  from  absolute  want.  Is  not  a  wealthy  father  under 
strong  moral  obligation  to  advance  the  interest  of  an  obedient, 


Chap.  II.  §  4.]  CONSIDERATION.  203 

well-disposed  son,  to  furnish  him  with  the  means  of  acquiring 
and  maintaining  a  becoming  rank  in  life,  to  rescue  him  from  the 
horrors  of  debt  incurred  by  misfortune?  Yet  the  law  will  uphold 
him  in  any  degree  of  parsimony,  short  of  that  which  would  reduce 
his  son  to  the  necessity  of  seeking  public  charity. 

Without  doubt,  there  are  great  interests  of  society  which  justify 
withholding  the  coercive  arm  of  the  law  from  these  duties  of 
imperfect  obligation,  as  they  are  called;  imperfect,  not  because 
they  are  less  binding  upon  the  conscience  than  those  which  are 
called  perfect,  but  because  the  wisdom  of  the  social  law  does  not 
impose  sanctions  upon  them. 

A  deliberate  promise,  in  writing,  made  freely  and  without  any 
mistake,  one  which  may  lead  the  party  to  whom  it  is  made  into 
contracts  and  expenses,  cannot  be  broken  without  a  violation  of 
moral  duty.  But  if  there  was  nothing  paid  or  promised  for  it, 
the  law,  perhaps  wisely,  leaves  the  execution  of  it  to  the  con- 
science of  him  who  makes  it.  It  is  only  when  the  party  making 
the  promise  gains  something,  or  he  to  whom  it  is  made  loses 
something,  that  the  law  gives  the  promise  validity.  And  in  the 
case  of  the  promise  of  the  adult  to  pay  the  debt  of  the  infant,  of 
the  debtor  discharged  by  the  statute  of  limitations  or  bank- 
ruptcy, the  principle  is  preserved  by  looking  back  to  the  origin 
of  the  transaction,  where  an  equivalent  is  to  be  found.  An  exact 
equivalent  is  not  required  by  the  law;  for  there  being  a  consid- 
eration, the  parties  are  left  to  estimate  its  value:  though  here 
the  courts  of  equity  will  step  in  to  relieve  from  gross  inadequacy 
between  the  consideration  and  the  promise. 

These  principles  are  deduced  from  the  general  current  of 
decided  cases  upon  the  subject,  as  well  as  from  the  known 
maxims  of  the  common  law.  The  general  position,  that  moral 
obligation  is  a  sufficient  consideration  for  an  express  promise,  is 
to  be  limited  in  its  application,  to  cases  where  at  some  time  or 
other  a  good  or  valuable  consideration  has  existed. 

A  legal  obligation  is  always  a  sufficient  consideration  to  sup- 
port either  an  express  or  an  implied  promise ;  such  as  an  infant's 
debt  for  necessaries,  or  a  father's  promise  to  pay  for  the  support 
and  education  of  his  minor  children.  But  when  the  child  shall 
have  attained  to  manhood,  and  shall  have  become  his  own  agent 


204  FORMATION  OF  CONTRACT.  [Pabt  IL 

in  the  world's  business,  the  debts  he  incurs,  whatever  may  be 
their  nature,  create  no  obligation  upon  the  father;  and  it  seems 
to  follow,  that  his  promise  founded  upon  such  a  debt  has  no 
legally  binding  force. 

The  cases  of  instruments  under  seal  and  certain  mercantile 
contracts,  in  which  considerations  need  not  be  proved,  do  not 
contradict  the  principles  above  suggested.  The  first  import  a 
consideration  in  themselves,  and  the  second  belong  to  a  branch 
of  the  mercantile  law,  which  has  found  it  necessary  to  disregard 
the  point  of  consideration  in  respect  to  instruments  negotiable  in 
their  nature  and  essential  to  the  interests  of  commerce. 

Instead  of  citing  a"  multiplicity  of  cases  to  support  the  posi- 
tions I  have  taken,  I  will  only  refer  to  a  very  able  review  of  all 
the  cases  in  the  note  in  3  Bos.  &  Full.  249.  The  opinions  of  the 
judges  had  been  variant  for  a  long  course  of  years  upon  this 
subject,  but  there  seems  to  be  no  case  in  which  it  was  nakedly 
decided  that  a  promise  to  pay  the  debt  of  a  son  of  full  age,  not 
living  with  his  father,  though  the  debt  were  incurred  by  sick- 
ness which  ended  in  the  death  of  the  son,  without  a  previous 
request  by  the  father  proved  or  presumed,  could  be  enforced  by 
action. 

It  has  been  attempted  to  show  a  legal  obligation  on  the  part  of 
the  defendant  by  virtue  of  our  statute,  which  compels  lineal  kin- 
dred in  the  ascending  or  descending  line  to  support  such  of  their 
poor  relations  as  are  likely  to  become  chargeable  to  the  town 
where  they  have  their  settlement.  But  it  is  a  sufficient  answer 
to  this  position,  that  such  legal  obligation  does  not  exist  except 
in  the  very  cases  provided  for  in  the  statute,  and  never  until  the 
party  charged  has  been  adjudged  to  be  of  sufficient  ability 
thereto.  We  do  not  know  from  the  report  any  of  the  facts  which 
are  necessary  to  create  such  an  obligation.  Whether  the  deceased 
had  a  legal  settlement  in  this  commonwealth  at  the  time  of  his 
death,  whether  he  was  likely  to  become  chargeable  had  he  lived, 
whether  the  defendant  was  of  sufficient  ability,  are  essential  facts 
to  be  adjudicated  by  the  court  to  which  is  given  jurisdiction  on 
this  subject.  The  legal  liability  does  not  arise  until  these  facts 
have  all  been  ascertained  by  judgment,  after  hearing  the  party 
intended  to  be  charged. 


Chap.  II.  §  4.]  CONSIDERATION.  205 

For  the  foregoing  reasons  we  are  all  of  opinion  that  the  nonsuit 
directed  by  the  Court  of  Common  Pleas  was  right,  and  that 
judgment  be  entered  thereon  for  costs  for  the  defendant.^ 


(a)    Consideration  moved  by  previous  request. 

HICKS  V.    BURHANS. 

10  JOHNSON  (N.  Y.),  342.  — 1813. 

In  error,  on  certiorari,  from  a  justice's  court.  B.  and  others 
brought  an  action  of  assumpsit  against  Hicks,  before  the  jus- 
tice. The  cause  was  tried  by  a  jury.  The  plaintiffs  gave  in  evi- 
dence a  writing  dated  the  16th  of  January,  1808,  signed  by  the 
defendant  and  ten  others,  reciting  that  whereas  the  plaintiffs 
had,  previous  to  the  date  of  the  writing,  been  in  pursuit  of  sev- 
eral persons  who  had  absconded  and  were  in  debt  to  the  subscrib- 
ers, they,  the  subscribers,  promised  to  pay  to  the  plaintiffs,  or 
either  of  them,  an  equal  proportion  of  all  the  expenses  which 
the  plaintiffs  had  been  at,  in  pursuing  such  fugitive  debtors,  and 
also  promised  to  pay  their  equal  proportion  of  all  further  ex- 
penses the  plaintiffs  should  be  at  in  further  pursuing  the  said 
persons,  etc.  The  plaintiffs  proved  an  account  of  the  expenses, 
amounting  to  about  one  hundred  and  thirty-eight  dollars;  and 
that  the  defendant  examined  the  account  when  presented  to  the 
creditors,  and  made  no  objection  to  it,  except  to  a  charge  of 
twenty  dollars. 

The  jury  gave  a  verdict  for  the  plaintiffs  for  seventeen  dollars, 
on  which  the  justice  gave  judgment. 

Per  Curiam.  The  written  promise  to  pay,  if  founded  on 
a  past  consideration,  may  be  good,  if  the  past  service  be  laid 
to  have  been  done  on  request ;  and  if  not  so  laid,  a  request  may  j 

1  "  We  do  not  believe  a  case  can  be  found  where  a  moral  obligation  alone 
has  been  held  to  be  a  sufficient  consideration  for  a  subsequent  promise."  — 
Allen  V.  Bryson,  67  la.  591. 

"  This  court  has  never,  when  called  upon,  hesitated  to  say  that  a  moral 
obligation  is  a  sufficient  consideration  to  support  a  promise  to  pay."  — 
Mutual  <&c.  Ass'n  v.  Hurst,  78  Md.  —  ;  26  Atl.  R.  956.  See  also  Gray  v. 
Hamil,  82  Ga.  376, 


206  FORMATION  OF  CONTRACT.  [Part  n. 

be  implied  from  the  beneficial  nature  of  the  consideration,  and 

the  circumstances  of  the  transaction.     1  Caines'  Hep.  585,  586. 

Here  the  past  service  consisted  in  an  expensive  pursuit,  by  the 

plaintiffs,  of  certain  fugitive  debtors,  who  were  indebted  to  the 

defendant  and  others;  and  it  appeared  that  the  plaintiffs  had 

exhibited  their  accounts,  at  a  meeting  of  the  creditors,  and  that 

the   defendant   examined  them,  and  made  no  objection,   except 

to  a  single  item  of  the  charges.     A  request,  in  this  case,  might 

have  been  implied;  and  we  ought  to  intend  it  to   have   been 

proved  upon  trial.     There  are  no  formal  pleadings  in  the  case, 

and  the  return  does  not  negative  the  fact  of  a  request. 

There  was  no  other  objection  raised  that  merits  notice.     The 

judgment  must  be  affirmed. 

Judgment  affirmed. 


(/3)    Voluntarily  doing  what  another  was  legally  bound  to  do. 

GLEASON   V.    DYKE. 
22  PICKERING  (Mass.),  390.  — 1839. 

In  1833  defendant  gave  a  note  to  the  Massachusetts  Hospital 
Life  Insurance  Co.,  and  a  mortgage  was  given  by  him  to  secure 
the  payment  of  the  note.  November  11,  1837,  the  defendant's 
equity  of  redemption  was  sold  on  execution  to  plaintiff,  who  on 
the  24th  paid  to  the  Insurance  Co.  the  amount  due  on  the  note. 
The  mortgage  and  note,  both  cancelled,  and  with  a  release  in- 
dorsed upon  the  mortgage,  were  delivered  up  to  the  plaintiff  by 
the  company.  Some  days  after  the  execution  of  the  release,  the 
defendant  examined  the  note  and  mortgage  for  the  purpose  of 
ascertaining  the  amount  due  to  the  plaintiff,  and  promised  the 
plaintiff  to  pay  the  same. 

Wilde,  J.  There  was  no  express  proof  that  the  note  to  the 
Massachusetts  Hospital  Life  Insurance  Company  was  paid  at  the 
request  of  the  defendant;  but  the  plaintiff  relied  on  the  promise 
of  the  defendant  to  pay  him,  made  subsequently  to  the  discharge 
of  the  mortgage.  This  promise,  we  think,  is  equivalent  to  a 
previous  request.  It  comes  within  the  well-established  princi- 
ple, that  the  subsequent  ratification  of  an  act  done  by  a  voluntary 


Chap.  II.  §  4.]  CONSIDERATION.  207 

agent  of  another,  without  authority  from  him,  is  equivalent  to  a 
previous  authority.  The  law,  it  is  true,  will  not  allow  a  party 
to  maintain  an  action  for  money  paid  to  discharge  the  debt  of 
another  without  his  consent;  for  to  allow  this,  would  subject 
every  debtor  to  the  power  of  those  who  might  be  disposed  to  in- 
jure him,  and  who  might  harass  him  with  suits,  and  burden  him 
with  costs,  in  the  most  unreasonable  and  oppressive  manner. 
But  if  the  debtor  assents  to  the  payment,  the  reason  of  the  law 
fails ;  and  whether  the  consent  be  given  before  or  after  the  pay- 
ment is,  as  it  seems  to  us,  immaterial.  Yelv.  (Metcalf's  ed.)  42, 
note.  We  have  no  doubt,  therefore,  that  the  defendant's  prom- 
ise is  valid;  first,  because  his  ratification  of  the  payment  isj 
equivalent  to  a  previous  request  to  pay,  and  the  objection,  thati/' 
the  consideration  was  past,  cannot  be  maintained ;  and  secondly,  | 
because  the  case  shows  an  equitable  consideration,  which  is  suffi- 
cient to  sustain  an  express  promise.  Where  a  man  is  under  a 
moral  obligation  to  pay  a  debt,  which  cannot  be  enforced  by  a 
court  of  law  or  equity,  yet  if  he  promises  to  pay  he  will  be 
bound.  As  where  a  man  promises  to  pay  a  just  debt,  the  recov- 
ery of  which  is  barred  by  the  statute  of  limitations;  or  if  a 
minor  contracts  a  debt,  but  not  for  necessaries,  and  after  he 
comes  of  age,  promises  to  pay  it;  or  if  a  debtor  promises  the 
assignee  of  a  chose  in  action  to  pay  him.  In  all  such  cases,  and 
many  others,  the  party  will  be  bound  by  his  promise,  although 
before  the  promise  the  other  party  had  no  remedy  either  in  law 
or  equity.     Hawkes  v.  Saunders,  Cowper,  290. 

There  is  another  ground  on  which  this  action  might  be  main- 
tained, if  there  had  been  no  express  promise.  The  payment  of 
the  mortgage  debt  by  the  plaintiff  was  not  merely  voluntary. 
He  was  bound  to  pay  the  debt  in  order  to  secure  his  equitable 
interest  in  the  estate.  He  was  placed  in  this  situation  by  the 
neglect  of  the  defendant  to  pay  the  debt  due  to  his  creditor,  who 
levied  his  execution  on  the  equity  of  redemption.  Under  these 
circumstances  no  previous  request  to  pay  the  debt,  or  subsequent 
ratification  by  the  defendant,  was  required.  Child  v.  Morley,  8 
T.  R.  610. 

It  was  contended  by  the  defendant's  counsel,  at  the  trial,  that 
the  operation  of  the  payment  of  the  mortgage  was   sufficient. 


208  FORMATION  OF  CONTRACT.  [Part  IL 

under  the  circumstances,  to  constitute  the  plaintiff  the  assignee 
thereof,  and  to  convey  to  him  all  the  right  of  the  original  mort- 
gagee. This  right,  we  think,  is  sustained  by  the  Eevised  Stat. 
0.  73,  §§  34,  35.  But  it  by  no  means  follows  that  the  plaintiff 
has  not  a  double  remedy,  as  the  mortgagee  had.  If  the  payment 
operated  as  an  equitable  assignment  of  the  mortgage,  it  would 
have  the  same  operation  as  to  the  note.  If  the  plaintiff  had  a 
right  to  hold  the  mortgaged  estate  until  the  defendant  paid  the 
debt,  then  most  clearly  the  defendant's  promise  is  binding  and 
obligatory,  although  the  plaintiff  had  another  security. 

Default  entered.* 


(y)  Reviving  agreement  barred  by  some  rule  of  law.   . 
DUSENBURY,  Executor,  v.  HOYT. 

53  NEW  YORK,  521.  — 1873.  . 

The  action  was  upon  a  promissory  note.  The  defendant 
pleaded  his  discharge  in  bankruptcy.  Upon  the  trial,  after 
proof  of  the  discharge,  plaintiff  offered  to  prove  subsequent 
promise  of  the  defendant  to  pay  the  note.  Defendant  objected 
upon  the  ground  that  the  action  was  upon  the  note,  not  upon  the 
new  promise.  The  court  sustained  the  objection,  and  directed 
a  verdict  for  defendant,  which  was  rendered  accordingly.  Plain- 
tiff appeals. 

Andrews,  J.     The  34th  section  of  the  bankrupt  law  declares 
that  a  discharge  in  bankruptcy  releases  the  bankrupt  from  all 
debts  provable  under  the  act,  and  that  it  may  be  pleaded  as  a  ful 
and  complete  bar  to  all  suits  brought  thereon. 

The  legal  obligation  of  the  bankrupt  is  by  force  of  positive  la"', 
discharged,  and  the  remedy  of  the  creditor  existing  at  the  tim 
the  discharge  was  granted  to  recover  his  debt  by  suit  is  barred 
But  the  debt  is  not  paid  by  the  discharge.     The  moral  obligatio  \ 
of  the  bankrupt  to  pay  it  remains.     It  is  due   in  conscience, 
although  discharged  in  law,  and  this  moral  obligation,  uniting 
I  with  a  subsequent  promise  by  the   bankrupt  to  pay  the  debt, 

^  Accord :  Doty  v.  Wilson,  14  Johns.  378. 


Chap.  II.  §  4.]  CONSIDERATION.  209 

gives  a  right  of  action.  It  was  held  in  S hippy  v.  Henderson  (14^ 
J.  R.  178)  that  it  was  proper  for  the  plaintiif,  when  the  bank- 
rupt  had  promised  to  pay  the  debt  after  his  discharge,  to  bring 
his  action  upon  the  original  demand,  and  to  reply  the  new  prom- 
ise in  avoidance  of  the  discharge  set  out  in  the  plea.  The  court, 
following  the  English  authorities,  said  that  the  replication  of  the 
new  promise  was  not  a  departure  from  the  declaration,  but  sup- 
ported it  by  removing  the  bar  interposed  by  the  plea,  and  that 
in  point  of  pleading  it  was  like  the  cases  where  the  defense  of 
infancy  or  the  statute  of  limitations  was  relied  upon.  The  case 
of  Shippy  V.  Henderson  was  followed  in  subsequent  cases,  and  the 
doctrine  declared  in  it  became,  prior  to  the  Code,  the  settled  law. 
McNair  v.  Gilbert,  3  Wend.  344;  Wait  v.  Morris,  6  Id.  394;  Fitz- 
gerald V.  Alexander,  19  Id.  402. 

The  question  whether  the  new  promise  is  the  real  cause  of 
action,  and  the  discharged  debt  the  consideration  which  supports 
it,  or  whether  the  new  promise  operates  as  a  waiver  by  the  bank- 
rupt of  the  defense  which  the  discharge  gives  him  against  the 
original  demand,  has  occasioned  much  diversity  of  judicial 
opinion.  The  former  view  was  held  by  Marcy,  J.,  in  Depuy  v. 
Swart  (3  Wend.  139),  and  is  probably  the  one  best  supported  by 
authority.  But,  after  as  before  the  decision  in  that  case,  the 
court  held  that  the  original  demand  might  be  treated  as  the  cause 
of  action,  and  for  the  purpose  of  the  remedy,  the  decree  in  bank- 
ruptcy was  regarded  as  a  discharge  of  the  debt  sub  modo  only, 
and  the  new  promise  as  a  waiver  of  the  bar  to  the  recovery  of 
the  debt  created  by  the  discharge.  We  are  of  opinion  that  the 
rule  of  pleading,  so  well  settled  and  so  long  established,  should 
be  adhered  to.  The  original  debt  may  still  be  considered  the 
cause  of  action  for  the  purpose  of  the  remedy.  The  objection 
that,  as  no  replication  is  now  required,  the  pleadings  will  not 
disclose  the  new  promise,  is  equally  applicable  where  a  new 
promise  is  relied  upon  to  avoid  the  defense  of  infancy  or  the 
statute  of  limitations,  and  in  these  cases  the  plaintiff  may  now, 
as  before  the  Code,  declare  upon  the  original  demand.  Esselstyn 
V.  Weeks,  12  N.  Y.  635. 

The  offer  of  the  plaintiff  to  prove  an  unconditional  promise  by 
the  defendant,  after  his  discharge,  to  pay  the  debt,  was  improp- 


210  '  FORMATION  OF  CONTRACT.  [Pakt  U. 

erly  overruled,  and  the  judgment  should,  for  this  reason,  be  re- 
versed, and  a  new  trial  ordered,  with  costs  to  abide  the  event. 
All  concur,  except  Folger,  J.,  not  voting. 

Judgment  reversed. 


SHEPARD  V.   RHODES. 

7  RHODE  ISLAND,  470.— 1863. 

Assumpsit.     Demurrer  to  declaration. 

Bullock,  J.  The  count  demurred  to  states,  in  substance,  that 
the  plaintiffs  had  discharged  the  defendants  from  a  certain  debt, 
then  due  and  owing  from  them  to  the  plaintiffs,  in  consideration 
of  dividends  to  be  received  from  the  proceeds  of  certain  effects 
assigned  by  the  defendants;  and  that,  subsequent  to  such  dis- 
charge, the  defendants  feeling  themselves  honorably  bound  to  pay 
to  the  plaintiffs  this  debt,  in  consideration  thereof  and  of  one  dollar 
to  them  paid,  made  the  following  new  promise,  to  wit,  to  pay  to  the 
plaintiffs  in  one  year  after  a  final  dividend,  any  difference  that 
might  exist  between  their  full  debt  and  interest  and  the  amount 
of  any  dividend  or  dividends  the  plaintiffs  might  have  previously 
received.  The  count  further  states,  that  more  than  one  year  has 
elapsed  since  the  plaintiffs  received  notice  that  no  dividend  would 
be  paid  them  from  the  assigned  effects. 

This  statement  of  the  cause  of  action  shows,  in  effect,  two 
separate  and  distinct  considerations,  as  the  foundation  of  the  new 
promise:  Jirst,  a  moral  consideration,  that  the  defendants,  not- 
withstanding their  discharge,  felt  themselves  in  honor  bound  to 
pay  the  plaintiffs'  debt;  and,  second,  the  valuable  consideration 
of  one  dollar,  paid  to  the  defendants  by  the  plaintiffs  when  the 
new  promise  was  made. 

Are  these  considerations,  as  stated,  sufficient  in  law  to  sustain 
the  promise?  Passing  by  the  earlier  cases,  referred  to  at  length 
in  a  note  to  the  report  of  Weyinall  v.  Adney  (3  Bos.  &  Pull.  249), 
and  some  of  which  hold  to  the  opposite,  it  may  now  be  deemed 
settled,  that  no  action  can  be  maintained  upon  a  promise  founded 
upon  a  mere  moral  consideration.  Mills  v.  Wyman,  3  Pick.  207; 
Eastwood  V.  Kenyon,  11  Ad.  &  Ell.  438;    Beaumont  v.  Reeve,  ^ 


o.^ 


Chap.  II.  §4.]  CONSIDERATION.  211 

Ad.  &  Ell.  (N.  S.)  483;  S.  C.  55  Eng.  C.  L.  483.  It  has  been 
said,  that  such  a  doctrine  is  not  creditable  to  the  common  law; 
but  the  rule  has  its  origin  in  the  widely  diversified  character  of 
moral  duties,  and  the  consequent  difficulty  of  measuring  them 
with  exactness,  and  determining  which  are  so  high  and  obligatory 
in  their  nature  as  to  demand,  in  their  performance,  the  payment 
of  money. 

There  is  a  class  of  cases  which  for  the  most  part  have  been 
regarded  as  not  falling  within  the  rule,  that  a  mere  moral  con- 
sideration will  not  support  a  promise.  Of  such  is  the  case  of  a 
promise  barred  by  the  statute  of  limitations,  where  the  party  is 
under  no  legal  liability  to  pay  when  the  promise  is  made.  And 
so,  of  the  promise  of  an  infant,  made  after  he  becomes  of  age,  to 
pay  a  debt  incurred  during  his  minority,  and  which  debt  he  is 
then  at  liberty  to  ratify  or  avoid.  Upon  the  same  principle,  a 
promise  to  pay  a  debt  originally  usurious,  where  usury  avoids  the 
contract,  but  freed  from  all  usury  at  the  time  the  new  promise  is 
made,  is  binding,  because  the  original  contract  is  not  void,  but 
voidable  only  at  the  election  of  the  borrower.  And  so,  the 
promise  of  a  bankrupt,  made  after  certificate  of  discharge  granted 
maybe  enforced,  although  now,  in  England,  by  statute  {&  Oeo.  IV. 
c.  16)  the  promise  must  be  in  writing.  But  it  is  settled,  that  such 
considerations  as  love,  friendship,  natural  affection,  even  the  close 
relation  existing  between  parent  and  child,  are  not,  of  themselves, 
sufficient  to  support  an  express  promise.  Whether  the  promise 
of  a  feme  covert,  after  coverture  ended,  to  pay  a  debt  contracted 
during  coverture,  falls  within  the  limit  of  the  exception,  has  been 
a  subject  of  frequent  discussion,  and  of  decisions  somewhat 
contrariant.  In  Lee  v.  Muggeridge  (5  Taunt.  36)  an  action  was 
upheld  against  her  executors,  upon  the  bond  of  a,  feme  covert,  fol- 
lowed by  her  promise  to  pay,  dum  sola.  But  this  case  can 
hardly  be  deemed  authority  since  the  decision  in  Eastwood  v. 
Kenyon,  supra;  and  in  New  York  an  action  was  maintained 
against  a  woman,  upon  a  contract  of  retainer  entered  into  by  her 
before  a  divorce.  Wilson  v.  Burr,  25  Wend.  386.  A  more  lead- 
ing case,  in  the  same  State,  affirming  the  validity  of  such  a 
promise,  is  that  of  Moulding  v.  Davidson  (3  Am.  L.  Keg.  N.  S.  34; 
26  N.  Y.  604),  recently  decided  in  the  Court  of  Appeals.    The  facta 


212  FORMATION  OF  CONTRACT.  [Pakt  II. 

■were,  that  a  feme  covert  represented  herself  as  unmarried  and  as 
trading  on  her  own  account,  and  so  procured  credit,  and  purchased 
goods,  for  which  she  gave  her  note.  Her  coverture  was  not 
known  to  the  creditor.  After  the  death  of  her  husband,  she 
promised  to  pay  this  debt,  and  an  action  was  brought  upon  this 
promise.  The  decision  proceeds,  mainly,  upon  the  ground,  that 
being  guilty  of  fraud  in  the  original  undertaking,  trover  or  replevin 
might  have  been  brought  against  her  and  her  husband  at  any  time 
after  the  supposed  purchase  was  made,  and  since  this  cause  of 
action  existed  against  her  during  coverture,  a  promise  by  her, 
after  coverture,  rested  upon  this  as  a  sufficient  consideration. 

The  principle  recognized  in,  and  which,  almost  without  excep- 
tion, has  controlled  this  class  of  cases,  is  this:  that  when  the 
precedent  original  consideration  was  sufficient  to  sustain  the 
promise,  but  the  right  of  action  was  suspended  or  barred  by  some 
positive  rule  of  statutory  or  common  law,  the  debtor  might,  by  a 
subsequent  promise,  waive  the  exemption  which  the  law  has 
interposed  indirectly  for  his  benefit,  but,  mainly,  from  reasons  of 
sound  policy. 

The  case  here  is  one  where  the  original  right  of  action  was 
extinguished,  not  by  the  act  of  the  law,  but  by  the  act  of  the 
parties.  It  was  a  voluntary  release  of  the  debt  by  the  creditor  to 
the  debtor.  In  Willing  v.  Peters  (12  S.  &  K.  179)  the  question 
arose,  how  far  a  promise  to  pay  a  debt,  thus  discharged,  might  be 
enforced;  and  because  of  the  analogy  between  waiving  a  dis- 
charge created  by  act  of  law  and  one  created  by  act  of  the  parties, 
the  court  upheld  the  action,  Shaw,  C.  J,,  in  Valentine  v,  Foster 
(1  Mete.  522),  admits  the  closeness  of  the  analogy,  and  suggests, 
if  the  rule  be  not  narrow,  that  allows  the  waiver  in  the  one  case 
to  bind  the  party,  and  rejects  it  in  the  other;  but  he  adds,  that 
the  Pennsylvania  authority  is  the  only  one  he  has  been  able  to 
find  in  support  of  the  doctrine;  and  in  the  case  then  before  him, 
ruled,  that  when  a  creditor  released  a  debtor  to  make  him  a  wit- 
ness, the  subsequent  promise  of  the  debtor  was  not  binding. 
Considering  his  own  decision,  and  that  the  case  of  Willing  v. 
Peters  was  subsequently  overruled  in  the  same  court,  in  Snevily 
V.  Read  (9  Watts,  396),  while  in  other  courts  it  has  been  repeatedly 
adjudicated,  that  after  the  voluntary  release  of  a  debt,  an  express 


Chap.  II.  §  4.]  CONSIDERATION.  213 

promise  does  not  revive  it,  nor  does  it  form  a  sufficient  considera- 
tion to  support  the  new  promise,  "we  may  affirm  that  such,  at 
present,  is  the  settled  law.  Warren  v.  Whitney,  24  Maine,  561 ; 
Stafford  v.  Bacon,  1  Hill,  533. 

But  the  plaintiffs  aver  an  additional  consideration  for  the 
defendants'  promise,  and  this  raises  another  question;  because 
the  former  consideration  not  being  illegal,  but  only  insufficient, 
the  latter  may  sustain  the  promise  declared  upon.  This  addi- 
tional consideration  is  one  dollar,  for  which,  it  is  alleged,  the 
defendants  promised,  etc.,  to  pay  a  sum  greater  than  $1000. 

Ordinarily,  courts  do  not  go  into  the  question  of  equality  or 
inequality  of  considerations ;  but  act  upon  the  presumption  that 
parties  capable  to  contract  are  capable,  as  well,  of  regulating  the 
terms  of  their  contracts,  granting  relief  only  when  the  inequality 
is  shown  to  have  arisen  from  mistake,  misrepresentation,  or  fraud. 
A  different  rule  would,  in  every  case,  impose  upon  the  court  the 
necessity  of  inquiring  into,  and  of  determining  the  value  of  the 
property  received  by  the  party  giving  the  promise.  Such  a  course 
is  obviously  impracticable.  In  all  cases,  therefore,  where  the 
assumption  or  undertaking  is  founded  upon  the  sale  or  exchange 
of  merchandise  or  property,  or  upon  other  than  a  money  consid- 
eration, and  the  promise  has  been  deliberately  made,  the  law 
looks  no  further  than  to  see  that  the  obligation  rests  upon  a 
consideration,  that  is,  one  recognized  as  legal,  and  of  some  value. 
But  the  reason  of  the  rule  ceases,  and  hence  the  rule  ceases, 
when  applied  to  contracts  to  pay  money  and  founded  solely  upon 
a  money  consideration.  How  far  a  forbearance  to  sue,  or  the 
giving  of  time,  or  the  mere  waiver  of  some  right,  may  support  a 
promise,  we  do  not  consider,  since  the  question  does  not  arise. 
Nor,  for  the  like  reason,  do  we  consider  how  far  the  rule  is 
qualified  or  limited  by  special  statutes  regulating  interest;  or  in 
that  class  of  contracts  peculiar  to  the  law  merchant,  as  bottomry, 
respondentia,  and  the  course  of  exchange.  Aside  from  these  and 
some  other  exceptions,  at  common  law  a  contract  for  the  exchange 
of  unequal  sums  of  money  at  the  same  time,  or  at  different  times, 
when  the  element  of  time  is  no  equivalent,  is  not  binding;  and 
in  such  cases  courts  may  and  do  inquire  into  the  equality  of  the 
contract;  for  its  subject  matter,  upon  both  sides,  has  not  only  a 


214  FORMATION  OF  CONTRACT.  [Pakt  II. 

fixed  value,  but  is  itself  the  standard  of  all  values ;  and  so,  for 
the  difference  of  value,  there  is  no  consideration.  In  this  prin- 
ciple, the  earliest  prohibitions  —  earlier  even  than  the  time  of 
Alfred  —  and  the  later  legislative  enactments  against  usury,  both 
in  England  and  in  this  country,  have  their  origin.  The  rule  is 
deemed  to  be  founded  in  good  policy. 

In  the  case  before  us,  the  only  legal  consideration  the  defend- 
ants received  was  one  dollar,  for  which  they  engaged  to  pay  a 
much  larger  sum.  The  case,  therefore,  falls  within  the  principle 
adverted  to.  The  consideration  was  not  only  unequal,  but  grossly 
80.  It  was  a  mere  nominal  consideration;  if  even  received  by 
the  defendants,  it  was,  no  doubt,  regarded  as  such  by  them,  and 
intended  as  such  by  the  promisees.  It  was,  at  best,  purely 
technical  and  colorable,  and  obviously  is  wanting  in  that  degree 
of  equitable  equality  sufficient  to  support  the  promise  declared 
upon. 

The  demurrer  to  thejirst  count  is  therefore  sustained. 


Chap.  IU.  §  1.]  CAPACITY  OF  PARTIES.  215 


CHAPTER  III. 

CAPACITY    OF    PARTIES. 
§  1.  Political  status. 

UNITED  STATES  v.   GEOSSMAYER. 

9  WALLACE  (U.  S.),  72.  — 1869. 

This  case  was  an  appeal  from  the  Court  of  Claims,  and  was 
thus: 

Elias  Einstein,  a  resident  of  Macon,  Georgia,  was  indebted, 
when  the  late  rebellion  broke  out,  to  Grossmayer,  a  resident  of 
New  York,  for  goods  sold  and  money  lent,  and  while  the  war  was 
in  progress  a  correspondence  on  the  subject  was  maintained 
through  the  medium  of  a  third  person,  who  passed  back  and  forth 
several  times  between  Macon  and  New  York.  The  communica- 
tion between  the  parties  resulted  in  Grossmayer  requesting 
Einstein  to  remit  the  amount  due  him  in  money  or  sterling 
exchange,  or,  if  that  were  not  possible,  to  invest  the  sum  in 
cotton  and  hold  it  for  him  until  the  close  of  the  war. 

In  pursuance  of  this  direction  —  and,  as  it  is  supposed,  because 
money  or  sterling  exchange  could  not  be  transmitted  —  Einstein 
purchased  cotton  for  Grossmayer,  and  informed  him  of  it;  Gross- 
mayer expressing  himself  satisfied  with  the  arrangement.  The 
cotton  was  afterwards  shipped  as  Grossmayer's  to  one  Abraham 
Einstein,  at  Savannah,  who  stored  it  there  in  his  own  name,  in 
order  to  prevent  its  seizure  by  the  rebel  authorities.  It  remained 
in  store  in  this  manner  until  the  capture  of  Savannah,  in  Decem- 
ber, 1864,  by  the  armies  of  the  United  States,  when  it  was 
reported  to  our  military  forces  as  Grossmayer's  cotton,  and  taken 
by  them  and  sent  to  New  York  and  sold. 

Grossmayer  now  preferred  a  claim  in  the  Court  of  Claims  for 
the  residue  of  the  proceeds,  asserting  that  he  was  within  the 
protection  of  the  Captured  and  Abandoned  Property  Act. 


216  FORMATION  OF  CONTRACT.  [Pakt  IL 

That  court  considering  that  the  purchase  by  Elias  Einstein  for 
Grossmayer  was  not  a  violation  of  the  war  intercourse  acts  set 
forth  in  the  preceding  case,  decided  that  he  was  so,  and  gave 
judgment  in  his  favor.     The  United  States  appealed. 

Mr.  Justice  Davis  delivered  the  opinion  of  the  court. 

Grossmayer  insists  that  he  is  within  the  protection  of  the 
Captured  and  Abandoned  Property  Act,  but  it  is  hard  to  see  on 
what  ground  he  can  base  this  claim  for  protection.  It  was  natural 
that  Grossmayer  should  desire  to  be  paid,  and  creditable  to 
Einstein  to  wish  to  discharge  his  obligation  to  him,  but  the  same 
thing  can  be  said  of  very  many  persons  who  were  similarly 
situated  during  the  war,  and  if  all  persons  in  this  condition  had 
been  allowed  to  do  what  was  done  in  this  case,  it  is  easy  to  see 
that  it  would  have  produced  great  embarrassment  and  obstructed 
very  materially  the  operations  of  the  army.  It  has  been  found 
necessary,  as  soon  as  war  is  commenced,  that  business  intercourse 
should  cease  between  the  citizens  of  the  respective  parties  engaged 
in  it,  and  this  necessity  is  so  great  that  all  writers  on  public  law 
agree  that  it  is  unlawful,  without  any  express  declaration  of  the 
sovereign  on  the  subject. 

But  Congress  did  not  wish  to  leave  any  one  in  ignorance  of  the 
effect  of  war  in  this  regard,  for  as  early  as  the  13th  of  June, 
1861,  it  passed  a  Non-intercourse  Act,  which  prohibited  all  com- 
mercial intercourse  between  the  States  in  insurrection  and  the 
rest  of  the  United  States.  It  is  true  the  President  could  allow  a 
restricted  trade,  if  he  thought  proper;  but  in  so  far  as  he  did 
allow  it,  it  had  to  be  conducted  according  to  regulations  prescribed 
by  the  Secretary  of  the  Treasury. 

There  is  no  pretense,  however,  that  this  particular  transaction 
was  authorized  by  any  one  connected  with  the  Treasury  Depart- 
ment, and  it  was,  therefore,  not  only  inconsistent  with  the  duties 
growing  out  of  a  state  of  war,  but  in  open  violation  of  a  statute 
on  the  subject.  A  prohibition  of  all  intercourse  with  an  enemy 
during  the  war  affects  debtors  and  creditors  on  either  side,  equally 
with  those  who  do  not  bear  that  relation  to  each  other.  We  are 
I  not  disposed  to  deny  the  doctrine  that  a  resident  in  the  territory 
of  one  of  the  belligerents  may  have,  in  time  of  war,  an  agent 
t  residing  in  the  territory  of  the  other,  to  whom  his  debtor  could 


Chap.  III.  §  1]  CAPACITY   OF  PARTIES.  21T 

pay  his  debt  in  money,  or  deliver  to  him  property  in  discharge 
of  it,  but  in  such  a  case  the  agency  must  have  been  created  before 
the  war  began,  for  there  is  no  power  to  appoint  an  agent  for  any 
purpose  after  hostilities  have  actually  commenced,  and  to  this 
effect  are  all  the  authorities.  The  reason  why  this  cannot  be  done 
is  obvious,  for  while  the  war  lasts  nothing  which  depends  on 
commercial  intercourse  is  permitted.  In  this  case,  if  Einstein  is 
to  be  considered  as  the  agent  of  Grossmayer  to  buy  the  cotton,  the 
act  appointing  him  was  illegal,  because  it  was  done  by  means  of 
a  direct  communication  through  a  messenger  who  was  in  some 
manner  not  stated  in  the  record  able  to  pass,  during  the  war, 
between  Macon  and  New  York.  It  was  not  necessary  to  make 
the  act  unlawful  that  Grossmayer  should  have  communicated 
personally  with  Einstein.  The  business  intercourse  through  a 
middle  man,  which  resulted  in  establishing  the  agency,  is  equally 
within  the  condemnation  of  the  law. 

Besides,  if,  as  is  conceded,  Grossmayer  was  prohibited  from 
trading  directly  with  the  enemy,  how  can  the  purchase  in  ques- 
tion be  treated  as  lawful  when  it  was  made  for  him  by  an  agent 
appointed  after  his  own  disability  to  deal  at  all  with  the  insur- 
gents was  created? 

It  is  argued  that  the  purchase  by  Einstein  was  ratified  by 
Grossmayer,  and  that  being  so,  the  case  is  relieved  of  difficulty^ 
but  this  is  a  mistaken  view  of  the  principle  of  ratification,  for  a. 
transaction  originally  unlawful  cannot  be  made  any  better  by 
being  ratified. 

In  any  aspect  of  this  case,  whether  the  relation  of  debtor  and 
creditor  continued,  or  was  changed  to  that  of  principal  and  agent, 
the  claimant  cannot  recover. 

As  he  was  prohibited  during  the  war  from  having  any  dealings, 
with  Einstein,  it  follows  that  nothing  which  both  or  either  of 
them  did  in  this  case  could  have  the  effect  to  vest  in  him  the 
title  to  the  cotton  in  question. 

Not  being  the  owner  of  the  property,  he  has  no  claim  against 
the  United  States. 

The  judgment  of  the  Court  of  Claims  is  reversed,  and  the  cause 
is  remanded  to  that  court  with  directions  to  enter  an  order 

Dismissing  the  petition.^ 
1  See  also  Kershaw  v.  KeUey,  100  Mass.  661. 


218  FORMATION  OF  CONTRACT.  [Part  U. 

§  2.    Infants. 

TRUEBLOOD   v.    TRUEBLOOD. 

8  INDIANA,  195.  — 1856. 

Appeal  from  tlie  Vigo  Circuit  Court. 

Perkins,  J.  Bill  in  chancery,  under  the  old  practice,  to 
•compel  a  specific  performance,  and  so  set  aside  a  fraudulent  deed. 
Bill  dismissed.  The  facts  of  the  case,  so  far  as  material  to  its 
decision,  are  as  follows : 

In  1845,  William  Trueblood  was  an  infant,  and  owner  of  a 
piece  of  land.  At  that  date,  Richard  J.  Trueblood,  the  father 
of  said  William,  executed  a  title-bond  to  one  Nathan  Trueblood, 
whereby  he  obligated  himself  to  cause  to  be  conveyed  to  him,  said 
Nathan,  the  piece  of  land  belonging  to  William,  after  the  latter 
should  become  of  age.  The  conveyance  was  to  be  upon  a  stated 
consideration.  The  bond  is  single  —  simply  the  bond  of  Richard 
—  and  William  is  nowhere  mentioned  in  it  as  a  party,  but  his 
name  is  signed  with  his  father's  at  the  close  of  the  condition,  as 
may  be  supposed,  in  signification  of  his  assent  to  the  execution 
of  the  instrument  by  his  father.  We  shall  so  treat  his  signature 
to  the  bond. 

After  William  became  of  age,  it  is  claimed  that  he  ratified  the 
"bond,  and  afterwards  sold  and  conveyed  the  land  to  another  — 
Robert  Lockridge  —  who  had  notice,  etc.  This  bill  was  filed  in 
order  to  have  the  deed  to  Lockridge  set  aside,  and  a  conveyance 
decreed  to  Nathan  Trueblood,  pursuant  to  the  terms  of  the  bond. 

The  court  below,  as  we  have  stated,  refused  to  enter  such  a 
■decree,  and  held,  as  counsel  inform  us,  that  the  bond  was  not 
susceptible  of  ratification  by  William  Trueblood;  and  whether  it 
was  or  not  is  the  important  question  in  the  case;  for  if  the  bond 
was  not  susceptible  of  such  ratification,  we  need  not  inquire  into 
the  alleged  facts  which  it  is  claimed  evidence  that  such  an  act 
had  been  done. 

As  we  have  seen,  the  bond  is  not,  in  terms,  the  bond  of  Wil- 
liam Trueblood.  He  could  not,  by  virtue  of  its  express  provis- 
ions, be  sued  upon  it.  Where  a  father  signs  his  name  to  articles 
of  apprenticeship  of  his  son,  simply  to  signify  his  assent  to  them, 
lie  cannot  be  a  party  to  a  suit  upon  the  articles.     5  Tnd.  JR.  538. 


I 


Chap.  III.  §  2.]  CAPACITY  OF  PARTIES.  219 

If  the  bond,  then,  can  in  any  light  be  regarded  as  the  contract 
of  William  Trueblood,  it  must  be  because  his  father  may  be  con- 
sidered his  agent  in  executing  it.  Can,  then,  an  infant,  after 
arriving  at  age,  ratify  the  act  of  his  agent,  performed  while  he 
was  an  infant?  This  depends  upon  whether  his  appointment  of 
an  agent  is  a  void  or  voidable  act.  If  the  former,  it  cannot  be 
ratified  (5  Jnd.  R.  353);  if  the  latter,  it  can  be.  Reeves^  Dom. 
Rel.  240. 

In  the  first  volume  of  American  Leading  Cases  (3d  ed.,  p.  248, 
€t  seq. )  the  doctrine  is  laid  down,  as  the  result  of  the  American 
cases  on  the  subject,  that  the  only  act  an  infant  is  incapable  of 
performing,  as  to  contracts,  is  the  appointment  of  an  agent  or 
attorney.  Whether  the  doctrine  is  founded  in  solid  reasons, 
they  admit,  may  be  doubted ;  but  assert  that  there  is  no  doubt 
but  that  it  is  law.     See  the  cases  there  collected. 

The  law  seems  to  be  held  the  same  in  England.  In  Doe  v. 
Roberts  (16  M.  and  W.  778),  a  case  slightly  like  the  present  in 
some  respects,  the  attorney,  in  argument,  said :  "  Here  a  tenancy 
has  been  created,  either  by  the  children,  or  by  Hugh  Thomas, 
acting  as  their  agent."  Parke,  B.,  replied:  "That  is  the  fallacy 
of  your  argument.  An  agreement  by  an  agent  cannot  bind  an 
infant.  If  an  infant  appoints  a  person  to  make  a  lease,  it  does 
not  bind  the  infant,  neither  does  his  ratification  bind  him.  There 
is  no  doubt  about  the  law;  the  lease  of  an  infant,  to  be  good, 
must  be  his  own  personal  act."  So,  here,  had  the  bond  been  the 
personal  act  of  the  infant,  he  could  have  ratified  it.  It  would 
have  been  simply  voidable.  But  the  bond  of  his  agent,  or  one 
having  assumed  to  act  as  such,  is  void,  and  not  capable  of  being 
ratified.     See  8  Black/.  345. 

The  decree  below  must,  therefore,  be  afiirmed  with  costs. 

GooKiNs,  J.,  having  been  concerned  as  counsel,  was  absent. 

Per  Curiam.     The  decree  is  affirmed  with  costs.  ^ 

1  But  see  Hastings  v.  Dollarhide,  24  Cal.  195  (1864)  ;  Hardy  v.  Waters, 
38  Me.  450  (1853),  holding  that  the  transfer  by  indorsement  of  a  promisaory 
note  by  the  agent  of  an  infant  payee  is  voidable  and  not  void. 

*'  From  a  careful  examination  of  the  modern  decisions  and  text  writers, 
we  are  satisfied  that  the  following  propositions  may  be  regarded  as  settled  : 
first,  that  an  infant's  contracts  for  necessaries  are  as  valid  and  binding  upon 
the  infant  as  the  contracts  of  an  adult,  and  that  such  contracts  cannot  be 


220  FORMATION  OF  CONTRACT.  [Pabt  II, 

TRAINEE  V.    TRUMBULL. 

141  MASSACHUSETTS,  527.  — 1886. 

C.  Allen,  J.  The  practical  question  in  this  case  is,  whether 
the  food,  clothing,  etc.,  furnished  to  the  defendant  were  neces- 
saries for  which  he  should  be  held  responsible.  This  question 
must  be  determined  by  the  actual  state  of  the  case,  and  not  by 
appearances.  That  is  to  say,  an  infant  who  is  already  well 
provided  for  in  respect  to  board,  clothing,  and  other  articles 
suitable  for  his  condition,  is  not  to  be  held  responsible  if  any 
one  supplies  to  him  other  board,  clothing,  etc.,  although  such 
person  did  not  know  that  the  infant  was  already  well  supplied. 
Angel  v.  McLellan,  16  Mass.  28;  Swijl  v.  Bennett,  10  Gush.  436; 
Davis  V.  Caldwell,  12  Gush.  512;  Barnes  v.  Toye,  13  Q.  B.  D. 
410.  So,  on  the  other  hand,  the  mere  fact  that  an  infant,  as  in 
this  case,  had  a  father,  mother,  and  guardian,  no  one  of  whom 
did  anything  towards  his  care  or  support,  does  not  prevent  his 
being  bound  to  pay  for  that  which  was  actually  necessary  for 
him  when  furnished.  The  question  whether  or  not  the  infant 
made  an  express  promise  to  pay  is  not  important.  He  is  held 
on  a  promise  implied  by  law,  and  not,  strictly  speaking,  on  his 
i  actual  promise.  The  law  implies  the  promise  to  pay,  from  the 
(;  necessity  of  his  situation ;  just  as  in  the  case  of  a  lunatic.  1 
Chit.  Con.  (11th  Am.  ed.)  197;  Hyman  v,  Cain,  3  Jones  (IST.  G.), 
Ill;  Richardson  v.  Strong,  13  Ired.  106;  Oay  v.  Ballou,  4 
Wend.  403;  Epperson  v.  Nugent,  57  Miss.  45,  47.  In  other 
1  words,  he  is  liable  to  pay  only  what  the  necessaries  were  rea- 
I  sonably  worth,  and  not  what  he  may  improvidently  have  agreed 

disaflSrmed,  and  need  not  be  ratified  before  they  can  be  enforced  ;  second, 
the  contract  of  an  infant  appointing  an  agent  or  attorney  in  fact  is  absolutely 
void  and  incapable  of  ratification ;  third,  any  contract  that  is  illegal,  by 
reason  of  being  against  a  statute  or  public  policy,  is  absolutely  void  and 
incapable  of  ratification ;  fourth,  all  other  contracts  made  by  an  infant  are 
voidable  only,  and  may  be  affirmed  or  disaffirmed  by  the  infant  at  his  elec- 
tion when  he  arrives  at  his  legal  majority.  The  second  proposition  may  not 
be  founded  in  solid  reason,  but  it  is  so  held  by  all  the  authorities."  Fetrow 
V.  Wiseman.,  40  Ind.  148,  155.  See  also  Harnery.  Dipple,  31  Ohio  St.  72; 
Mustard  v.  Wohlford's  Heirs,  15  Gratt.  (Va.)  320. 


Chap.  III.  §  2.]  CAPACITY  OF  PARTIES.  221 

to  pay  for  them.  If  he  has  made  an  express  promise  to  pay,  or 
has  given  a  note  in  payment  for  necessaries,  the  real  value  will 
be  inquired  into,  and  he  will  be  held  only  for  that  amount. 
Earle  v.  Beed,  10  Met.  387;  LocJce  v.  Smith,  41  N.  H.  346; 
Met.  Con.  73,  75. 

But  it  is  contended  that  the  board,  clothing,  etc.,  furnished  to 
the  defendant  were  not  necessaries,  because  he,  "  being  a  pauper 
and  an  inmate  of  an  almshouse,  was  supplied  with  necessaries 
suitable  to  his  estate  and  condition,  and,  under  the  circum- 
stances, it  would  have  been  the  duty  of  the  guardian  to  place 
him  in  the  almshouse."  It  is  true  that  a  guardian  is  not  obliged 
to  provide  for  the  support  of  his  ward,  when  he  has  no  property 
of  the  ward  available  for  that  purpose;  and  if  he  has  no  other 
resource,  no  doubt  he  may,  under  such  circumstances,  place  the 
ward  in  an  almshouse.  The  authorities  cited  for  the  defendant 
go  no  further  than  this.  Spring  v.  Woodworth,  2  Allen,  206. 
But  this  by  no  means  implies  that  a  boy  with  an  expectation  of 
a  fortune  of  $10,000  should  be  brought  up  in  an  almshouse,  if 
any  suitable  person  will  take  him  and  bring  him  up  properly,  on 
the  credit  of  his  expectations.  On  the  other  hand,  it  seems  to  us 
highly  proper  for  a  parent  or  guardian,  under  such  circumstances, 
to  do  what  the  father  did  in  this  case;  leaving  it  for  the  boy's 
guardian  to  see  to  it  that  an  unreasonable  price  is  not  paid. 
Looking  to  the  advantage  of  his  subsequent  life,  as  well  as  to 
his  welfare  for  the  time  being,  his  transfer  from  an  almshouse  to 
a  suitable  person,  by  whom  he  would  be  cared  for  and  educated, 
would  certainly  be  judicious ;  and  the  support  and  education  fur- 
nished to  an  infant  of  such  expectations,  whose  means  were  not 
presently  available,  fall  clearly  within  the  class  of  necessaries. 
In  Met.  Con.  70,  the  authority  of  Lord  Mansfield  is  cited  to  the 
point  that  a  sum  advanced  for  taking  an  infant  out  of  jail  is  for 
necessaries.  Buckinghamshire  v.  Dricry,  2  Eden,  60,  72.  See 
also  Clarke  v.  Leslie,  5  Esp.  28.  Giving  credit  to  the  infant's 
expectation  of  property  is  the  same  as  giving  credit  to  him. 
There  was  no  error  in  refusing  to  rule,  as  matter  of  law,  that, 
upon  all  the  facts  in  evidence,  the  action  could  not  be  maintained. 
The  findings  of  all  matters  of  fact,  of  course,  are  not  open  to 

revision. 

Exceptions  overruled. 


222  FORMATION  OF  CONTRACT.  [Pabt  IL 

§  3.   CorporatioiiB. 

SLATER  WOOLLEN   CO.   v.    LAMB. 

143  MASSACHUSETTS,  420.  — 1887. 

Action  upon  contract  for  goods  sold  and  delivered. 

Contract,  upon  an  account  annexed  for  goods  sold  and  deliv- 
ered. 

Field,  J.  If  we  assume  that  tlie  truth  of  the  exceptions 
has  been  established,  we  think  that  they  must  be  overruled. 
The  substance  of  the  defendant's  contentions  is,  that  the  Slater 
Woollen  Company,  having  been  incorporated  "  for  the  purpose  of 
manufacturing  fabrics  of  wool  and  worsted  or  of  a  mixture  there- 
of with  other  textile  materials, "  could  not,  by  and  in  the  name  of 
persons  who  were  in  fact  keeping  a  store  as  its  agents,  but  whose 
agency  was  undisclosed,  sell  groceries,  dry  goods,  and  other  simi- 
lar articles  to  the  defendant,  who  was  not  employed  by  the  com- 
pany, and  then  maintain  an  action  against  him  to  recover  either 
the  price  or  the  value  of  the  goods  sold. 

If  the  goods  were  the  property  of  the  plaintiff,  and  were  sold 
by  its  agents,  the  plaintiff  can  sue  as  an  undisclosed  principal. 

It  was  said  of  Chester  Glass  Co.  v.  Dewey  (16  Mass.  94)  in 
Davis  V.  Old  Colony  Railroad  (131  Mass.  258,  273)  that  "the 
leading  reason  assigned  was,  '  the  legislature  did  not  intend  to 
prohibit  the  supply  of  goods  to  those  employed  in  the  manufac- 
tory ; '  in  other  words,  the  contract  sued  on  was  not  ultra  vires. 
That  reason  being  decisive  of  the  case,  the  further  suggestion  in 
the  opinion,  '  Besides,  the  defendant  cannot  refuse  payment  on 
this  ground;  but  the  legislature  may  enforce  the  prohibition,  by 
causing  the  charter  to  be  revoked,  when  they  shall  determine 
that  it  has  been  abused,'  was,  as  has  been  since  pointed  out, 
wholly  obiter  dictum."  But  the  weight  of  authority,  we  think, 
supports  the  last  reason  given  in  its  application  to  the  facts  of 
the  present  case.  There  is  a  distinction  between  a  corporation 
making  a  contract  in  excess  of  its  powers,  and  making  a  contract 
which  it  is  prohibited  by  statute  from  making,  or  which  is  against 
public  policy  or  sound  morals;  and  there  is  also  a  distinction 
between  suing  for  the  breach  of  an  executory  contract  and  suing 
to  recover  the  value  of  property  which  has  been  received  and 


Chap,  in  §  3.]  CAPACITY  OF  PARTIES.  223^ 

retained  by  the  defendant  under  a  contract  executed  on  the  part 
of  the  plaintiff. 

If  it  be  assumed,  in  favor  of  the  defendant,  that  the  contracts 
of  sale  in  the  case  at  bar  were  ultra  vires  of  the  corporation,  they 
were  not  contracts  which  were  prohibited,  or  contracts  which 
were  void  as  against  public  policy  or  good  morals;*  the  defect  la 
them  is,  that  the  corporation  exceeded  its  powers  in  making 
them.  The  defendant,  under  these  contracts,  has  received  the 
goods,  and  retained  and  used  them.  Either  the  corporation  must 
lose  the  value  of  its  property,  or  the  defendant  must  pay  for  it; 
in  such  an  alternative,  courts  have  held,  on  one  ground  or  an- 
other, that  an  action  can  be  maintained  when  the  sole  defect  is  a 
want  of  authority  on  the  part  of  the  corporation  to  make  the 
contract.  We  think  that  the  corporation  can  maintain  an  action 
of  contract  against  the  defendant  to  recover  the  value  of  the 
goods.  The  defendant  is  not  permitted  to  set  up  this  want  of 
authority  as  a  defense ;  and  as  the  form  of  the  transaction  was 
that  of  contract,  such  should  be  the  form  of  the  action. 

We  are  not  required  to  determine  whether  an  action  can  be 
maintained  to  recover  the  price,  as  distinguished  from  the  value 
of  the  goods,  as  no  exception  has  been  taken  to  the  measure  of 
damages.  Chester  Glass  Co.  v.  Dewey,  uhi  supra  ;  Whitney  Arms 
Co.  V.  Barlow,  63  N".  Y.  62;  Woodruff  v.  Erie  Railroad,  93 
N.  Y.  609;  Nassau  Bank  v.  Jones,  95  N.  Y.  115;  Pine  Grove 
Township  v.  Talcott,  19  Wall.  Q&Q,  679;  National  Bank  v.  Mat- 
thews, 98  U.  S.  621;  National  Bank  v.  Whitney,  103  U.  S.  99. 
See  Whitney  v.  Leominster  Savings  Bank,  141  Mass.  85;  Bow- 
ditch  V.  New  England  Ins.   Co.,  141  Mass.  292;    Wright  v.  Pipe 

Line  Co.,  101  Penn.  St.  204. 

Exceptions  overruled.^ 

1  Upon  the  last  point  in  the  foregoing  opinion : 

Gray,  J.,  in  Central  Transportation  Co.  v.  Pullman's  Car  Co.,  139  U.  S. 
24,  60  (1890)  : 

"A  contract  ultra  vires  being  unlawful  and  void,  not  because  it  is  in 
itself  immoral,  but  because  the  corporation,  by  the  law  of  its  creation,  is 
incapable  of  making  it,  the  courts,  while  refusing  to  maintain  any  action 
upon  the  unlawful  contract,  have  always  striven  to  do  justice  between  the 
parties,  so  far  as  could  be  done  consistently  with  adherence  to  law,  by  per- 
mitting property  or  money  parted  with  on  faith  of  the  unlawful  contract,  to 
be  recovered  back  or  compensation  to  be  made  for  it. 


224  FORMATION  OF  CONTRACT,  [Pabt  U. 

§  4.    Lunatics  and  drunken  persons. 

GRIBBEN  V.   MAXWELL. 

34  KANSAS,  8.  — 1886. 

Error  from  Cowley  District  Court. 

Action  brought  December  7, 1883,  by  Noah  Gribben,  as  guardian 
of  Olive  E.  Gribben,  a  lunatic,  against  Samuel  E.  Maxwell,  to  set 
aside  a  conveyance  executed  by  Olive  E.  Gribben  on  June  11, 
1883. 

HoRTON,  C.  J.  As  a  general  rule,  the  contract  of  a  lunatic  is 
void  pe7'  se.  The  concurring  assent  of  two  minds  is  wanting. 
*'  They  who  have  no  mind  cannot  '  concur  in  mind '   with   one 

"  In  such  case,  however,  the  action  is  not  maintained  upon  the  unlawful 
contract  nor  according  to  its  terms,  but  on  an  implied  contract  of  the  defend- 
ant to  return,  or,  failing  to  do  that,  to  make  compensation  for,  property  or 
money  which  it  has  no  right  to  retain.  To  maintain  such  an  action  is  not 
to  affirm,  but  to  disaffirm  the  unlawful  contract." 

Walton,  J.,  in  Brunswick  Qas  Light  Co.  v.  United  Gas  Fuel  &  Light  Co., 
85  Me.  632,  541  (1893)  : 

"But  it  is  claimed  that,  inasmuch  as  the  defendant  company  took  and 
held  possession  of  the  plaintiff  company's  works  by  virtue  of  the  lease,  ultra 
vires  is  no  defense  to  an  action  to  recover  the  agreed  rent.  We  do  not  doubt 
that  the  plaintiff  company  is  entitled  to  recover  a  reasonable  rent  for  the 
time  the  defendant  company  actually  occupied  the  works,  but  do  not  think 
the  amount  can  be  measured  by  the  ultra  vires  agreement.  We  think  that 
in  such  cases  the  recovery  must  be  had  upon  an  implied  agreement  to  pay  a 
reasonable  rent ;  and  that  while  the  ultra  vires  agreement  may  be  used  as 
evidence^  in  the  nature  of  an  admission,  of  what  is  a  reasonable  rent,  it 
cannot  be  allowed  to  govern  or  control  the  amount.  It  seems  to  us  that  it 
would  be  absurd  to  hold  that  the  ultra  vires  lease  is  void,  and  at  the  same 
time  hold  that  it  governs  the  rights  of  the  parties  with  respect  to  the  amount 
of  rent  to  be  recovered.  A  void  instrument  governs  nothing.  We  think  the 
correct  rule  is  the  one  stated  by  Mr.  Justice  Gray  in  a  recent  case  in  the 
United  States  Supreme  Court.  He  said  that  a  contract  made  by  a  corpora- 
tion which  is  unlawful  and  void,  because  beyond  the  scope  of  its  corporate 
powers,  does  not  by  being  carried  into  execution  become  lawful  and  valid, 
and  that  the  proper  remedy  of  the  aggrieved  party,  is  to  disaffirm  the  contract 
and  sue  to  recover  as  on  a  quantum  meruit  the  value  of  what  the  defendant 
has  actually  received  the  benefit  of.  Pittsburgh  &c.  v.  Keokuk  (6c.,  131  U.  S. 
371.  We  think  this  is  the  correct  rule.  2  Beach  on  Corp.  §  423,  and  cases 
there  cited." 

On  the  other  hand,  the  doctrine  of  equitable  estoppel  to  prevent  defendant 
from  relying  upon  the  invalidity  of  the  contract  is  applied  in  Denver  Fire 
Ins.  Co.  V.  McClelland,  9  Col.  11,  22  (1885). 


Chap.  III.  §  4.]  CAPACITY  OF  PARTIES.  225 

another;  and  as  this  is  the  essence  of  a  contract,  they  cannot 
enter  into  a  contract."  1  Parsons  on  Contracts  (6th  ed.),  383; 
Powell  V.  Poiveil,  18  Kas.  371.  Notwithstanding  this  recognized 
doctrine,  the  decided  cases  are  far  from  being  uniform  on  the 
subject  of  the  liability  or  extent  of  liability  of  lunatics  for  their 
contracts.  An  examination  of  the  cases  upon  the  subject  shows 
that  there  is  an  irreconcilable  conflict  in  the  authorities.  We 
think,  however,  the  weight  of  authority  favors  the  rule  that 
where  the  purchase  of  real  estate  from  an  insane  person  is  made, 
and  a  deed  of  conveyance  is  obtained  in  perfect  good  faith,  before 
an  inquisition  and  finding  of  lunacy,  for  a  sufficient  consideration, 
without  knowledge  of  the  lunacy,  and  no  advantage  is  taken  by 
ihe  purchaser,  the  consideration  received  by  the  lunatic  must  be 
returned,  or  offered  to  be  returned,  before  the  conveyance  can  be 
set  aside  at  the  suit  of  the  alleged  lunatic,  or  one  who  repre- 
sents him. 

Wright,  C.  J.,  in  Corbit  v.  Smith  (7  Iowa,  60),  thus  states  the 
law: 

"  In  the  next  place,  a  distinction  is  to  be  borne  in  mind  between  con- 
tracts executed  and  contracts  executory.  The  latter  the  courts  will  not  in 
generallend  their  aid  to  execute  where  the  party  sought  to  be  affected 
was  at  the  time  incapable,  unless  it  may  be  for  necessaries.  If,  on  the 
other  hand,  the  incapacity  was  unknown,  no  advantage  was  taken,  the 
contract  has  been  executed,  and  the  parties  cannot  be  put  in  statu  quo,  it 
will  not  be  set  aside." 

In  Behrens  v.  McKenzie  (23  Iowa,  333)  Dillon,  J.,  said: 

"But  with  respect  to  executed  contracts,  the  tendency  of  modem 
decision  is  to  hold  persons  of  unsound  mind  liable  in  cases  where  the 
transaction  is  in  the  ordinary  course  of  business,  is  fair  and  reasonable, 
and  the  mental  condition  was  not  known  to  the  other  party,  and  the 
parties  cannot  be  put  in  statu  quo." 

In  Allen  v.  Berryhill  (27  Iowa,  634)  it  was  decided  that: 

"Where  a  contract  made  by  an  insane  person  has  been  adopted,  and 
is  sought  to  be  enforced  by  the  representatives  of  such  person,  it  is  no 
defense  to  the  sane  party  to  show  that  the  other  party  was  non  compos 
mentis  at  the  time  the  contract  was  made." 

Cole,  J.,  dissenting,  expressed  his  views  as  follows: 

"  In  every  case  of  contract  with  a  lunatic,  which  has  been  executed  in 

Q 


226  FORMATION  OF  CONTRACT.  [Part  II. 

■whole  or  in  part,  the  fact  that  the  parties  cati  or  cannot  be  placed  in  statu 
quo,  will  have  an  important  bearing  in  determining  whether  such  con- 
tract shall  stand.  .  .  .  When  the  parties  cannot  be  placed  in  statu  quo, 
and  the  contract  is  fair,  was  made  in  good  faith  and  without  knowledge 
of  the  lunacy,  it  will  not  be  set  aside,  even  at  the  suit  of  the  lunatic. 
And  this;  not  because  the  contract  was  valid  or  binding,  but  because  an 
innocent  party,  one  entirely  without  fault  or  negligence,  might,  and  in 
the  eyes  of  the  law  would,  be  prejudiced  by  setting  it  aside.  Both  parties 
are  faultless,  and  therefore  stand  equal  before  the  law,  and  in  the  forum 
of  conscience.  The  law  will  not  lend  its  active  interposition  to  effectuate 
a  wrong  or  prejudice  to  either;  it  will  suffer  the  misfortune  to  remain 
where  nature  has  cast  it." 

In  Bank  v.  Moore  (78  Pa.  St.  407)  a  lunatic  was  held  liable 
upon  a  note  discounted  by  him  at  the  bank;  and  Mr.  Justice 
Paxson,  in  delivering  the  opinion  of  the  court,  said,  among  other 
things : 

"  Insanity  is  one  of  the  most  mysterious  diseases  to  which  humanity  i» 
subject.  It  assumes  such  varied  forms  and  produces  such  opposite  effects 
as  frequently  to  baffle  the  i-ipest  professional  skill  and  the  keenest  observa^ 
tion.  In  some  instances  it  affects  the  mind  only  in  its  relation  to  or 
connection  with  the  particular  subject,  leaving  it  sound  and  rational 
upon  all  other  subjects.  Many  insane  persons  drive  as  thrifty  a  bargain 
as  the  shrewdest  business  man  without  betraying  in  manner  or  conversa- 
tion the  faintest  trace  of  mental  derangement.  It  would  be  an  unreason- 
able and  unjust  rule  that  such  persons  should  be  allowed  to  obtain  the 
property  of  innocent  parties  and  retain  both  the  property  and  its  price. 
Here  the  bank  in  good  faith  loaned  the  defendant  the  money  on  his  note. 
The  contract  was  executed,  so  far  as  the  consideration  is  concerned,  and 
it  "would  be  alike  derogatory  to  sound  law  and  good  morals  that  he 
should  be  allowed  to  retain  it  to  swell  the  corpus  of  his  estate." 

Mr.  Pomeroy,  in  his  treatise  on  "Equity  Jurisprudence,"  says: 

"In  general  a  lunatic,  idiot,  or  person  completely  non  compos  mentis,  is 
incapable  of  giving  a  true  consent  in  equity,  as  at  law ;  his  conveyance 
or  contract  is  invalid,  and  will  generally  be  set  aside.  While  this  rule 
is  generally  true,  the  mere  fact  that  a  party  to  an  agreement  was  a  luna- 
tic will  not  operate  as  a  defense  to  its  enforcement  or  as  ground  for  its 
cancellation.  A  contract,  executed  or  executory,  made  with  a  lunatic  in 
good  faith  without  any  advantage  taken  of  his  position,  and  for  his  own 
benefit,  is  valid  both  in  equity  and  at  law.  And  where  a  conveyance  or 
contract  is  made  in  ignorance  of  the  insanity,  with  no  advantage  taken, 
and  with  perfect  good  faith,  a  court  of  equity  will  not  set  it  aside  if  the 
parties  cannot  be  restored  to  their  original  position,  and  injustice  would 


Chap.  III.  §  4.]  CAPACITY  OF  PARTIES.  227 

be  done."  2  Pomeroy''s  Eq.  Juris.  §  946,  p.  465,  See  also  Scanlan  v. 
Cobb,  85  111.  296 ;  Young  v.  Stevens,  48  N.  H.  133 ;  Eaton  v.  Eaton,  37 
N.  J.  L.  108;  Freed  v.  Brown,  55  lud.  310;  Ashcrafi  v.  De  Armond,  44 
Iowa,  229. 

Applying  the  law  thus  declared  to  the  case  at  bar,  the  District 
Court  committed  no  error  in  overruling  the  demurrer.  It  appears 
from  the  pleadings  that  the  conveyance  was  executed  and  delivered 
before  an  inquisition  and  finding  of  lunacy;  that  no  offer  was 
made  to  return  to  the  purchaser  his  money  paid  for  the  conveyance 
of  the  land;  and  the  answer  sets  forth  good  faith  on  the  part  of 
the  purchaser;  that  he  paid  a  fair  and  reasonable  price  for  the 
land;  that  he  had  no  knowledge  or  information  of  the  lunacy  of 
Olive  E.  Gribben,  the  ward  of  the  plaintiff;  that  there  was  noth- 
ing in  her  looks  or  conduct  at  the  time  to  indicate  that  she  was 
of  unsound  mind,  or  incapable  of  transacting  business;  but,  on 
the  contrary,  that  she  was  apparently  in  possession  of  her  full 
mental  faculties,  and  was  then,  and  had  been  for  a  long  time  prior, 
engaged  in  the  transaction  of  business  for  herself. 

Our  attention  is  called  to  the  case  of  Powell  v.  Powell,  supra,  as 
decisive  that  the  conveyance  in  question  is  void;  but  a  considera- 
tion of  the  views  above  expressed  and  the  authorities  cited  show 
that  all  the  reasons  to  avoid  a  marriage  with  a  lunatic  do  not 
apply  in  the  case  of  a  deed  obtained  in  good  faith  from  a  lunatic, 
executed  before  an  inquisition  and  finding  of  lunacy.  We  have 
examined  fully  the  authorities  on  the  other  side  of  the  question, 
and  especially  In  the  matter  of  DeSilver,  5  Rawle  (1835),  110; 
Gibson  y.  Soper,  6  Gray,  279;  Van  DeicsenY.  Sweet,  51  N.  Y.  378; 
Dexter  v.  Hall,  82  U.  S.  9. 

Notwithstanding  the  recognized  ability  of  the  judges  rendering 
these  decisions,  we  are  better  satisfied  with  the  doctrine  herein 
announced. 

The  order  and  judgment  of  the  District  Court  will  be  afiirmed. 

All  the  Justices  concurring.^ 

1  See  also  Young  v.  Stevens,  48  N.  H.  133. 


228  FORMATION  OF  CONTRACT.  [Paet  IL 

^  BARKETT  v.   BUXTON. 

2  AIKENS  (Vt.),  167.  — 1826. 

Prentiss,  J.  This  is  an  action  upon  a  promissory  note,  exe- 
cuted by  the  defendant  to  the  plaintiff  for  the  sum  of  $1000, 
being  the  difference  agreed  to  be  paid  the  plaintiff  on  a  contract 
for  the  exchange  of  lands.  The  agreement  of  exchange  was  in 
writing,  and  the  plaintiff  afterwards  tendered  to  the  defendant  a 
deed,  in  performance  of  his  part  of  the  agreement,  which  the 
defendant  refused.  The  defendant  offered  evidence  to  prove, 
that  at  the  time  of  executing  the  note  and  agreement  he  was 
intoxicated,  and  thereby  incapable  of  judging  of  the  nature  and 
consequences  of  the  bargain.  The  court  refused  to  admit  the 
evidence,  without  proof  that  the  intoxication  was  procured  by  the 
plaintiff.  The  question  is,  whether  the  evidence  was  admissible 
as  a  defense  to  the  action,  or,  in  other  words,  whether  the  defend- 
ant could  be  allowed  to  set  up  his  intoxication  to  avoid  the 
contract. 

This  question  has  been  already  substantially  decided  by  the 
court  on  the  present  circuit;  but  the  importance  of  the  question, 
and  the  magnitude  of  the  demand  in  this  case,  have  led  us  to  give 
it  further  consideration.  According  to  Beverley^s  case  (4  Co.  123) 
a  party  cannot  set  up  intoxication  in  avoidance  of  his  contract 
under  any  circumstance.  Although  Lord  Coke  admits,  that  a 
drunkard,  for  the  time  of  his  drunkenness,  is  non  compos  mentis, 
yet  he  says,  "his  drunkenness  shall  not  extenuate  his  act  or 
offense,  but  doth  aggravate  his  offense,  and  doth  not  derogate 
from  his  act,  as  well  touching  his  life,  lands,  and  goods,  as  any- 
thing that  concerns  him."  He  makes  no  distinction  between 
criminal  and  civil  cases,  nor  intimates  any  qualification  of  his 
doctrine,  on  the  ground  of  the  drunkenness  being  procured  by  the 
contrivance  of  another  who  would  profit  by  it.  His  doctrine  is 
general,  and  without  any  qualification  whatever;  and  connected 
with  it,  he  holds,  that  a  party  shall  not  be  allowed  to  stultify 
himself,  or  disable  himself,  on  the  ground  of  idiocy  or  lunacy. 
The  latter  proposition  is  supported,  it  is  true,  by  two  or  three 
cases  in  the  Year  Books,  during  the  reigns  of  Edward  III.  and 


Chap.  III.  §  4.]  CAPACITY  OF  PARTIES.  229 

Henry  VI. ;  by  Littleton,  s.  405,  who  lived  in  the  time  of  Henry 
VI. ;  and  by  Stroud  v.  Marshall,  Cro.  Eliz.  398,  and  Cross  v. 
Andrews,  Cro.  Eliz.  622.  Sir  William  Blackstone,  however,  who 
traces  the  progress  of  this  notion,  as  he  calls  it,  considers  it  con- 
trary to  reason,  and  shows  that  such  was  not  the  ancient  common 
law.  The  Register,  it  appears,  contains  a  writ  for  the  alienor 
himself  to  recover  lands  aliened  by  him  during  his  insanity ;  and 
Britton  states,  that  insanity  is  a  sufficient  plea  for  a  man  to  avoid 
his  own  bond.  Eitzherbert  also  contends,  "that  it  stands  with 
reason  that  a  man  should  show  how  he  was  visited  by  the  act  of 
God  with  infirmity,  by  which  he  lost  his  memory  and  discretion 
for  a  time."  Blackstone  considers  the  rule  as  having  been  handed 
down  from  the  loose  cases  in  the  times  of  Edward  III.  and  Henry 
VI.,  founded  upon  the  absurd  reasoning,  that  a  man  cannot  know 
in  his  sanity  what  he  did  when  he  was  non  compos  mentis  ;  and 
he  says,  later  opinions,  feeling  the  inconvenience  of  the  rule, 
have,  in  many  points,  endeavored  to  restrain  it.  2  Black.  Com. 
291.  In  Thompson  v.  Leach  (3  Mod.  301)  it  was  held,  that  the 
deed  of  a  man  non  compos  mentis  was  not  merely  voidable,  but  was 
void  ab  initio,  for  want  of  capacity  to  bind  himself  or  his  prop- 
erty. In  Yates  v.  Boen  (2  Stra.  1104)  the  defendant  pleaded  non 
est  factum  to  debt  on  articles,  and  upon  the  trial,  offered  to  give 
lunacy  in  evidence.  The  chief  justice  at  first  thought  it  ought 
not  to  be  admitted,  upon  the  rule  in  Beverley's  case,  that  a  man 
•shall  not  stultify  himself;  but  on  the  authority  of  Smith  v.  Carr, 
in  1728,  where  Chief  Baron  Pengelly  in  a  like  case  admitted 
it,  and  on  considering  the  case  of  Thompson  v.  Leach,  the  chief 
justice  suffered  it  to  be  given  in  evidence,  and  the  plaintiff  became 
nonsuit.  The  most  approved  elementary  writers  and  compilers 
of  the  law  refer  to  this  case,  and  lay  it  down  as  settled  law,  that 
lunacy  may  be  given  in  evidence  on  the  plea  of  non  est  factum,  by 
the  party  himself;  and  it  is  said  to  have  been  so  ruled  by  Lord 
Mansfield,  in  Chamberlain  of  London  v.  Evans,  mentioned  in  note 
to  1  Chit.  PL  470.  In  this  country,  it  has  been  decided  in  several 
instances,  that  a  party  may  take  advantage  of  his  own  disability, 
and  avoid  his  contract,  by  showing  that  he  was  insane  and  inca- 
pable of  contracting.  Rice  v.  Peet,  15  Johns.  Rep.  503;  Webster 
V.  Woodford,  3  Day's  Rep.  90.     These  decisions  are  founded  in  the 


230  FORMATION  OF  CONTRACT.  [Part  II. 

law  of  nature  and  of  justice,  and  go  upon  the  plain  and  true 
ground,  that  the  contract  of  a  party  non  compos  mentis  is  abso- 
lutely void,  and  not  binding  upon  him.  The  rule  in  Beverley's 
case,  as  to  lunacy,  therefore,  is  not  only  opposed  to  the  ancient 
common  law,  and  numerous  authorities  of  great  weight,  but  to 
the  principles  of  natural  right  and  justice,  and  cannot  be  recog- 
nized as  law;  and  it  is  apprehended  that  the  case  is  as  little  to 
be  regarded  as  authority  in  respect  to  intoxication,  which  rests 
essentially  upon  the  same  principle. 

It  is  laid  down  in  Butter's  N.  P.  172,  and  appears  to  have  been 
decided  by  Lord  Holt,  in  Cole  v.  Robins,  there  cited,  that  the 
defendant  may  give  in  evidence  under  the  plea  of  non  est  factum 
to  a  bond,  that  he  was  made  to  sign  it  when  he  was  so  drunk  that 
he  did  not  know  what  he  did.  And  in  Pitt  v.  Smith  (3  Campb. 
Cas.  33),  where  an  objection  was  made  to  an  attesting  witness  being 
asked  whether  the  defendant  was  not  in  a  complete  state  of 
intoxication  when  he  executed  the  agreement,  Lord  Ellenborough 
says :  "  You  have  alleged  that  there  was  an  agreement  between  the 
parties;  but  there  was  no  agreement,  if  the  defendant  was  intoxi- 
cated in  the  manner  supposed.  He  had  not  an  agreeing  mind. 
Intoxication  is  good  evidence  upon  a  plea  of  non  est  factum  to  a 
deed,  of  non  concessit  to  a  grant,  and  of  7ion  assumpsit  to  a 
promise."  Chitty,  Selwyn,  and  Phillipps  lay  down  the  same  doc- 
trine; and  Judge  Swift  in  his  digest  says,  that  an  agreement, 
signed  by  a  man  in  a  complete  state  of  intoxication,  is  void. 
1  Chit.  PL  470;  Selw.  N.  P.  563;  1  Phil.  Ev.  128;  1  Swift's  Dig. 
173.  In  these  various  authorities  it  is  laid  down  generally,  and 
without  any  qualification,  that  drunkenness  is  a  defense,  and  no 
intimation  is  made  of  any  distinction,  founded  on  the  intoxication 
being  procured  by  the  party  claiming  the  benefit  of  the  contract. 
It  is  true,  that  in  Johnson  v.  Medlicott  (3  P.  Wms.  130)  that  cir- 
cumstance was  considered  essential  to  entitle  the  party  to  relief 
in  equity  against  his  contract.  Sir  Joseph  Jekyll  held,  that  the 
having  been  in  drink  was  not  any  reason  to  relieve  a  man  against 
his  deed  or  agreement,  unless  the  party  was  drawn  into  drink  by 
the  management  or  contrivance  of  him  who  gained  the  deed. 
But  from  what  is  said  in  1  Fonh.  Eq.  68,  it  would  not  seem  that 
the  author  considered  this  circumstance  as  indispensable.     He 


Chap.  III.  §  4.]  CAPACITY  OF  PARTIES.  231 

says,  equity  will  relieve,  especially  if  the  drunkenness  were  caused 
by  the  fraud  or  contrivance  of  the  other  party,  and  he  is  so 
excessively  drunk,  that  he  is  utterly  deprived  of  the  use  of  his 
reason  or  understanding;  for  it  can  by  no  means  be  a  serious  and 
deliberate  consent;  and  without  this,  no  contract  can  be  binding 
by  the  law  of  nature.  In  Spiers  v.  Higgins,  decided  at  the  Rolls 
in  1814,  and  cited  in  1  Mad.  Ch.  304,  a  bill  filed  for  a  specific 
performance  of  an  agreement,  which  was  entered  into  with  the 
defendant  when  drunk,  was  dismissed  with  costs,  although  the 
plaintiff  did  not  contribute  to  make  the  defendant  drunk. 

On  principle,  it  would  seem  impossible  to  maintain,  that  a 
contract  entered  into  by  a  party  when  in  a  state  of  complete 
intoxication,  and  deprived  of  the  use  of  his  reason,  is  binding 
upon  him,  whether  he  was  drawn  into  that  situation  by  the  con- 
■"rivance  of  the  other  party  or  not.  It  is  an  elementary  principle 
of  law,  that  it  is  of  the  essence  of  every  contract,  that  the  party 
to  be  bound  should  consent  to  whatever  is  stipulated,  otherwise 
no  obligation  is  imposed  upon  him.  If  he  has  not  the  command 
of  his  reason,  he  has  not  the  power  to  give  his  assent,  and  is 
incapable  of  entering  into  a  contract  to  bind  himself.  Accordingly, 
Pothier  holds  (Vol.  1,  c.  I,  a.  4,  s.  1)  that  ebriety,  when  it  is  such 
as  to  take  away  the  use  of  reason,  renders  the  person  who  is  m 
that  condition,  while  it  continues,  unable  to  contract,  since  it 
renders  him  incapable  of  assent.  And  it  seems  Heineccius  and 
Puffendorf  both  consider  contracts  entered  into  under  such  cir- 
cumstances as  invalid.  By  the  Scotch  law,  also,  an  obligation 
granted  by  a  person  while  he  is  in  a  state  of  absolute  and  total 
drunkenness,  is  ineffectual,  because  the  grantor  is  incapable  of 
consent ;  but  a  lesser  degree  of  drunkenness,  which  only  darkens 
reason,  is  not  sufficient.  Ersk.  Inst.  447.  The  author  of  the 
late  excellent  treatise  on  the  principles  and  practice  of  the  court 
of  chancery,  after  reviewing  the  various  cases  in  equity  on  the 
subject,  and  citing  the  Scotch  law  with  approbation,  observes.- 
"  The  distinction  thus  taken  seems  reasonable ;  for  it  never  can  be 
said  that  a  person  absolutely  drunk  has  that  freedom  of  mind 
generally  esteemed  necessary  to  a  deliberate  consent  to  a  contract; 
the  reasoning  faculty  is  for  a  time  deposed.  At  law  it  has  been 
held,  that  upon  non  est  factum  the  defendant  may  give  in  evi- 


232  FORMATION  OF  CONTRACT.  [Fabt  II. 

dence,  that  they  made  him  sign  the  bond  when  he  was  so  drunk 
that  he  did  not  know  what  he  did.  So  a  will  made  by  a  drunken 
man  is  invalid.  And  will  a  court  of  equity  be  less  indulgent  to 
human  frailty?  It  seems  to  be  a  fraud  to  make  a  contract  with  a 
man  who  is  so  drunk  as  to  be  incapable  of  deliberation."  1  Mad. 
Ch.  302.  Mr.  Maddock  seems  to  consider  it  as  settled,  that  at 
law,  complete  intoxication  is  a  defense,  and  that  it  ought  to  be  a 
sufficient  ground  for  relief  in  equity;  and,  indeed,  it  would  seem 
difficult  to  come  to  a  different  conclusion.  As  it  respects  crimes 
and  torts,  sound  policy  forbids  that  intoxication  should  be  an 
excuse;  for  if  it  were,  under  actual  or  feigned  intoxication,  the 
most  atrocious  crimes  and  injuries  might  be  committed  with 
impunity.  But  in  questions  of  mere  civil  concern,  arising  ex 
contractu,  and  affecting  the  rights  of  property  merely,  policy  does 
not  require  that  any  one  should  derive  an  unjust  profit  from  a 
bargain  made  with  a  person  in  a  state  of  intoxication,  although 
brought  upon  himself  by  his  own  fault,  or  that  he  should  be  a 
prey  to  the  arts  and  circumvention  of  others,  and  be  ruined,  or 
even  embarrassed  by  a  bargain,  when  thus  deprived  of  his  reason. 
It  is  a  violation  of  moral  duty  to  take  advantage  of  a  man  in  that 
defenseless  situation,  and  draw  him  into  a  contract;  and  if  the 
intoxication  is  such  as  to  deprive  him  of  the  use  of  his  reason,  it 
cannot  be  very  material  whether  it  was  procured  by  the  other 
party  or  was  purely  voluntary.  The  former  circumstance  would 
only  stamp  the  transaction  with  deeper  turpitude,  and  make  it  a 
more  aggravated  fraud.  The  evidence  which  was  offered  and 
rejected  at  the  trial  in  the  case  before  us,  went  not  only  to  show 
that  the  defendant  was  so  intoxicated  at  the  time  of  giving  the 
note  as  to  be  incapable  of  the  exercise  of  his  understanding,  but 
that  the  contract  was  grossly  unequal  and  unreasonable ;  and,  both 
on  principle  and  authority,  we  think  the  evidence  was  admissible, 
and  that  a  new  trial  must  be  granted. 

New  trial  granted. 


C5HAF.  III.  §  5.]  CAPACITY  OF  PARTIES.  23S 

§  5.    Meurled  women. 

WELLS  V.  CAYWOOD. 

3  COLORADO,  487.  — 1877. 

Thatcher,  C.  J.  This  was  an  action  of  ejectment  brought  by 
the  appellee  against  the  appellant  in  the  court  below.  On  the 
11th  day  of  August,  1873,  Albert  W.  Benson,  being  at  the  time 
the  owner  in  fee  of  the  premises  in  dispute,  made  a  promissory 
note  for  the  sum  of  $250,  payable  to  Catherine  D.  Caywood,  the 
wife  of  William  W.  Caywood,  two  years  after  the  date  thereof. 
On  the  same  date,  to  secure  the  payment  of  this  note,  Mr.  Benson 
conveyed  to  William  W.  Caywood,  as  trustee,  the  disputed 
premises,  with  power  to  sell  and  dispose  of  the  same  at  public 
auction  in  the  manner  prescribed  in  said  deed  of  trust,  in  case 
the  grantor  therein  should  make  default  in  the  payment  of  the 
promissory  note,  or  any  part  thereof,  or  the  interest  thereon,  and 
to  make,  execute,  and  deliver  to  the  purchaser,  at  such  sale,  a 
good  and  sufficient  deed  of  conveyance  for  the  premises  sold. 
After  the  maturity  of  the  note,  Mr.  Benson  having  made  default 
in  its  payment,  the  trustee  advertised  and  sold  and  conveyed  the 
premises  to  Mrs.  Caywood,  the  then  holder  of  the  note.  The 
deed  of  trust  and  the  note  were  offered  and  read  in  evidence  with- 
out objection.  To  the  admission  of  the  trustee's  deed  from  Mr. 
to  Mrs.  Caywood,  counsel  for  the  defendant  in  the  lower  court 
objected,  on  the  sole  ground  that.it  was  a  deed  executed  by  a 
husband  to  his  wife.  This  objection  was  overruled,  the  deed 
admitted  in  evidence,  and  an  exception  taken.  The  admission 
of  the  deed  in  evidence  is  assigned  for  error. 

This  brings  us  to  the  consideration  of  the  question  of  the 
relation  of  husband  and  wife  under  the  laws  of  this  State,  with 
respect  to  the  independent  acquisition,  enjoyment,  and  disposition 
of  property.  The  general  tendency  of  legislation  in  this  country 
has  been  to  make  husband  and  wife  equal  in  all  respects  in  the 
eye  of  the  law,  to  secure  to  each,  untrammelled  by  the  other,  the 
full  and  free  enjoyment  of  his  or  her  proprietary  rights,  and  to 
confer  upon  each  the  absolute  dominion  over  the  property  owned 
by  them  respectively.  The  legislation  of  our  own  State  upon  this 
subject,  although  yet  somewhat  crude  and  imperfect,  has  doubt- 


234  FORMATION  OF  CONTRACT.  [Pakt  U. 

less  been  animated  by  a  growing  sense  of  the  unjustly  subordinate 
position  assigned  to  married  women  by  the  common  law,  whose 
asperities  are  gradually  softening  and  yielding  to  the  demands  of 
this  enlightened  and  progressive  age.  The  benignant  principles 
of  the  civil  law  are  being  slowly  but  surely  grafted  into  our 
system  of  jurisprudence.  "In  the  civil  law,"  says  Sir  William 
Blackstone  (1  Blackstone' s  Com.  [Cooley]  444),  "husband  and 
wife  are  considered  as  two  distinct  persons,  and  may  have  separate 
estates,  contracts,  debts,  and  injuries,  and,  therefore,  in  our 
ecclesiastical  courts,  a  woman  may  sue  and  be  sued  without  her 
husband." 

The  courts, — which  have  ever  been  conservative,  and  which  have 
always  been  inclined  to  check,  with  an  unsparing  hand,  any 
attempt  at  departure  from  the  principles  of  the  body  of  our  law, 
which  were  borrowed  from  England, —  in  the  States  which  were  the 
&st  to  pass  enactments  for  the  enlargement  of  the  rights  of 
married  women,  regarding  such  enactments  as  a  violent  innova- 
tion upon  the  common  law,  construed  them  in  a  spirit  so  narrow 
and  illiberal  as  to  almost  entirely  defeat  the  intention  of  the 
law-makers ;  but  generally  with  a  promptness  that  left  little  room 
for  doubt,  a  succeeding  legislature  would  reassert,  in  a  more 
unequivocal  form,  the  same  principles  which  the  courts  had 
before  almost  expounded  out  of  existence.  To  understand  the 
marked  changes  which  our  own  legislation  has  wrought  in  this 
respect,  it  is  necessary  that  we  should  consider  some  of  the 
•disabling  incidents  and  burdens  attendant  upon  coverture  at  com- 
mon law.  At  common  law  the  husband  and  wife  are  one  person, 
and  as  to  every  contract  there  must  be  two  parties,  it  followed 
that  they  could  enter  into  no  contract  with  each  other.  "  The  very 
being  or  legal  existence  of  the  woman  is  suspended  during  the 
marriage,  or  at  least  is  incorporated  and  consolidated  into  that  of 
the  husband,  under  whose  wing,  protection,  and  cover  she  per- 
forms everything."  "Upon  the  principle  of  an  union  of  person 
in  husband  and  wife  depend  almost  all  the  legal  rights,  duties, 
and  disabilities  that  either  of  them  acquire  by  marriage."  1 
Cooley^s  Blackstone,  442. 

All  the  personal  estate,  as  money,  goods,  cattle,  household 
furniture,  etc.,  that  were  the  property  and  in  possession  of  the 


Chap.  III.  §  5.]  CAPACITY  OF  PARTIES.  236 

wife  at  the  time  of  tlie  marriage,  are  actually  vested  in  the  hus- 
band, so  that  of  these  he  might  make  any  disposition  in  his  life- 
time, without  her  consent,  or  might  by  will  devise  them,  and 
they  would,  without  any  such  disposition,  go  to  the  executors  or 
administrators  of  the  husband  and  not  to  the  wife,  though  she 
survive  him.  Debts  due  to  the  wife  are  so  far  vested  in  the  hus- 
band that  he  may,  by  suit,  reduce  them  to  possession.  2  Bacon's 
Abridgment,  21.  The  rents  ajid  profits  of  her  land  during  cover- 
ture belonged  to  the  husband. 

The  law  Avrested  from  the  wife  both  her  personal  estate  and 
the  profits  of  her  realty,  however  much  it  might  be  against  her 
will,  and  made  them  liable  for  his  debts. 

An  improvident  husband  had  it  in  his  power  to  impoverish  the 
wife  by  dissipating  her  personal  estate,  and  the  profits  of  her 
realty  over  which  she,  under  the  law,  by  reason  of  the  coverture, 
had  no  control. 

The  wife  in  Colorado  is  the  wife  under  our  statutes,  and  not 
the  wife  at  common  law,  and  by  our  statutes  must  her  rights  be 
determined,  the  common  law  affecting  her  rights,  as  we  shall 
presently  see,  having  been  swept  away. 

By  our  laws  it  was  declared  that  the  property,  real  and  per- 
sonal, which  any  woman  may  own  at  the  time  of  her  marriage, 
and  the  rents,  issues,  profits,  and  proceeds  thereof,  and  any  real, 
personal,  or  mixed  property  that  shall  come  to  her  by  descent, 
devise,  or  bequest,  or  be  the  gift  of  any  person  except  her  hus- 
band, shall  remain  her  sole  and  separate  property,  notwithstand- 
ing her  marriage,  and  not  be  subject  to  the  disposal  of  her 
husband  or  liable  for  his  debts.     R.  S.  1868,  p.  454. 

The  legislature,  however,  being  reluctant  to  allow  a  married 
woman  the  absolute  dominion  over  her  own  real  property,  further 
provided  that  she  could  only  convey  her  estate  in  lands  by  unit^ 
ing  with  her  husband  in  any  conveyance  thereof,  and  acknowl- 
edging the  same  separate  and  apart  from  her  husband.  R.  S. 
1868,  p.  Ill,  §  17. 

It  was  not  to  be  expected  that  our  laws  would  long  be  permitted 
to  remain  in  this  anomalous  and  incongruous  condition,  declaring 
in  one  section  that  the  wife's  real  property  should  remain  her 
separate  estate,  not  subject  to  disposal  by  her  husband,  and  in 


236  FORMATION  OF  CONTRACT.  [Part  IL 

another  that  she  could  not  convey  it  without  the  consent  of  her 
husband,  which  is  necessarily  implied  by  his  uniting  in  a  deed 
with  her. 

By  "an  act  concerning  married  women,"  approved  February  12, 
1874,  it  is  provided  in  section  1,  that  any  woman,  while  married, 
may  bargain,  sell,  and  convey  real  and  personal  property,  and 
enter  into  any  contract  in  reference  to  the  same,  as  if  she  were 
sole.  Section  2  provides  that  she  may  sue  and  be  sued,  in  all 
matters,  the  same  as  if  she  were  sole.  Section  3  provides  that  she 
may  contract  debts  in  her  own  name,  and  upon  her  own  credit, 
and  may  execute  promissory  notes,  bonds,  and  bills  of  exchange, 
and  other  instruments  in  writing,  and  may  enter  into  any  contract 
the  same  as  if  she  were  sole.  Section  4  repeals  section  17  of 
chapter  17  of  the  Revised  Statutes,  which  required  the  husband 
to  unite  with  the  wife  in  conveying  her  separate  estate.  This  is, 
essentially,  an  enabling  statute,  and  as  such  must  be  liberally 
construed  to  effectuate  the  purpose  of  its  enactment.  It  confers, 
in  terms,  enlarged  rights  and  powers  upon  married  women.  In 
contemplation  of  this  statute,  whatever  may  be  the  actual  fact, 
a  feme  covert  is  no  longer  sub  potestate  viri  in  respect  to  the 
acquisition,  enjoyment,  and  disposition  of  real  and  personal 
property.  This  statute  asserts  her  individuality,  and  emanci- 
pates her,  in  the  respects  within  its  purview,  from  the  condition 
of  thraldom  in  which  she  was  placed  by  the  common  law.  The 
legal  theoretical  unity  of  husband  and  wife  is  severed  so  far  as  is 
necessary  to  carry  out  the  declared  will  of  the  law-making  power. 
With  her  own  property  she,  as  any  other  individual  who  is  sui 
juris,  can  do  what  she  will,  without  reference  to  any  restraints  or 
disabilities  of  coverture.  Whatever  incidents,  privileges,  and 
profits  attach  to  the  dominion  of  property,  when  exercised  by 
others,  attach  to  it  in  her  hands.  Before  this  statute  her  right 
to  convey  was  not  untrammelled,  but  now  it  is  absolute  without 
any  qualification  or  limitation  as  to  who  shall  be  the  grantee. 
Husband  and  wife  are  made  strangers  to  each  other's  estates. 
There  are  no  words  in  the  act  that  prohibit  her  from  making  a 
conveyance  directly  to  her  husband,  and  it  is  not  within  the 
province  of  the  court  to  supply  them. 

When  a  right  is  conferred  on  an  individual,  the  court  cannot, 


Chap.  III.  §  5.}  CAPACITY  OF  PARTIES.  237 

without  transcending  its  legitimate  functions,  hamper  its  exercise 
by  imposing  limitations  and  restrictions  not  found  in  the  act 
conferring  it.  Were  we  to  construe  this  enabling  statute  so  as 
to  deprive  the  wife  of  the  right  to  elect  to  whom  she  will  convey 
her  property,  we  would,  it  is  believed,  thwart  the  legislative  will 
whose  wisdom  we,  as  a  court,  are  not  permitted  to  question.  The 
disability  of  husband  and  wife  to  contract  with  and  convey  to 
each  other  was,  at  common  law,  correlated  and  founded  mainly 
upon  the  same  principle,  viz.,  the  unity  of  haron  and  femme. 
The  removal  in  respect  to  the  wife,  of  a  disability  that  is  mutual 
and  springing  from  the  same  source,  removes  it  also  as  to  the 
husband. 

The  reason,  which  is  the  spirit  and  soul  of  the  law,  cannot 
apply  to  the  husband,  as  it  no  longer  applies  to  the  wife.  If  she 
may  convey  to  the  husband,  the  husband  may  convey  to  the  wife. 
Allen  V.  Hooper,  50  Me.  371;  Stone  v.  Gazzam,  46  Ala.  269; 
Burdeno  v.  Amperse,  14  Mich.  91;  Patten  v.  Patten,  75  111.  446. 

Perhaps  the  right  of  the  husband  when  acting  in  a  representa- 
tive capacity  in  autre  droit  to  make  a  deed  to  his  wife  might  be 
supported  at  common  law.  Co.  Litt.  112  a,  187  6;  Com.  Dig., 
Baron  and  Femme,  D.  1.  This  doctrine,  however,  is  repudiated 
in  New  York  (Leitch  v.  Wells,  48  Barb.  654)  but  sanctioned  in 
Pennsylvania.     Dundas'  Appeal,  64  Pa.  St.  332. 

We,  however,  rest  our  decision,  not  upon  this  mooted  doctrine, 
but  broadly  upon  the  statute,  under  which  a  husband,  when  act- 
ing not  in  a  representative  capacity,  but  in  his  own  right,  has, 
;as  we  have  seen,  the  right  to  convey  directly  to  the  wife. 
«  «  .  «  •  « 

The  court  did  not  err  in  excluding  the  deed  from  Benson  and 
wife  to  Wells.  As  we  discover  no  error  in  the  record,  the  judg- 
ment of  the  court  below  must  be  affirmed. 

Affirmed.^ 

1  For  a  case  showing  the  conservative  attitude  in  some  jurisdictions  towards 
such  married  women's  enabling  acts  as  are  apparently  most  sweeping  in 
terms,  see  Seattle  Board  of  Trade  v.  Hayden,  4  Wash,  (State)  263  (1892). 


238  FORMATION  OF  CONTRACT.  [Past  U. 


CHAPTER   IV. 

REALITY    OF    CONSENT. 
§  1.   Mistake. 
(».)  Mistake  as  to  the  nature,  or  as  to  the  existence  of  the  contract. 

WALKER  V.   EBERT. 
29  WISCONSIN,  194.— 1871. 

Action  on  a  promissory  note,  by  a  holder,  who  claims  to  have 
purchased  it  for  full  value,  before  maturity.  Verdict  for  plaintiff. 
Defendant  appeals. 

Dixon,  C.  J.  The  defendant,  having  properly  alleged  the 
same  facts  in  his  answer,  offered  evidence  and  proposed  to  prove 
by  himself  as  a  witness  on  the  stand,  that  at  the  time  he  signed 
the  supposed  note  in  suit,  he  was  unable  to  read  or  write  the 
English  language ;  that  when  he  signed  the  same,  it  was  repre- 
sented to  him  as,  and  he  believed  it  was,  a  certain  contract  of  an 
entirely  different  character,  which  contract  he  also  offered  to 
produce  in  evidence ;  that  the  contract  offered  to  be  produced  was 
a  contract  appointing  him,  defendant,  agent  to  sell  a  certain 
patent  right,  and  no  other  or  different  contract,  and  not  the  note 
in  question;  and  that  the  supposed  note  was  never  delivered  by 
the  defendant  to  any  one.  It  was  at  the  same  time  stated  that 
the  defendant  did  not  claim  to  prove  that  the  plaintiff  did  not 
purchase  the  supposed  note  before  maturity  and  for  value.  To 
this  evidence  the  plaintiff  objected,  and  the  objection  was  sus- 
tained by  the  court,  and  the  evidence  excluded,  to  which  the 
defendant  excepted;  and  this  presents  the  only  question. 

We  think  it  was  error  to  reject  the  testimony.  The  two  cases 
cited  by  counsel  for  the  defendant  (Foster  v.  McKinnon,  L.  R. 
4  C.  P.  704,  and  Whitney  v.  Snyder,  2  Lansing,  477)  are  very 
clear  and  explicit  upon  the  point,  and  demonstrate,  as  it  seems 


Chap.  IV.  §1.]  REALITY  OF  CONSENT:   MISTAKE.  239 

to  US,  beyond  any  rational  doubt,  the  invalidity  of  such  paper, 
even  in  the  hands  of  a  holder  for  value,  before  maturity,  without 
notice.  The  party  whose  signature  to  such  a  paper  is  obtained 
by  fraud  as  to  the  character  of  the  paper  itself,  who  is  ignorant  of 
such  character,  and  has  no  intention  of  signing  it,  and  who  is 
guilty  of  no  negligence  in  affixing  his  signature,  or  in  not  ascer- 
taining the  character  of  the  instrument,  is  no  more  bound  by  it 
than  if  it  were  a  total  forgery,  the  signature  included. 

The  reasoning  of  the  above  cases  is  entirely  satisfactory  and 
conclusive  upon  this  point.  The  inquiry  in  such  cases  goes  back 
of  all  questions  of  negotiability,  or  of  the  transfer  of  the  supposed 
paper  to  a  purchaser  for  value,  before  maturity  and  without 
notice.  It  challenges  the  origin  or  existence  of  the  paper  itself; 
and  the  proposition  is,  to  show  that  it  is  not  in  law  or  in  fact 
what  it  purports  to  be,  namely,  the  promissory  note  of  the  sup- 
posed maker.  For  the  purpose  of  setting  on  foot  or  pursuing 
this  inquiry,  it  is  immaterial  that  the  supposed  instrument  is 
negotiable  in  form,  or  that  it  may  have  passed  to  the  hands  of  a 
bonajide  holder  for  value.  Negotiability  in  such  cases  presup- 
poses the  existence  of  the  instrument  as  having  been  made  by  the 
party  whose  name  is  subscribed;  for,  until  it  has  been  so  made 
and  has  such  actual  legal  existence,  it  is  absurd  to  talk  about  a 
negotiation,  or  transfer,  or  bona  fide  holder  of  it,  within  the 
meaning  of  the  law  merchant.  That  which,  in  contemplation  of 
law,  never  existed  as  a  negotiable  instrument,  cannot  be  held  to 
be  such;  and  to  say  that  it  is,  and  has  the  qualities  of  negotia- 
bility, because  it  assumes  the  form  of  that  kind  of  paper,  and 
thus  to  shut  out  all  inquiry  into  its  existence,  or  whether  it  is 
really  and  truly  what  it  purports  to  be,  is  petitio  principii  —  beg- 
ging the  question  altogether.  It  is,  to  use  a  homely  phrase, 
putting  the  cart  before  the  horse,  and  reversing  the  true  order  of 
reasoning,  or  rather  preventing  all  correct  reasoning  and  investi- 
gation, by  assuming  the  truth  of  the  conclusion,  and  so  precluding 
any  inquiry  into  the  antecedent  fact  or  premise,  which  is  the  first 
point  to  be  inquired  of  and  ascertained.  For  the  purposes  of 
this  first  inquiry,  which  must  be  always  open  when  the  objection 
is  raised,  it  is  immaterial  what  may  be  the  nature  of  the  supposed 
instrument,  whether  negotiable  or  not,  or  whether  transferred  or 


240  FORMATION  OF  CONTRACT.  [Part  II. 

negotiated,  or  to  whom  or  in  what  manner,  or  for  what  considera- 
tion or  value  paid  by  the  holder.  It  must  always  be  competent 
for  the  party  proposed  to  be  charged  upon  any  written  instru- 
ment, to  show  that  it  is  not  his  instrument  or  obligation.  The 
principle  is  the  same  as  where  instruments  are  made  by  persons 
having  no  capacity  to  make  binding  contracts;  as,  by  infants, 
married  women,  or  insane  persons;  or  where  they  are  void  for 
other  cause,  as,  for  usury ;  or  where  they  are  executed  as  by  an 
agent,  but  without  authority  to  bind  the  supposed  principal.  In 
these  and  all  like  cases,  no  additional  validity  is  given  to  the 
instrument  by  putting  them  in  the  form  of  negotiable  paper.  See 
Veeder  v.  Town  of  Lima,  19  Wis.  297  to  299,  and  authorities  there 
cited.     See  also  Thomas  v.  Watkins,  16  Wis.  549. 

And  identical  in  principle,  also,  are  those  cases  under  the 
registry  laws  where  the  bonajide  purchaser  for  value  of  land  has 
been  held  not  to  be  protected  when  the  recorded  deed  under 
which  he  purchased  and  claims  turns  out  to  have  been  procured 
by  fraud  as  to  the  signature,  or  purloined  or  stolen,  or  was  a 
forgery  and  the  like.  See  Everts  v.  Agnes,  4  Wis.  343,  and  the 
remarks  of  this  court,  pp.  351-353  inclusive. 

In  the  case  first  above  cited,  the  defendant  was  induced  to  put 
his  name  upon  the  back  of  a  bill  of  exchange  by  the  fraudulent 
representation  of  the  acceptor  that  he  was  signing  a  guaranty. 
In  an  action  against  him  as  indorser,  at  the  suit  of  a  bonajide 
holder  for  value,  the  Lord  Chief  Justice,  Boville,  directed  the 
jury  that,  "If  the  defendant's  signature  to  the  document  was 
obtained  upon  a  fraudulent  representation  that  it  was  a  guaranty, 
and  the  defendant  signed  it  without  knowing  that  it  was  a  bill, 
and  under  the  belief  that  it  was  a  guaranty,  and  if  he  was  not 
guilty  of  any  negligence  in  so  signing  the  paper,  he  was  entitled 
to  the  verdict;  "  and  this  direction  was  held  proper.  In  deliver- 
ing the  judgment  of  the  court  upon  a  rule  nisi  for  a  new  trial, 
Byles,  J.,  said: 

"  The  case  presented  by  the  defendant  is  that  he  never  made  the  con- 
tract declared  on ;  that  he  never  saw  the  face  of  the  bill ;  that  the  purport 
of  the  contract  was  fraudulently  misdescribed  to  him ;  that  when  he 
signed  one  thing,  he  was  told  and  believed  he  was  signing  another 
and  entirely  different  thing ;  and  that  his  mind  never  went  with  his  act 


Chap.  IV.  §1.]  REALITY  OF  CONSENT:   MISTAKE.  241 

It  seems  plain  on  principle  and  on  authority  that  if  a  blind  man,  or  a 
man  who  cannot  read,  or  for  some  reason  (not  implying  negligence) 
forbears  to  read,  has  a  written  contract  falsely  read  over  to  him,  the 
reader  misreading  to  such  a  degree  that  the  written  contract  is  of  a 
nature  altogether  different  from  the  contract  pretended  to  be  read  from 
the  paper,  which  the  blind  or  illiterate  man  afterwards  signs,  then  at 
least,  if  there  be  no  negligence,  the  signature  so  obtained  is  of  no  force ; 
and  it  is  invalid  not  merely  on  the  ground  of  fraud,  where  fraud  exists, 
but  on  the  ground  that  the  mind  of  the  signer  did  not  accompany  the 
signature ;  in  other  words,  that  he  never  intended  to  sign,  and  therefore, 
in  contemplation  of  law,  never  did  sign  the  contract  to  which  his  name 
is  appended." 

And  again,  after  remarking  the  distinction  between  the  case 
under  consideration  and  those  where  a  party  has  written  his 
name  upon  a  blank  piece  of  paper,  intending  that  it  should  after- 
wards be  filled  up,  and  it  is  improperly  so  filled,  or  for  a  larger 
sum,  or  where  he  has  written  his  name  upon  the  back  or  across 
the  face  of  a  blank  bill-stamp,  as  indorser  or  acceptor,  and  that 
has  been  fraudulently  or  improperly  filled,  or  in  short,  where, 
under  any  circumstances,  the  party  has  voluncarily  affixed  his 
signature  to  commercial  paper,  knowing  what  he  was  doing  and 
intending  the  same  to  be  put  in  circulation  as  a  negotiable  security, 
and  after  also  showing  that  in  all  such  cases  the  party  so  signing 
will  be  liable  for  the  full  amount  of  the  note  or  bill,  when  it  has 
once  passed  into  the  hands  of  an  innocent  indorsee  or  holder,  for 
value  before  maturity,  and  that  such  is  the  limit  of  the  protec- 
tion afforded  to  such  an  indorsee  or  holder,  the  learned  judge 
proceeded : 

"  But  in  the  case  now  under  consideration,  the  defendant,  according 
to  the  evidence,  if  believed,  and  the  finding  of  the  jury,  never  intended 
to  indorse  a  bill  of  exchange  at  all,  but  intended  to  sign  a  contract  of  an 
entirely  different  nature.  It  was  not  his  design,  and,  if  he  were  guilty 
of  no  negligence,  it  was  not  even  his  fault  that  the  instrument  he  signed 
turned  out  to  be  a  bill  of  exchange.  It  was  as  if  he  had  written  his  name 
on  a  sheet  of  paper  for  the  purpose  of  franking  a  letter,  or  in  a  lady's 
album,  or  an  order  for  admission  to  Temple  Church,  or  on  the  fly-leaf 
of  a  book,  and  there  had  already  been  without  his  knowledge  a  bill  of 
exchange  or  a  promissory  note  payable  to  order  inscribed  on  the  other 
side  of  the  paper.  To  make  the  case  clearer,  suppose  the  bill  or  note  on 
the  other  side  of  the  paper  in  each  of  these  cases  to  be  written  at  a  time 
subsequent  to  the  signature,  then  the  fraudulent  misapplication  of  that 


242  FORMATION  OF  CONTRACT.  [Pabt  II. 

genuine  signature  to  a  different  purpose  would  have  been  a  counterfeit 
alteration  of  a  writing  with  intent  to  defraud,  and  would  therefore  have 
amounted  to  a  forgery.  In  that  case  the  signer  would  not  have  been 
bound  by  his  signature  for  two  reasons ;  first,  that  he  never  in  fact 
signed  the  writing  declared  on,  and  secondly,  that  he  never  intended  to 
sign  any  such  contract. 

"  In  the  present  case  the  first  reason  does  not  apply,  but  the  second 
does  apply.  The  defendant  never  intended  to  sign  that  contract,  or  any 
such  contract.  He  never  intended  to  put  his  name  to  any  instrument 
that  then  was  or  thereafter  might  become  negotiable.  He  was  deceived 
not  merely  as  to  the  legal  effect,  but  as  to  the  actual  contents  of  the 
instrument." 

The  other  case  first  above  cited,  Wliitney  v.  Snyder,  was  in  all 
respects  like  the  present,  a  suit  upon  a  promissory  note  by  the 
purchaser  before  maturity,  for  value,  against  the  maker;  and  the 
facts  offered  to  be  proved  in  defense  were  the  same  as  here ;  and 
it  was  held  that  the  evidence  should  have  been  admitted. 

In  Nance  v.  Lary  (5  Ala.  370)  it  was  held  that  where  one 
writes  his  name  on  a  blank  piece  of  paper,  of  which  another 
takes  possession  without  authority  therefor,  and  writes  a  promissory 
note  above  the  signature,  which  he  negotiates  to  a  third  person, 
who  is  ignorant  of  the  circumstances,  the  former  is  not  liable  as 
the  maker  of  the  note  to  the  holder.  In  that  case  the  note  was 
written  over  the  signature  by  one  Langford,  and  by  him  negotiated 
to  the  plaintiff  in  the  action,  who  sued  the  defendant  as  maker. 
Collier,  C.  J.,  said: 

"  The  making  of  the  note  by  Langford  was  not  a  mere  fraud  upon 
the  defendant ;  it  was  something  more.  It  was  quite  as  much  a  forgery 
as  if  he  had  found  the  blank  or  purloined  it  from  the  defendant's  posses- 
sion. If  a  recovery  were  allowed  upon  such  a  state  of  facts,  tlien  every 
one  who  ever  indulges  in  the  idle  habit  of  writing  his  name  for  mere 
pastime,  or  leaves  sufl&cient  space  between  a  title  and  his  subscription, 
might  be  made  a  bankrupt  by  having  promises  to  pay  money  written  over 
his  signature.  Such  a  decision  would  be  alarming  to  the  community,  has 
DO  warrant  in  law,  and  cannot  receive  our  sanction." 

And  in  Putnam  v.  Sullivan  (4  Mass.  54)  Chief  Justice  Parsons 
said: 

"  The  counsel  for  the  defendants  agree  that  generally  an  indorsement 
obtained  by  fraud  will  hold  the  indorsers  according  to  the  terms  of  it, 
but  they  make  a  distinction  between    the    cases  where   the  indorser, 


Chap.  TV.  1 1.1  REALITY  OF  CONSENT :  MISTAKE.  248 

through  fraudulent  pretenses,  has  been  induced  to  indorse  the  note  he  is 
called  on  to  pay,  and  where  he  never  intended  to  indorse  a  note  of  that  descrip- 
tion, but  a  different  note  and  for  a  different  purpose.  Perhaps  there  may  be 
cases  in  which  this  distinction  ought  to  prevail.  As,  if  a  blind  man  fiad  a 
note  falsely  and  fraudulently  read  to  him,  and  he  indorsed  it,  supposing  it  to 
be  the  note  read  to  him.  But  we  are  satisfied  that  an  indorser  cannot  avail 
himself  of  this  distinction,  but  in  cases  where  he  is  not  chargeable  with  any 
laches  or  neglect  or  misplaced  confidence  in  others."  See  also  1  Parsons  on 
Notes  and  Bills,  110  to  114,  and  cases  cited  in  notes. 

The  judgment  below  must  be  reversed,  and  a  venire  de  novo 
awarded.    By  the  court.    It  is  so  ordered.^ 


(ii.)  Mistake  as  to  the  identity  of  the  person  with  whom  the 
contract  is  made. 

BOSTON  ICE  CO.  v.  POTTER. 

123  MASSACHUSETTS,  28.— 1877. 

Contract  on  an  account  annexed,  for  ice  sold  and  delivered 
between  April  1,  1874,  and  April  1,  1875.  Answer,  a  general  de- 
nial.   Judgment  for  defendant.     Plaintiff  alleged  exceptions. 

Endicott,  J.  To  entitle  the  plaintiff  to  recover,  it  must  show 
some  contract  with  the  defendant.  There  was  no  express  contract, 
and  upon  the  facts  stated  no  contract  is  to  be  implied.  The  de- 
fendant had  taken  ice  from  the  plaintiff  in  1873,  but,  on  account 
of  some  dissatisfaction  with  the  manner  of  supply,  he  terminated 
his  contract,  and  made  a  contract  for  his  supply  with  the  Citizens' 
Ice  Company.  The  plaintiff  afterward  delivered  ice  to  the  defend- 
ant for  one  year  without  notifying  the  defendant,  as  the  presiding 
judge  has  found,  that  it  had  bought  out  the  business  of  the  Citi- 
zens' Ice  Company,  until  after  the  delivery  and  consumption  of 
the  ice. 

The  presiding  judge  has  decided  that  the  defendant  had  a  right 
to  assume  that  the  ice  in  question  was  delivered  by  the  Citizens' 

'  See  also  Phillip  v.  Gallant,  62  N.  Y.  256  ;  Oibhs  v.  Lindbury,  22  Mich. 
479 ;  De  Camp  v.  Hamma,  29  Ohio  St.  467.  As  to  effect  of  negligence  in 
case  of  negotiable  instruments,  see  Chapman  v.  Hose,  56  N.  Y.  137.  Cf. 
Bedell  v.  Herring,  77  Cal.  573. 


244  FORMATION   OF   CONTRACT.  [Part  II. 

Ice  Company,  and  has  thereby  necessarily  found  that  the  defend- 
ant's contract  with  that  company  covered  the  time  of  the  delivery 
of  the  ice. 

There  was  no  privity  of  contract  established  between  the  plain- 
tiff and  defendant,  and  without  such  privity  the  possession  and 
use  of  the  property  will  not  support  an  implied  assumpsit.  Hills 
V.  Snell,  104  Mass.  173,  177.  And  no  presumption  of  assent  can 
be  implied  from  the  reception  and  use  of  the  ice,  because  the 
defendant  had  no  knowledge  that  it  was  furnished  by  the  plaintiff, 
but  supposed  that  he  received  it  under  the  contract  made  with  the 
Citizens'  Ice  Company.  Of  this  change  he  was  entitled  to  be 
informed. 

A  party  has  a  right  to  select  and  determine  with  whom  he  will 
contract,  and  cannot  have  another  person  thrust  upon  him  with- 
out his  consent.  If  may  be  of  importance  to  him  who  performs 
the  contract,  as  when  he  contracts  with  another  to  paint  a  picture, 
or  write  a  book,  or  furnish  articles  of  a  particular  kind,  or  when 
he  relies  upon  the  character  or  qualities  of  an  individual,  or  has, 
as  in  this  case,  reasons  why  he  does  not  wish  to  deal  with  a 
particular  party.  In  all  these  cases,  as  he  may  contract  with 
whom  he  pleases,  the  sufficiency  of  his  reasons  for  so  doing  cannot 
be  inquired  into.  If  the  defendant,  before  receiving  the  ice,  or 
during  its  delivery,  had  received  notice  of  the  change,  and  that 
the  Citizens'  Ice  Company  could  no  longer  perform  its  contract 
with  him,  it  would  then  have  been  his  undoubted  right  to  have 
rescinded  the  contract  and  to  decline  to  have  it  executed  by  the 
plaintiff.  But  this  he  was  unable  to  do,  because  the  plaintiff 
failed  to  inform  him  of  that  which  he  had  a  right  to  know. 
Orcutt  V.  Nelson,  1  Gray,  536,  542;  Winchester  v.  Howard,  97 
Mass.  303;  Hardman  v.  Booth,  1  H.  &  C.  803;  Humhle  v.  Hunter, 
12  Q.  B.  310;  Rohson  v.  Drummond,  2  B.  &  Ad.  303.  If  he  had 
received  notice  and  continued  to  take  the  ice  as  delivered,  a  con- 
tract would  be  implied.  Mudge  v.  Oliver,  1  Allen,  74;  Orcutt  v. 
Nelson,  uhi  supra;  Mitchell  v.  Lapage,  Holt  N.  P.  253. 

There  are  two  English  cases  very  similar  to  the  case  at  bar. 
In  Schmaling  v.  Thomlinson  (6  Taunt.  147)  a  firm  was  employed 
by  the  defendants  to  transport  goods  to  a  foreign  market,  and 
transferred  tne  entire  employment  to  the  plaintiff,  who  performed 


(3hap.  IV.  §  1.]  REALITY  OF  CONSENT:  MISTAKE.  245 

it  without  the  privity  of  the  defendants,  and  it  was  held  that  he 
could  not  recover  compensation  for  his  services  from  the  de- 
fendants. 

The  case  of  Boulton  v.  Jones  (2  H.  &  N.  564)  was  cited  by 
both  parties  at  the  argument.  There  the  defendant,  who  had 
been  in  the  habit  of  dealing  with  one  Brocklehurst,  sent  a  written 
order  to  him  for  goods.  The  plaintiff,  who  had  on  the  same  day 
bought  out  the  business  of  Brocklehurst,  executed  the  order 
without  giving  the  defendant  notice  that  the  goods  were  supplied 
by  him  and  not  by  Brocklehurst.  And  it  was  held  that  the 
plaintiff  could  not  maintain  an  action  for  the  price  of  the  gpods 
against  the  defendant.  It  is  said  in  that  case  that  the  defendant 
had  a  right  of  set-off  against  Brocklehurst,  with  whom  he  had  a 
running  account,  and  that  is  alluded  to  in  the  opinion  of  Baron 
Bramwell,  though  the  other  judges  do  not  mention  it. 

The  fact  that  a  defendant  in  a  particular  case  has  a  claim  in 
set-off  against  the  original  contracting  party  shows  clearly  the 
injustice  of  forcing  another  person  upon  him  to  execute  the  con- 
tract without  his  consent,  against  whom  his  set-off  would  not  be 
available.  But  the  actual  existence  of  the  claim  in  set-off  cannot 
be  a  test  to  determine  that  there  is  no  implied  assumpsit  or 
privity  between  the  parties.  Nor  can  the  non-existence  of  a 
set-off  raise  an  implied  assumpsit.  If  there  is  such  a  set-off,  it 
is  sufficient  to  state  that  as  a  reason  why  the  defendant  should 
prevail;  but  it  by  no  means  follows  that  because  it  does  not  exist 
the  plaintiff  can  maintain  his  action.  The  right  to  maintain  an 
action  can  never  depend  upon  whether  the  defendant  has  or  has 
not  a  defense  to  it. 

The  implied  assumpsit  arises  upon  the  dealings  between  the 
parties  to  the  action,  and  cannot  arise  upon  the  dealings  between 
the  defendant  and  the  original  contractor,  to  which  the  plaintiff 
was  not  a  party.  At  the  same  time,  the  fact  that  the  right  of 
set-off  against  the  original  contractor  could  not,  under  any  cir- 
cumstances, be  availed  of  in  an  action  brought  upon  the  contract 
by  the  person  to  whom  it  was  transferred  and  who  executed  it, 
shows  that  there  is  no  privity  between  the  parties  in  regard  to 
the  subject  matter  of  this  action. 

It  is,  therefore,  immaterial  that  the  defendant  had  no  claim  in 
set-off  against  the  Citizens'  Ice  Company. 


246  FORMATION  OF  CONTRACT.  [Pabt  U. 

We  are  not  called  upon  to  determine  what  other  remedy  the 
plaintiff  has,  or  what  would  be  the  rights  of  the  parties  if  the 
ice  were  now  in  existence. 

Exceptions  overruled. 


(m.)   Mistake  as  to  the  subject  matter, 
a.  Mistake  of  identity  as  to  the  thing  contracted  for. 

KYLE  V.    KAVANAGH. 

103  MASSACHUSETTS,  356.— 1869. 

Contract  to  recover  the  price  of  land  sold  and  conveyed  to  the 
defendant,  pursuant  to  the  following  agreement : 

"Boston,  July  2,  1868.  I  hereby  agree  to  sell  to  E.  Kavanagh  four 
lota  pf  land  in  Waltham  on  Prospect  Street,  so  called,  for  50  shares  of 
Mitchell  Granite  stock,  9000  shares  of  Revenue  Gold  stock,  also  ^150  in 
lawful  money  for  said  land.  Said  Kyle  is  to  give  said  Kavanagh  a  good 
title,  if  the  title  is  in  said  Kyle,  so  he  can  give  deed ;  if  said  Kyle  cannot 
gfive  a  good  title,  then  this  agreement  is  null  and  void." 

The  defendant  contended  and  introduced  evidence  tending  to 
show  that,  either  by  the  fraud  or  misrepresentation  of  the  plain- 
tiff, or  by  mistake,  the  land  conveyed  by  the  deed  was  not  the 
land  which  he  bargained  for,  and  that  what  he  had  agreed  to 
purchase  was  a  lot  of  land  on  another  Prospect  Street  in  Wal- 
tham, in  no  way  connected  with  that  mentioned  in  the  deed,  and 
a  long  way  off;  and  he  also  contended  that  he  was  entitled  to  a 
warranty  deed.     Verdict  for  defendant. 

Morton,  J.  .  .  .  The  other  exception  taken  by  the  plaintiff 
cannot  be  sustained.  The  instructions  given  were,  in  substance, 
that,  if  the  defendant  was  negotiating  for  one  thing  and  the 
plaintiff  was  selling  another  thing,  and  their  minds  did  not  agree 
as  to  the  subject  matter  of  the  sale,  there  would  be  no  contract 
by  which  the  defendant  would  be  bound,  though  there  was  no 
fraud  on  the  part  of  the  plaintiff.     This  ruling  is  in  accordance 


Chap.  IV.  §  1.]  REALITY  OF  CONSENT:  MISTAKE.  247 

with  the  elementary  principles  of  the  law  of  contracts,  and  was 
correct.     Spurr  v.  Benedict,  99  Mass.  463. 

Exceptions  sustained.* 


6.   Mistake  as  to  the  existence  of  the  thing  contracted  for. 
GIBSON  V.   PELKIE. 

37  MICHIGAN,  380.  — 1877. 

Assumpsit. 

Graves,  J.  The  right  Gibson  asserts  is  based  solely  on  an 
alleged  special  agreement  entitling  him  to  collect  so  much  as  he 
might  of  a  specific  judgment,  and  to  retain  one-half  of  the  sum 
collected.  According  to  his  own  statement  of  his  case,  the  judg- 
ment was  the  exclusive  subject  matter  of  the  agreement  relied 
on.  No  other  demand  or  form  of  demand  entered  into  the  bar- 
gain. The  parties  had  nothing  else  in  their  minds.  They  did 
not  assume  to  contract  about  an  unliquidated  claim  or  an  unad- 
judicated  cause  of  action,  the  enforcement  of  which  in  Pelkie's 
name  might  involve  him  in  a  much  larger  liability  than  would 
be  likely  to  attend  the  collection  of  a  judgment.  It  was  a  judg- 
ment which  formed  the  subject  matter  of  the  bargain.  Such  was 
the  claim  made  by  the  declaration  and  such  was  the  case  in  issue. 
No  other  ground  for  recovery  appears.  Now,  there  was  no  proof 
of  a  judgment;  but  there  was  evidence  concerning  one,  and  it 
seems  to  have  been  in  effect  conceded  that  there  was  something 
which  had  been  taken  to  be  a  judgment,  but  which  was  so  de- 
fective that  it  could  not  avail  anything. 

The  case  must  be  viewed  as  it  is.     It  is  not  admissible  to  arbi- 

1  (To  the  ruling  as  to  defendant's  right  to  a  warranty  deed.)  In  Hazard 
v.  New  England  Marine  Ins.  Co.  (1  Sumner,  218),  Mr.  Justice  Story  charged 
that  if  in  a  policy  of  insurance  the  insured  used  the  term  "  coppered  ship" 
in  one  sense  and  the  underwriter  in  another,  "plainly  it  would  be  a  contract 
founded  in  mutual  mistake  ;  and  therefore  neither  party  would  be  bound  by 
It.  They  would  not  have  contracted  ad  idem.  There  would  never  have 
been  an  agreement  to  the  same  subject  matter  in  the  same  sense.  This 
principle  is  so  well  known  and  so  familiar,  that  it  may  now  be  deemed  to  be 
treasured  up  among  the  elements  of  jurisprudence."  See  also  Barfield  v. 
Trice,  40  Cal.  636. 


248  FORMATION  OF  CONTRACT.  [Part  II. 

trarily  admit  one  part  and  reject  another.  If  what  there  is  to 
show  that  the  supposed  judgment  was  void  is  rejected,  then  all 
there  is  to  make  out  the  existence  of  any  such  judgment  will  be 
stricken  out,  and  if  that  be  done,  there  will  be  no  proof  whatever 
of  the  essence  of  the  cause  of  action  set  up.  There  will  be  no 
showing  that  there  was  any  subject  matter  for  the  alleged  agree- 
ment, and  no  proof  to  maintain  the  actual  averments  of  the 
declaration.  The  cause  is  presented  here  by  both  sides  upon  the 
theory  that  there  was  something  which  was  intended  as  a  judg- 
ment, but  which  was  void  and  hence  uncollectible,  and  the  plain- 
tiff in  error  cannot  ask  a  more  favorable  view  of  the  record.  If, 
then,  there  was  a  proceeding  which  was  meant  to  be  a  judgment, 
but  which  was  void,  there  was  nothing  to  which  the  actual  bar- 
gaining could  attach.  There  was  no  subject  matter.  The  par- 
ties' supposed  there  was  a  judgment,  and  negotiated  and  agreed 
on  that  basis,  but  there  was  none.  Where  they  assumed  there 
was  substance,  there  was  no  substance.  They  made  no  contract 
because  the  thing  they  supposed  to  exist,  and  the  existence  of 
which  was  indispensable  to  the  institution  of  the  contract,  had 
no  existence.  Allen  v.  Hammond,  11  Pet.  63;  Suydam  v.  Clark, 
2  Sandf.  Sup'r  Court  Rep.  133;  Gove  v.  Wooster,  Lalor's  Supp. 
to  Hill  &  Den.  30;  Smidt  v.  Tiden,  L.  R.  9  Q.  B.  446;  9  Eng. 
379;  Goxdurier  v.  Hastie,  5  H.  L.  673;  Hazard  v.  New  England 
Ins.  Co.,  1  Sumn.  218;  Silvernail  v.  Cole,  12  Barb.  685;  Sher- 
man V.  Barnard,  19  Barb.  291;  Metcalf  on  Cont.  30,  31;  1 
Poth.  Ob.  by  Evans,  113;  Benjamin  on  Sales,  §§  76,  77, 
ch.  4;  2  Kent.  Com.  468.  It  is  therefore  the  opinion  of  a 
majority  of  the  court  that  the  judgment  in  Pelkie's  favor  ought 
not  to  be  disturbed. 

Judgment  is  affirmed  with  costs.* 

"^Accord:  Allen  v.  Hammond,  11  Pet.  (U.  S.)  63;  Biegel  v.  American. 
Life  Ins.  Co.,  140  Pa.  193 ;  S.  C,  153  Pa.  134  ;  Duncan  v.  New  York  Mut. 
Ins.  Co.,  138  N.  Y.  88  ;  Bedell  v.  Wilder,  65  Vt.  406. 


Chap.  IV.  §1.]  REALITY  OF  CONSENT:  MISTAKE.  249 

SHERWOOD  V.  WALKER. 

66  MICHIGAN,  568.  — 1887. 

Morse,  J.  Replevin  for  a  cow.  Suit  commenced  in  justice's 
court.  Judgment  for  plaintiff.  Appealed  to  Circuit  Court  of 
Wayne  County,  and  verdict  and  judgment  for  plaintiff  in  that 
court.  The  defendants  bring  error,  and  set  out  twenty-five 
assignments  of  the  same. 

The  main  controversy  depends  upon  the  construction  of  a  con- 
tract for  the  sale  of  the  cow.  The  plaintiff  claims  that  the  title 
passed,  and  bases  his  action  upon  such  claim.  The  defendants 
contend  that  the  contract  was  executory,  and  by  its  terms  no  title 
to  the  animal  was  acquired  by  plaintiff. 

The  defendants  reside  at  Detroit,  but  are  in  business  at  Walker- 
ville,  Ontario,  and  have  a  farm  at  Greenfield,  in  Wayne  County, 
upon  which  were  some  blooded  cattle  supposed  to  be  barren  as 
breeders.  The  Walkers  are  importers  and  breeders  of  polled 
Angus  cattle. 

The  plaintiff  is  a  banker  living  at  Plymouth,  in  Wayne  County. 
He  called  upon  the  defendants  at  Walkerville  for  the  purchase 
of  some  of  their  stock,  but  found  none  there  that  suited  him. 
Meeting  one  of  the  defendants  afterwards,  he  was  informed  that 
they  had  a  few  head  upon  this  Greenfield  farm.  He  was  asked 
to  go  out  and  look  at  them,  with  the  statement  at  the  time  that 
they  were  probably  barren,  and  would  not  breed. 

May  5,  1886,  plaintiff  went  out  to  Greenfield  and  saw  the 
cattle.  A  few  days  thereafter,  he  called  upon  one  of  the  defend- 
ants with  the  view  of  purchasing  a  cow,  known  as  "  Rose  2d  of 
Aberlone."  After  considerable  talk,  it  was  agreed  that  defend- 
ants would  telephone  Sherwood  at  his  home  in  Plymouth  in 
reference  to  the  price.  The  second  morning  after  this  talk  he 
was  called  up  by  telephone,  and  the  terms  of  the  sale  were  finally 
agreed  upon.  He  was  to  pay  five  and  one-half  cents  per  pound, 
live  weight,  fifty  pounds  shrinkage.  He  was  asked  how  he 
intended  to  take  the  cow  home,  and  replied  that  he  might  ship 
her  from  King's  cattle-yard.  He  requested  defendants  to  con- 
firm the  sale  in  writing,  which  they  did  by  sending  him  the 
following  letter: 


250  FORMATION  OF  CONTRACT.  [Part  U. 

"  Walkerville,  May  15,  1886. 
*'  T.  C.  Sherwood,  President,  etc. 

"  Dear  Sir,  —  We  confirm  sale  to  you  of  the  cow,  Rose  2d  of  Aberlone, 
lot  56  of  our  catalogue,  at  five  and  a  half  cents  per  pound,  less  fifty  pounds 
shrink.  We  enclose  herewith  order  on  Mr.  Graham  for  the  cow.  You 
might  leave  check  with  him,  or  mail  to  us  here,  as  you  prefer. 

"  Yours  truly, 

"Hiram  Walker  &  Sons." 

The  order  upon  Graham  enclosed  in  the  letter  read  as  follows : 

"  Walkerville,  May  15,  1886. 
"  George  Graham,  —  You  will  please  deliver  at  King 's  cattle-yard  to 
Mr.  T.  C.  Sherwood,  Plymouth,  the  cow  Rose  2d  of  Aberlone,  lot  56  of 
our  catalogue.     Send  halter  with  cow,  and  have  her  weighed. 

"  Yours  truly, 

"Hiram  Walker  &  Sons." 

On  the  twenty-first  of  the  same  month  the  plaintiff  went  to 
defendants'  farm  at  Greenfield,  and  presented  the  order  and  letter 
to  Graham,  who  informed  him  that  the  defendants  had  instructed 
him  not  to  deliver  the  cow.     Soon  after,  the  plaintiff  tendered  to 
Hiram  Walker,  one  of  the  defendants,  $80,  and  demanded  the 
^  /       cow.     Walker  refused  to  take  the  money  or  deliver  the  cow. 
^/z  J  ^The  plaintiff  then  instituted  this  suit. 
,      ^/"^  After  he  had  secured  possession  of  the  cow  under  the  writ  of 
'y     'replevin,  the  plaintiff  caused  her  to  be  weighed  by  the  constable 
who  served  the  writ,  at  a  place  other  than  King's  cattle-yard. 
She  weighed  1420  pounds. 

When  the  plaintiff,  upon  the  trial  in  the  Circuit  Court,  had 
submitted  his  proofs  showing  the  above  transaction,  defendants 
moved  to  strike  out  and  exclude  the  testimony  from  the  case,  for 
the  reason  that  it  was  irrelevant,  and  did  not  tend  to  show  that 
the  title  to  the  cow  passed,  and  that  it  showed  that  the  contract 
of  sale  was  merely  executory.  The  court  refused  the  motion, 
and  an  exception  was  taken. 

The  defendants  then  introduced  evidence  tending  to  show  that 
at  the  time  of  the  alleged  sale  it  was  believed  by  both  the  plain- 
tiff and  themselves  that  the  cow  was  barren  and  would  not  breed ; 
that  she  cost  $850,  and  if  not  barren  would  be  worth  from  $750 
to  $1000;   that  after  the  date  of  the  letter,  and  the  order  to 


Chap.  IV.  §1]  REALITY  OF  CONSENT:  MISTAKE.  261 

Graham,  the  defendants  were  informed  by  said  Graham  that  in 
his  judgment  the  cow  was  with  calf,  and  therefore  they  instructed 
him  not  to  deliver  her  to  plaintiff,  and  on  the  twentieth  of  May, 
1886,  telegraphed  to  the  plaintiff  what  Graham  thought  about  the 
cow  being  with  calf,  and  that  consequently  they  could  not  sell 
her.     The  cow  had  a  calf  in  the  month  of  October  following. 

On  the  nineteenth  of  May  the  plaintiff  wrote  Graham  as 
follows : 

«  Plymouth,  May  19,  1886. 
"Mr.  George  Graham,  Greenfield. 

"  Dear  Sir,  —  I  have  bought  Rose  or  Lucy  from  Mr.  Walker,  and  will 
be  there  for  her  Friday  morning,  nine  or  ten  o'clock.  Do  not  water  her 
in  the  morning. 

"  Yours,  etc., 

"  T.  C.  Sherwood." 

Plaintiff  explained  the  mention  of  the  two  cows  in  this  letter 
by  testifying  that,  when  he  wrote  this  letter,  the  order  and  letter 
of  defendants  were  at  his  house,  and,  writing  in  a  hurry,  and 
being  uncertain  as  to  the  name  of  the  cow,  and  not  wishing  his 
cow  watered,  he  thought  it  would  do  no  harm  to  name  them  both, 
as  his  bill  of  sale  would  show  which  one  he  had  purchased. 
Plaintiff  also  testified  that  he  asked  defendants  to  give  him  a 
price  on  the  balance  of  their  herd  at  Greenfield,  as  a  friend 
thought  of  buying  some,  and  received  a  letter  dated  May  17, 1886, 
in  which  they  named  the  price  of  five  cattle,  including  Lucy  at 
$90,  and  Kose  2d  at  $80.  When  he  received  the  letter  he  called 
defendants  up  by  telephone,  and  asked  them  why  they  put  Kose 
2d  in  the  list,  as  he  had  already  purchased  her.  They  replied 
that  they  knew  he  had,  but  thought  it  would  make  no  difference 
if  plaintiff  and  his  friend  concluded  to  take  the  whole  herd. 

The  foregoing  is  the  substance  of  all  the  testimony  in  the  case. 

The  circuit  judge  instructed  the  jury  that  if  they  believed  the 
defendants,  when  they  sent  the  order  and  letter  to  plaintiff, 
meant  to  pass  the  title  to  the  cow,  and  that  the  cow  was  intended 
to  be  delivered  to  plaintiff,  it  did  not  matter  whether  the  cow  was 
weighed  at  any  particular  place,  or  by  any  particular  person ;  and 
if  the  cow  was  weighed  afterwards,  as  Sherwood  testified,  such 
weighing  would  be  a  sufficient  compliance  with  the  order;  if  they 


262  FORMATION  OF  CONTRACT.  [Part  IL 

believed  that  defendants  intended  to  pass  the  title  by  the  writing, 
it  did  not  matter  whether  the  cow  was  weighed  before  or  after 
suit  brought,  and  the  plaintiff  would  be  entitled  to  recover. 

The  defendants  submitted  a  number  of  requests,  which  were 
refused.  The  substance  of  them  was  that  the  cow  was  never 
delivered  to  plaintiff,  and  the  title  to  her  did  not  pass  by  the 
letter  and  order;  and  that  under  the  contract,  as  evidenced  by 
these  writings,  the  title  did  not  pass  until  the  cow  was  weighed 
and  her  price  thereby  determined;  and  that,  if  the  defendants 
only  agreed  to  sell  a  cow  that  would  not  breed,  then  the  barren- 
ness of  the  cow  was  a  condition  precedent  to  passing  title,  and 
plaintiff  cannot  recover.  The  court  alsQ  charged  the  jury  that  it 
was  immaterial  whether  the  cow  was  with  calf  or  not.  It  will 
therefore  be  seen  that  the  defendants  claim  that,  as  a  matter  of 
law,  the  title  to  this  cow  did  not  pass,  and  that  the  circuit  judge 
erred  in  submitting  the  case  to  the  jury,  to  be  determined  by 
them,  upon  the  intent  of  the  parties  as  to  whether  or  not  the 
title  passed  with  the  sending  of  the  letter  and  order  by  the 
defendants  to  the  plaintiff. 

*  «  »  »  « 

The  following  cases  in  this  court  support  the  instruction  of 
the  court  below  as  to  the  intent  of  the  parties  governing  and 
controlling  the  question  of  a  completed  sale,  and  the  passing  of 
title:  Lingham  v.  Eggleston,  27  Mich.  324;  Wilkinson  v.  Holiday, 
33  Id.  386 ;  Grant  v.  Merchants'  and  Manufacturers^  Bank,  35  Id. 
627;  Carpenter  v.  Oraham,  42  Id.  194;  Brewer  v.  Michigan  Salt 
Ass'n,  47  Id.  534;  Whitcomh  v.  Whitney,  24  Id.  486;  Byles  v. 
Colier,  54  Id.  1 ;  Scotten  v.  Sutter,  37  Id.  526,  532 ;  Ducey  Lumber 
Co.  V.  Lane,  58  Id.  520,  525;  Jenkinson  v.  Monroe  Bros.  &  Co., 
61  Id.  454. 

It  appears  from  the  record  that  both  parties  supposed  this  cow 
was  barren  and  would  not  breed,  and  she  was  sold  by  the  pound 
for  an  insignificant  sum  as  compared  with  her  real  value  if  a 
breeder.  She  was  evidently  sold  and  purchased  on  the  relation 
of  her  value  for  beef,  unless  the  plaintiff  had  learned  of  her  true 
condition,  and  concealed  such  knowledge  from  the  defendants. 
Before  the  plaintiff  secured  possession  of  the  animal,  the  defend- 
ants learned  that  she  was  with  calf,  and  therefore  of  great  value, 


Chap.  IV.  §  1.]         REALITY  OP  CONSENT  :    MISTAKE.  253 

and  undertook  to  rescind  the  sale  by  refusing  to  deliver  her.    The 
question  arises  whether  they  had  a  right  to  do  so. 

The  circuit  judge  ruled  that  this  fact  did  not  avoid  the  sale, 
and  it  made  no  difference  whether  she  was  barren  or  not.  I  am 
of  the  opinion  that  the  court  erred  in  this  holding.  I  know  that 
this  is  a  close  question,  and  the  dividing  line  between  the  adjudi- 
cated cases  is  not  easily  discerned.  But  it  must  be  considered  as 
well  settled  that  a  party  who  has  given  an  apparent  consent  to  a 
contract  of  sale  may  refuse  to  execute  it,  or  he  may  avoid  it  after 
it  has  been  completed,  if  the  assent  was  founded,  or  the  contract  ,'i 
made,  upon  the  mistake  of  a  material  fact, — such  as  the  subject  I 
matter  of  the  sale,  the  price,  or  some  collateral  fact  materially  | 
inducing  the  agreement;  and  this  can  be  done  when  the  mistake 
is  mutual.  1  Benj.  Sales,  §§  605,  606;  Leake,  Cont.  339;  Story, 
Sales  (4th  ed.),  §§  148,  377.  See  also  Cutis  v.  Guild,  57  N.  Y. 
229;  Harvey  v.  Harris,  112  Mass.  32;  Gardner  v.  Lane,  9  Allen, 
492;  S.  C,  12  Allen,  44;  Huthmacher  v.  Harris'  Adm'rs,  38  Penn, 
St.  491;  Byers  v.  Chapin,  28  Ohio  St.  300;  Gihson  v.  PelUe,  37 
Mich.  380,  and  cases  cited;  Allen  v.  Hammond,  11  Pet.  63,  71. 

If  there  is  a  difference  or  misapprehension  as  to  the  substance 
of  the  thing  bargained  for,  if  the  thing  actually  delivered  or  re- 
ceived is  different  in  substance  from  the  thing  bargained  for  and 
intended  to  be  sold,  then  there  is  no  contract;  but  if  it  be  only 
a  difference  in  some  quality  or  accident,  even  though  the  mistake 
may  have  been  the  actuating  motive  to  the  purchaser  or  seller, 
or  both  of  them,  yet  the  contract  remains  binding. 

"  The  difficulty  in  every  case  is  to  determine  whether  the  mistake  or 
misapprehension  is  as  to  the  substance  of  the  whole  contract,  going,  as  it 
were,  to  the  root  of  the  matter,  or  only  to  some  point,  even  though  a  mate- 
rial point,  an  error  as  to  which  does  not  affect  the  substance  of  the  whole 
consideration."    Kennedy  v.  Panama,  dec.  Mail  Co.,  L.  R.  2  Q.  B.  580,  588. 

It  has  been  held,  in  accordance  with  the  principles  above  stated, 
that  where  a  horse  is  bought  under  the  belief  that  he  is  sound, 
and  both  vendor  and  vendee  honestly  believe  him  to  be  sound,  the 
purchaser  must  stand  by  his  bargain,  and  pay  the  full  price,  unless 
there  was  a  warranty. 

It  seems  to  me,  however,  in  the  case  made  by  this  record,  that 


254  FORMATION  OP  CONTRACT.  [Pabt  U. 

the  mistake  or  misapprehension  of  the  parties  went  to  the  whole 
substance  of  the  agreement.  If  the  cow  was  a  breeder,  she  was 
worth  at  least  $750;  if  barren,  she  was  worth  not  over  $80.  The 
parties  would  not  have  made  the  contract  of  sale  except  upon  the 
understanding  and  belief  that  she  was  incapable  of  breeding,  and 
of  no  use  as  a  cow.  It  is  true  she  is  now  the  identical  animal 
that  they  thought  her  to  be  when  the  contract  was  made;  there 
is  no  mistake  as  to  the  identity  of  the  creature.  Yet  the  mistake 
was  not  of  the  mere  quality  of  the  animal,  but  went  to  the  very 
nature  of  the  thing.  A  barren  cow  is  substantially  a  different 
creature  than  a  breeding  one.  There  is  as  much  difference  be- 
tween them  for  all  purposes  of  use  as  there  is  between  an  ox 
and  a  cow  that  is  capable  of  breeding  and  giving  milk.  If  the 
mutual  mistake  had  simply  related  to  the  fact  whether  she  was 
with  calf  or  not  for  one  season,  then  it  mig-ht  have  been  a  good 
sale;  but  the  mistake  affected  the  character  of  the  animal  for  all 
time,  and  for  her  present  and  ultimate  use.  She  was  not  in  fact 
the  animal,  or  the  kind  of  animal,  the  defendants  intended  to  sell 
or  the  plaintiff  to  buy.  She  was  not  a  barren  cow,  and,  if  this  fact 
had  been  known,  there  would  have  been  no  contract.  The  mis- 
take affected  the  substance  of  the  whole  consideration,  and  it 
must  be  considered  that  there  was  no  contract  to  sell,  or  sale  of 
the  cow  as  she  actually  was.  The  thing  sold  and  bought  had  in 
fact  no  existence.  She  was  sold  as  a  beef  creature  would  be  sold; 
she  is  in  fact  a  breeding  cow,  and  a  valuable  one. 

The  court  should  have  instructed  the  jury  that  if  they  found 
that  the  cow  was  sold,  or  contracted  to  be  sold,  upon  the  under- 
standing of  both  parties  that  she  was  barren,  and  useless  for  the 
purpose  of  breeding,  and  that  in  fact  she  was  not  barren,  but 
capable  of  breeding,  then  the  defendants  had  a  right  to  rescind,  ^ 

and  to  refuse  to  deliver,  and  the  verdict  should  be  in  their  favor.  \- 

The  judgment  of  the  court  below  mtjst  be  reversed,  and  a  new      y  fJ' 
trial  granted,  with  costs  of  this  court  to  defendants.  \(\»j 

Campbell,  C.  J.,  and  Ohamplin,  J.,  concurred.  Sherwood,  J., 
dissented. 


?v\^j<^    V    \AM.tKO  -^<^-^  C c^^5/^>u>l*v"etW< 


Ckjlp.  IV.  §  1.]  REALITY  OF  CONSENT:  MISTAKE.  255 

HECHT   V.   BATCHELLER. 

147  MASSACHUSETTS,  335.  — 1888. 

Contract  for  money  had  and  received.  Judgment  for  plaintiff. 
Defendants  appeal. 

Morton,  C.  J.  The  defendants,  being  the  owners  of  a  prom- 
issory note  which  they  had  taken  in  the  ordinary  course  of  busi- 
ness, sold  it  through  brokers  to  the  plaintiffs.  It  was  afterwards 
ascertained  that,  two  hours  before  this  sale,  the  makers  of  the 
note  had  made  a  "  voluntary  assignment  of  all  their  assets  for  the 
benefit  of  their  creditors,  to  be  administered  under  the  insolvent 
laws  of  Ohio,"  of  which  State  they  were  residents.  Neither  of 
the  parties  to  this  suit,  nor  the  brokers  employed  by  the  defend- 
ants, knew  of  the  assignment  at  the  time  of  the  sale,  but  they 
all  supposed  that  the  makers  were  doing  business  as  theretofore. 
The  plaintiffs  contend  that  they  are  entitled  to  recover  upon 
either  of  two  grounds :  first,  that  there  was  a  mutual  mistake  of 
the  parties  as  to  the  thing  sold,  and  therefore  no  contract  was 
completed  between  them;  and,  secondly,  that  there  was  a  war- 
ranty express  or  implied,  by  the  defendants,  that  the  makers  of 
the  note  were  then  carrying  on  business,  and  had  not  failed  or 
made  an  assignment. 

It  is  a  general  rule,  that,  where  parties  assume  to  contract, 
and  there  is  a  mistake  as  to  the  existence  or  identity  of  the 
subject  matter,  there  is  no  contract,  because  of  the  want  of  the 
mutual  assent  necessary  to  create  one ;  so  that,  in  the  case  of  a 
contract  for  the  sale  of  personal  property,  if  there  is  such  mis- 
take, and  the  thing  delivered  is  not  the  thing  sold,  the  purchaser 
may  refuse  to  receive  it,  or,  if  he  receives  it,  may  upon  discovery 
of  the  mistake  return  it,  and  recover  back  the  price  he  has  paid. 
But  to  produce  this  result  the  mistake  must  be  one  which  affects 
the  existence  or  identity  of  the  thing  sold.  Any  mistake  as  to 
its  value  or  quality,  or  other  collateral  attributes,  is  not  sufficient 
if  the  thing  delivered  is  existent,  and  is  the  identical  thing  in 
kind  which  was  sold.  Gardner  v.  Lane,  9  Allen,  492 ;  Gardner 
V.  Lane,  12  Allen,  39;  Spurr  v.  Benedict,  99  Mass.  463;  Bridge- 
water  L'on  Co.  V.  Enterprise  Lis.  Co.,  134  Mass.  433;  Benjamin 
on  Sales,  §  54. 


266  FORMATION  OF  CONTRACT.  [Part  H. 

In  the  case  at  bar,  the  subject  matter  of  the  contract  was  the 
note  of  J.  and  S.  B.  Sachs.  The  note  delivered  was  the  same 
note  which  the  parties  bought  and  sold.  They  may  both  have 
understood  that  the  makers  were  solvent,  whereas  they  were 
insolvent;  but  such  a  mistake  or  misapprehension  affects  the 
value  of  the  note  and  not  its  identity.  Day  v.  Kinney,  131 
Mass.  37.  In  Day  v.  Kinney,  the  makers  of  the  note  sold  were 
in  fact  insolvent,  but  they  had  not  stopped  payment  or  been 
adjudged  insolvent,  and  the  decision  is  confined  to  the  facts  of 
the  case.  But  we  think  the  Same  principles  apply  in  this  case. 
The  makers  of  the  note  had  made  an  assignment  for  the  benefit 
of  their  creditors,  but  this  did  not  extinguish  the  note,  or  destroy 
its  identity.  It  remained  an  existing  note,  capable  of  being 
enforced,  with  every  essential  attribute  going  to  its  nature  as  a 
note  which  it  had  before.  Its  quality  and  value  were  impaired, 
but  not  its  identity.  The  parties  bought  and  sold  what  they 
intended,  and  their  mistake  was  not  as  to  the  subject  matter  of 
the  sale,  but  as  to  its  quality.  We  are  therefore  of  opinion  that 
the  sale  was  valid,  and  that  the  plaintiffs  cannot  recover  the 
amount  they  paid,  as  upon  a  failure  of  consideration. 
«  *  *  *  « 

We  think  the  principles  we  have  stated  are  decisive  of  the  case 
before  us.  The  defendants  sold  the  note  in  good  faith.  So  far 
as  the  evidence  shows,  neither  party,  at  the  time  of  the  sale, 
spoke  of,  or  inquired  about,  or  knew  anything  about,  the  failure 
of  the  makers.  They  stood  upon  an  equal  footing,  and  they  had 
equal  means  of  knowing  the  standing  of  the  makers.  It  was 
understood  that  the  defendants  were  selling  the  note  without 
recourse  to  them.  They  did  not  expressly  warrant  the  value  of 
the  note,  and  we  are  of  the  opinion  that  from  the  circumstances 
no  warranty  could  fairly  be  inferred  of  the  solvency  of  the 
makers,  or  that  they  continued  to  do  business. 

We  are  therefore  of  opinion,  .  .  .  upon  the  facts  of  the  case, 
the  court  was  not  justified  in  finding  for  the  plaintiffs. 

Exceptions  sustained. 


Chap.  IV.  §1.]         REALITY  OF  CONSENT:  MISTAKE.  267 

WOOD  V.   BOYNTON. 

64  WISCONSIN,  265.  — 1886. 

Taylor,  J.  This  action  was  brought  in  the  Circuit  Court  for 
Milwaukee  County  to  recover  the  possession  of  an  uncut  diamond 
of  the  alleged  value  of  $1000.  The  case  was  tried  in  the  Circuit 
Court  and,  after  hearing  all  the  evidence  in  the  case,  the  learned 
circuit  judge  directed  the  jury  to  find  a  verdict  for  the  defend- 
ants. The  plaintiff  excepted  to  such  instruction,  and,  after  a 
verdict  was  rendered  for  the  defendants,  moved  for  a  new  trial 
upon  the  minutes  of  the  judge.  The  motion  was  denied,  and  the 
plaintiff  duly  excepted,  and,  after  judgment  was  entered  in  favor 
of  the  defendants,  appealed  to  this  court. 

The  defendants  are  partners  in  the  jewelry  business.  On  the 
trial  it  appeared  that  on  and  before  the  28th  of  December,  1883, 
the  plaintiff  was  the  owner  of  and  in  the  possession  of  a  small 
stone  of  the  nature  and  value  of  which  she  was  ignorant ;  that  on 
that  day  she  sold  it  to  one  of  the  defendants  for  the  sum  of  one 
dollar.  Afterwards  it  was  ascertained  that  the  stone  was  a  rough 
diamond,  and  of  the  value  of  about  $700.  After  learning  this 
fact  the  plaintiff  tendered  the  defendants  the  one  dollar,  and  ten 
cents  as  interest,  and  demanded  a  return  of  the  stone  to  her. 
The  defendants  refused  to  deliver  it,  and  therefore  she  commenced 
this  action. 

The  plaintiff  testified  to  the  circumstances  attending  the  sale 
of  the  stone  to  Mr.  Samuel  B.  Boynton,  as  follows : 

"  The  first  time  Boynton  saw  that  stone  he  was  talking  about  buying 
the  topaz,  or  whatever  it  is,  in  September  or  October.  I  went  into  his 
store  to  get  a  little  pin  mended,  and  I  had  it  in  a  small  box,  —  the  pin, 
a  small  ear-ring,  .  .  .  this  stone,  and  a  broken  sleeve-button  were  in  the 
box.  Mr.  Boynton  turned  to  give  me  a  check  for  my  pin.  I  thought  I 
would  ask  him  what  the  stone  was,  and  I  took  it  out  of  the  box  and  asked 
him  to  please  tell  me  what  that  was.  He  took  it  in  his  hand  and  seemed 
some  time  looking  at  it.  I  told  him  I  had  been  told  it  was  a  topaz,  and 
he  said  it  might  be.  He  says,  '  I  would  buy  this ;  would  you  sell  it  ? '  I 
told  him  I  did  not  know  but  what  I  would.  What  would  it  be  worth  ? 
And  he  said  he  did  not  know ;  he  would  give  me  a  dollar  and  keep  it  as  a 
specimen,  and  I  told  him  I  would  not  sell  it ;  and  it  was  certainly  pretty 
s 


258  FORMATION  OF  CONTRACT.  [Part  TL 

to  look  at.  He  asked  me  where  I  found  it,  and  I  told  him  in  Eagle.  He 
asked  about  how  far  out,  and  I  said  right  in  the  village,  and  I  went  out. 
Afterwards,  and  about  the  28th  of  December,  I  needed  money  pretty 
badly,  and  thought  every  dollar  would  help,  and  I  took  it  back  to  Mr. 
Boynton  and  told  him  I  had  brought  back  the  topaz,  and  he  says,  '  Well, 
yes;  what  did  I  offer  you  for  it?'  and  I  says,  'One  dollar;'  and  he 
stepped  to  the  change  drawer  and  gave  me  the  dollar,  and  I  went  out." 

In  another  part  of  her  testimony  she  says : 

"  Before  I  sold  the  stone  I  had  no  knowledge  whatever  that  it  was  a 
diamond.  I  told  him  that  I  had  beeu  advised  that  it  was  probably  a 
topaz,  and  he  said  probably  it  was.  The  stone  was  about  the  size  of 
a  canary  bird's  egg,  nearly  the  shape  of  an  egg,  worn  pointed  at  one  end; 
it  was  nearly  straw  color,  a  little  darker." 

She  also  testified  that  before  this  action  was  commenced  she 
tendered  the  defendants  $1.10,  and  demanded  the  return  of  the 
stone,  which  they  refused.  This  is  substantially  all  the  evidence 
of  what  took  place  at  and  before  the  sale  to  the  defendants,  as 
testified  to  by  the  plaintiff  herself.  She  produced  no  other  wit- 
ness on  that  point. 

The  evidence  on  the  part  of  the  defendant  is  not  very  different 
from  the  version  given  by  the  plaintiff,  and  certainly  is  not  more 
favorable  to  the  plaintiff.  Mr.  Samuel  B.  Boynton,  the  defend- 
ant to  whom  the  stone  was  sold,  testified  that  at  the  time  he 
bought  this  stone,  he  had  never  seen  an  uncut  diamond ;  had  seen 
cut  diamonds,  but  they  are  quite  different  from  the  uncut  ones ; 
"  he  had  no  idea  this  was  a  diamond,  it  never  entered  his  brain  at 
the  time."  Considerable  evidence  was  given  as  to  what  took 
place  after  the  sale  and  purchase,  but  the  evidence  has  very  little, 
if  any,  bearing  upon  the  main  point  in  the  case. 

This  evidence  clearly  shows  that  the  plaintiff  sold  the  stone  in 
question  to  the  defendants,  and  delivered  it  to  them  in  December, 
1883,  for  a  consideration  of  one  dollar.  The  title  to  the  stone 
passed  by  the  sale  and  delivery  to  the  defendants.  How  has  that 
title  been  divested  and  again  vested  in  the  plaintiff?  The  con- 
tention of  the  learned  counsel  for  the  appellant  is  that  the  title 
became  vested  in  the  plaintiff  by  the  tender  to  the  Boyntons  of 
the  purchase  money,  with  interest,  and  a  demand  of  a  return 
of  the  stone  to  her.  Unless  such  tender  and  demand  revested 
the  title  in  the  appellant,  she  cannot  maintain  her  action. 


Chap.  IV.  §1.]  REALITY  OF  CONSENT:  MISTAKE.  259 

The  only  question  in  the  case  is  whether  there  was  anything  in 
the  sale  which  entitled  the  vendor  (the  appellant)  to  rescind  the 
sale  and  so  revest  the  title  in  her.  The  only  reasons  we  know 
of  for  rescinding  a  sale  and  revesting  the  title  in  the  vendor  so 
that  he  may  maintain  an  action  at  law  for  the  recovery  of  the 
possession  against  his  vendee  are,  (1)  that  the  vendee  was  guilty 
of  some  fraud  in  procuring  a  sale  to  be  made  to  him;  (2)  that 
there  was  a  mistake  made  by  the  vendor  in  delivering  an  article 
which  was  not  the  article  sold,  a  mistake  in  fact  as  to  the  iden- 
tity of  the  thing  sold  with  the  thing  delivered  upon  the  sale. 
This  last  is  not  in  reality  a  rescission  of  the  sale  made,  as  the 
thing  delivered  was  not  the  thing  sold,  and  no  title  ever  passed 
to  the  vendee  by  such  delivery. 

In  this  case,  upon  the  plaintiff's  own  evidence,  there  can  be 
no  just  ground  for  alleging  that  she  was  induced  to  make  the 
sale  she  did  by  any  fraud  or  unfair  dealings  on  the  part  of  Mr. 
Boynton.  Both  were  entirely  ignorant  at  the  time  of  the  char- 
acter of  the  stone  and  of  its  intrinsic  value.  Mr.  Boynton  was 
not  an  expert  in  uncut  diamonds,  and  had  made  no  examination 
of  the  stone,  except  to  take  it  in  his  hand  and  look  at  it  before- 
he  made  the  offer  of  one  dollar,  which  was  refused  at  the  time,, 
and  afterwards  accepted  without  any  comment  or  further  exami- 
nation made  by  Mr.  Boynton.  The  appellant  had  the  stone  in 
her  possession  for  a  long  time,  and  it  appears  from  her  own  state- 
ment that  she  had  made  some  inquiry  as  to  its  nature  and  quali- 
ties. If  she  chose  to  sell  it  without  further  investigation  as  to 
its  intrinsic  value  to  a  person  who  was  guilty  of  no  fraud  or  un- 
fairness which  induced  her  to  sell  it  for  a  small  sum,  she  can- 
not repudiate  the  sale  because  it  is  afterwards  ascertained  that 
she  made  a  bad  bargain.  Kennedy  v.  Panama  &c.  Mail  Co., 
L.  K.  2  Q.  B.  580. 

There  is  no  pretense  of  any  mistake  as  to  the  identity  of  the 
thing  sold.  It  was  produced  by  the  plaintiff  and  exhibited  to 
the  vendee  before  the  sale  was  made,  and  the  thing  sold  was 
delivered  to  the  vendee  when  the  purchase  price  was  paid.  Ken- 
nedy V.  Panama  &c.  Mail  Co.,  L.  R.  2  Q.  B.  587;  Street  v.  Blay, 
2  Barn.  &  Adol.  456;  Gompertz  v.  Bartlett,  2  El.  &  Bl.  849;  Our- 
ney  v.  Womersley,  4  El.  &  Bl.  133;  Ship's  Case,  2  De  G.,  J.  &  S. 


260  FORMATION  OF  CONTRACT.  [Part  H, 

644.  Suppose  the  appellant  had  produced  the  stone,  and  said  she 
had  been  told  that  it  was  a  diamond,  and  she  believed  it  was, 
but  had  no  knowledge  herself  as  to  its  character  or  value,  and 
Mr.  Boynton  had  given  her  $500  for  it,  could  he  have  rescinded 
the  sale  if  it  had  turned  out  to  be  a  topaz  or  any  other  stone  of 
very  small  value?  Could  Mr.  Boynton  have  rescinded  the  sale 
on  the  ground  of  mistake?  Clearly  not,  nor  could  he  rescind  it 
on  the  ground  that  there  had  been  a  breach  of  warranty,  because 
there  was  no  warranty,  nor  could  he  rescind  it  on  the  ground  of 
fraud,  \inless  he  could  show  that  she  falsely  declared  that  she 
had  been  told  it  was  a  diamond,  or,  if  she  had  been  so  told,  still 
she  knew  it  was  not  a  diamond.     See  Street  v.  Blay,  supra. 

It  is  urged,  with  a  good  deal  of  earnestness,  on  the  part  of  the 
counsel  for  the  appellant,  that,  because  it  has  turned  out  that  the 
stone  was  immensely  more  valuable  than  the  parties  at  the  time 
of  the  sale  supposed  it  was,  such  fact  alone  is  a  ground  for  the 
rescission  of  the  sale,  and  that  fact  was  evidence  of  fraud  on  the 
part  of  the  vendee.  Whether  inadequacy  of  price  is  to  be  re- 
ceived as  evidence  of  fraud,  even  in  a  suit  in  equity  to  avoid  a 
sale,  depends  upon  the  facts  known  to  the  parties  at  the  time  the 
sale  is  made. 

When  this  sale  was  made  the  value  of  the  thing  sold  was  open 
to  the  investigation  of  both  parties;  neither  knew  its  intrinsic 
value,  and,  so  far  as  the  evidence  in  this  case  shows,  both  sup- 
posed that  the  price  paid  was  adequate.  How  can  fraud  be 
predicated  upon  such  a  sale,  even  though  after  investigation 
showed  that  the  intrinsic  value  of  the  thing  sold  was  hundreds 
of  times  greater  than  the  price  paid?  It  certainly  shows  no  such 
fraud  as  would  authorize  the  vendor  to  rescind  the  contract  and 
bring  an  action  at  law  to  recover  the  possession  of  the  thing  sold. 
Whether  that  fact  would  have  any  influence  in  an  action  in  equity 
to  avoid  the  sale,  we  need  not  consider.  See  Stettheimer  v.  Killip,  . 
75  N.  Y.  287;  Etting  v.  Bank  of  U.  S.,  11  Wheat.  59. 

We  can  find  nothing  in  the  evidence  from  which  it  could  be 
justly  inferred  that  Mr.  Boynton,  at  the  time  he  offered  the  plain- 
tiff one  dollar  for  the  stone,  had  any  knowledge  of  the  real  value 
of  the  stone,  or  that  he  entertained  even  a  belief  that  the  stone  was 
a  diamond.     It  cannot,  therefore,  be  said  that  there  was  a  sup- 


Chap.  IV.  §1.]  REALITY  OF  CONSENT:  MISTAKE.  261 

pression  of  knowledge  on  the  part  of  the  defendant  as  to  the 
value  of  the  stone  which  a  court  of  equity  might  seize  upon  to 
avoid  the  sale.  Following  cases  show  that,  in  the  absence  of 
fraud  or  warranty,  the  value  of  the  property  sold,  as  compared 
with  the  price  paid,  is  no  ground  for  a  rescission  of  a  sale.  Wheat 
V.  Cross,  31  Md.  99;  Lambert  y.  Heath,  15  Mees.  &  W.  487;  Bry- 
ant V.  Pember,  45  Vt.  487;  Kuelkamp  v.  Hidding,  31  Wis. 
603,  511. 

However  unfortunate  the  plaintiff  may  have  been  in  selling 
this  valuable  stone  for  a  mere  nominal  sum,  she  has  failed  entirely 
to  make  out  a  case  either  of  fraud  or  mistake  in  the  sale  such  as 
will  entitle  her  to  a  rescission  of  such  sale  so  as  to  recover  the 
property  sold  in  an  action  at  law. 

By  the  court.     The  judgment  of  the  Circuit  Court  is  afi&rmed. 


ROVEGNO  V.   DEFFERARI. 

40  CALIFORNIA,  459.— 1871. 

Action  for  dissolution  of  alleged  partnership  and  distribution 
of  proceeds.  Defense,  no  partnership.  Judgment  for  plaintiff. 
Defendant  appeals. 

Wallace,  J.  It  is  not  disputed  that  Cassinelli  was  at  one 
time  a  copartner  with  the  defendant,  owning  an  interest  of  one- 
third  in  the  copartnership.  Each  of  the  parties  to  the  controversy, 
Rovegno  and  Defferari,  claims  to  have  purchased  that  interest 
from  Cassinelli,  and  this  is  the  only  question  presented  here. 

It  was  determined  below,  and  we  think  correctly,  that  Rovegno 
was  the  purchaser  of  that  interest.  The  facts  are,  that  on  March 
17, 1869,  Cassinelli  agreed  to  sell  it  to  Rovegno,  and  then  received 
part  of  the  purchase  price;  that  on  the  next  day  (March  18th) 
Cassinelli  and  Defferari  entered  into  a  treaty  concerning  the  sale 
of  this  interest  to  the  latter ;  that  this  was  in  the  presence  and 
with  the  consent  of  Rovegno.  On  this  occasion  a  sale  of  this 
interest  was  supposed  to  have  been  made  by  Cassinelli  to 
Defferari;  but  it  turned  out  afterwards  that  the  parties  to  that 
transaction  (Cassinelli  and  Defferari)  had  entirely  misunderstood 


262  FORMATION  OF  CONTRACT.  [Part  U. 

each  other  as  to  the  price  to  be  paid.  Cassinelli  thought  that  he 
Avas  selling  for  $850,  and  Defferari  supposed  himself  to  be  pur- 
chasing at  $750.  Upon  discovery  of  this  mistake  the  latter 
refused  to  take  the  interest  at  $850.  On  the  22d  March  the  sale 
from  Cassinelli  to  Eovegno  was  made,  pursuant  to  the  agreement 
of  March  17th,  and  a  bill  of  sale  was  then  made  to  the  latter. 

Upon  the  ascertained  fact  that  Cassinelli  and  Defferari  were 
each  mistaken  as  to  the  purchase  price  of  this  copartnership 
interest,  and  each  was,  therefore,  assenting  to  a  supposed  con- 
>v  tract  which  had  no  real  existence,  it  results  that  there  was  no 
valid  agreement,  notwithstanding  the  apparent  assent  of  each. 
It  is  in  principle  like  the  case  of  Phillips  v.  Bistolli  (2  B.  &  C. 
511),  where  it  appeared  that  the  defendant,  who  was  a  foreigner, 
not  understanding  the  English  language  well,  attended  an  auction 
sale  in  London,  and  there  bid  eighty-eight  guineas  for  certain 
goods,  which  were,  thereupon,  knocked  down  to  him,  and  when 
sued  for  the  purchase  price,  he  set  up  in  defense  that  he  supposed 
he  was  bidding  only  forty-eight  guineas  for  the  goods,  and  that 
the  mistake  grew  out  of  his  imperfect  knowledge  of  the  English 
language,  in  which  language  the  auction  was  conducted.  Chief 
Justice  Abbott  left  it  to  the  jury  to  find  if  the  defendant  had  been 
mistaken  as  to  the  price  bid,  the  court  being  of  the  opinion  that 
if  such  a  mistake  had  really  intervened,  the  parties  could  not  be 
said  to  have  entered  into  a  contract  at  all. 

Judgment  and  order  denying  new  trial  affirmed.* 


c.  Mistake  by  one  party  as  to  the  intention  of  the  other,  known  to 
that  other. 

SHELTON  V.   ELLIS. 

70  GEORGIA,  297.  — 1883. 

Bill  in  equity  for  an  injunction  to  restrain  defendant  from 
disposing  of  certain  railroad  tickets  and  for  the  appointment  of  a 
receiver  to  hold  them. 

1  Accord  :  Bupley  v.  Daggett,  74  111.  351 ;  Bovoland  v.  New  York  dbc.  B. 
Co.,  61  Conn.  103. 


Chap.  IV.  §1.]  REALITY  OF  CONSENT:   MISTAKE.  263 

Plaintiff  was  employed  to  compile  a  rate  sheet  for  the  W.  &  A. 
Ry.,  showing  cost  of  tickets  between  different  points.  By  mis- 
take he  printed  the  fare  from  Atlanta,  Georgia,  to  Rogers, 
Arkansas,  as  $21.25,  when  it  should  have  been  $36.70.  Defend- 
ant discovered  the  mistake,  and  immediately  purchased  of  the 
ticket  agent  of  the  W.  &  A.  Ry.  a  large  number  of  the  tickets  at 
the  price  printed  in  the  rate  sheet.  Plaintiff,  being  responsible 
to  the  railway  for  the  error,  offered  to  return  defendant's  money 
and  demanded  the  tickets,  which  offer  and  demand  were  refused 
by  defendant.  Plaintiff  alleges  in  his  bill  that  defendant  knew 
that  a  mistake  had  been  made  in  the  rate  sheet  and  fraudulently 
took  advantage  of  it. 

Defendant  answered  denying  any  fraud,  and  asserting  that  the 
sale  was  made  without  any  misrepresentations  on  the  part  of 
defendant  and  from  the  plaintiff's  own  rate  sheet. 

The  court  granted  a  temporary  injunction  and  appointed  a 
receiver.     Defendant  appeals. 

Hall,  J.  There  is  no  question  made  here  as  to  the  propriety 
of  the  orders  passed  by  his  honor,  the  presiding  judge,  if  the 
case  made  by  the  bill  entitles  the  complainants  to  the  relief 
prayed.  Upon  the  question  made  there  was  a  conflict  of  evi- 
dence ;  there  was  no  abuse  of  discretion,  if  the  law  authorized  the 
interposition  of  the  judge.  The  order  appointing  the  receiver 
and  directing  the  injunction  carefully  preserved  the  rights  of  all 
the  parties  to  the  final  hearing  of  the  cause. 

The  first  and  only  question  made  which  we  shall  consider  and 
determine,  is  whether  appropriate  relief  can  be  granted  by  a  court 
of  equity,  in  a  case  where  there  has  been  a  mistake  on  one  side, 
and  it  is  alleged  that  a  fraudulent  advantage  has  been  knowingly 
taken  of  this  mistake  by  the  opposite  party,  to  his  gain  and  to 
the  serious  detriment  and  injury  of  the  party  making  the  mis- 
take. The  question  is  thus  broadly  stated,  to  meet  the  views 
presented  by  the  counsel  in  the  case. 

In  Wyche  et  al.  v.  Greene  (26  Ga.  415)  this  court  held  that 
what  is  a  mistake  on  one  side  and  a  fraud  on  the  other  is  as  much 
the  subject  of  correction  as  if  it  were  a  mistake  on  both  sides, 
and  in  delivering  the  opinion  of  the  court,  Benning,  J.  (at 
p.  422),  said: 


264  FORMATION  OF  CONTRACT.  [Pajit  U. 

"  The  court's  charge  that  a  mistake,  to  be  the  subject  of  correction, 
must  be  a  mistake  in  which  all  the  parties  to  the  contract  participate, 
was  too  absolute.  If  one  of  the  parties  to  a  contract  is  mistaken  in  a 
matter,  and  the  others  know  that  he  is  and  do  not  apprise  him  of  it,  yet 
the  mistake,  though  not  one  on  their  part,  is  the  subject  of  correction. 
The  case  becomes  one  in  which  there  is  a  mistake  in  one  of  the  parties 
to  the  contract  and  a  fraud  in  the  others.  Such  a  case  is  even  more 
readily  the  subject  of  relief,  at  his  instance,  than  is  a  case  in  which 
there  is  nothing  but  a  mistake,  although  that  be  a  mistake  extending  to 
all  the  parties." 

There  is  nothing  that  we  are  aware  of,  either  in  the  Code  or 
any  subsequent  decision  of  this  court,  modifying  the  law  as  here 
declared.  On  the  other  hand,  we  think  there  is  much  confirming 
the  view  here  taken.  Compare  with  this  Code  §§  3117,  3119  to 
3126,  both  inclusive,  and  3180.  The  conditions  upon  which  relief 
will  be  granted  or  denied  must,  under  the  sections  of  the  Code 
and  the  cases  cited  under  them,  depend  in  large  measure  upon 
the  circumstances  of  each  particular  case,  and  upon  all  the  facts 
developed,  which  should  be  passed  upon  by  the  jury  at  the  final 
hearing,  and  ought  not  to  be  too  closely  scrutinized  or  evenly 
balanced  in  these  preliminary  proceedings.  All  that  the  judge 
decides  at  that  stage  of  the  cause  is  that  there  is  enough  developed 
to  carry  the  case  to  the  jury,  whose  exclusive  province  it  is  to 
determine  the  force  and  effect  of  facts  as  applied  to  the  law  given 
them  in  charge  by  the  court.  This  is  all  that  the  judge  has 
undertaken  in  this  case. 

Judgment  affirmed.* 

1  See  also  Laidlaw  v.  Organ,  2  Wheat.  178,  post,  p.  282. 


Chap.  IV.  §2.]    REALITY  OF  CONSENT:   MISREPRESENTATION.         26S 

§  2.    Misrepresentation. 

(i.)   Misrepresentation  distinguished  from  fraud. 

NoTK.  — For  cases  under  this  topic,  see  the  cases  on  "Effects  of  Misrepre- 
sentation," post,  p.  268,  and  on  "  Knowledge  of  Falsity,"  post,  p.  298. 

(m.)   Representations  distinguished  from  terras 

DAVISON  V.  VON  LINGEN. 

113  UNITED  STATES,  40.  — 1884. 

Libel  in  personam,  in  admiralty,  against  the  owners  of  the 
steamer  Whickham,  to  recover  damages  for  breach  of  charter- 
party.  Cross-libel  in  personam  against  the  charterers  for  damages 
for  breach  of  charter-party. 

The  charter-party  was  executed  at  Philadelphia  on  August  1, 
1879,  and  provided  that  the  steamship  Whickham  "now  sailed 
or  about  to  sail  from  Benizaf  with  cargo  for  Philadelphia,  .  .  . 
with  liberty  to  take  outward  cargo  to  Philadelphia  for  owner's 
benefit,  shall,  with  all  convenient  speed,  sail  and  proceed  to 
Philadelphia  or  Baltimore,  at  charterers'  option,  after  discharge 
of  inward  cargo  at  Philadelphia,  or  as  near  thereunto  as  she  may 
safely  get,  and  there  load  afloat  from  said  charterers,  or  their 
agents,  a  full  and  complete  cargo  of  grain  and  (or  )  other  lawful 
merchandise."  The  owners  had  submitted  a  charter-party  in 
which  the  vessel  was  described  as  "sailed  from,  or  loading  at, 
Benizaf,"  but  this  the  charterers  declined  to  accept,  and  the 
charter-party  was  executed  with  the  description  "  now  sailed  or 
about  to  sail  from  Benizaf."  In  fact  the  vessel  was  then  loading 
at  Benizaf,  and  did  not  sail  until  August  7th.  On  the  9th  the 
charterers  learned  that  she  had  that  day  passed  Gibraltar,  and 
being  satisfied  that  she  would  not  arrive  in  time  to  load  in  August, 
procured  another  vessel,  which  they  loaded  at  an  increased  rate 
of  freight,  as  favorable  as  possible.  The  Whickham  discharged 
her  cargo  at  Philadelphia  on  September  7th  and  was  tendered  to 
the  charterers  at  Baltimore  on  the  11th.  The  charterers  declined 
to  accept  her  on  the  ground  that  she  had  neither  sailed  nor  was 
about  to  sail  from  Benizaf  on  August  1st.  Another  charter  was 
then  obtained  at  a  loss,  on  as  favorable  terms  as  possible,  and  for 
this  loss  the  owners  filed  the  cross-libel. 


266  FORMATION  OF  CONTRACT.  [Part  U. 

It  further  appeared  that  all  parties  understood  that  the  char- 
terers wanted  a  vessel  which  could  load  in  August;  that  they  had 
asked  a  guaranty  that  the  Whickham  would  arrive  in  time,  but 
this  was  refused ;  that  the  basis  of  the  belief  that  the  Whickham 
would  arrive  rested  on  telegraphic  information  from  Gibraltar,  a 
day's  sail  from  Benizaf. 

Decree  for  cross-libellants  in  District  Court,  which  was  reversed 
in  the  Circuit  Court  and  a  decree  entered  for  the  libellants. 

Mb.  Justice  Blatchford.  .  .  .  The  decision  of  the  Circuit 
Court  proceeded  on  the  ground  that  the  language  of  the  charter- 
party  must  be  interpreted,  if  possible,  as  the  parties  in  Baltimore 
understood  it  when  they  were  contracting.  In  view  of  the  facts, 
that  all  the  contracting  parties  understood  that  the  vessel  was 
wanted  to  load  in  August,  that,  as  soon  as  the  charterers  learned 
that  she  did  not  leave  Gibraltar  until  the  9th,  they  took  steps  to 
get  another  vessel,  and  that  they  declined  to  sign  a  charter-party 
which  described  the  vessel  as  "  sailed  from,  or  loading  at,  Beni- 
zaf," the  court  held  that  the  language  of  the  charter-party  meant 
that  the  vessel  had  either  sailed,  or  was  about  ready  to  sail,  with 
cargo;  and  that  the  vessel  was  not  in  the  condition  she  was 
represented,  being  not  more  than  three-elevenths  loaded. 

The  argument  for  the  appellants  is,  that  the  words  of  the 
charter-party  "about  to  sail  with  cargo"  imply  that  the  vessel 
has  some  cargo  on  board  but  is  detained  from  sailing  by  not  hav- 
ing all  on  board,  and  that  she  will  sail,  when,  with  dispatch,  all 
her  cargo,  which  is  loading  with  dispatch,  shall  be  on  board ;  and 
that  this  vessel  fulfilled  those  conditions.  As  to  the  attendant 
circumstances  at  Baltimore,  it  is  urged  that  the  charterers  asked 
for  a  guaranty  that  the  vessel  would  arrive  in  time  for  their  pur- 
poses, and  it  was  refused,  and  that  the  printed  clause  as  to  an 
option  in  the  charterers  to  cancel  was  stricken  out,  and  that  then 
the  charterers  accepted  the  general  words  used. 

The  words  of  the  charter-party  are,  "now  sailed,  or  about  to 
sail,  from  Benizaf,  with  cargo  for  Philadelphia."  The  Avord 
"  loading  "  is  not  found  in  the  contract.  The  sentence  in  ques- 
tion implies  that  the  vessel  is  loaded,  because  the  words  "  with 
cargo"  apply  not  only  to  the  words  "about  to  sail,"  but  to  the 
word  "  sailed, "  and  as,  if  the  vessel  had  "  sailed  with  cargo, "  she 


Chap.  IV.  §2.]    REALITY  OF  CONSENT:   MISREPRESENTATION.         lit) 7 

must  have  had  her  cargo  on  board,  so,  if  it  is  agreed  she  is 
"about  to  sail  with  cargo,"  the  meaning  is,  that  she  has  her 
cargo  on  board,  and  is  ready  to  sail.  This  construction  is  in  har- 
mony with  all  that  occurred  between  the  parties  at  the  time,  and 
with  the  conduct  of  the  charterers  afterwards.  The  charterers 
wanted  a  guaranty  that,  even  if  the  vessel  had  already  sailed,  or 
whenever  she  should  sail,  she  would  arrive  in  time  for  them  to 
load  her  with  grain  in  August.  This  was  refused,  and  the  char- 
terers took  the  risk  of  her  arriving  in  time,  if  she  had  sailed,  or 
if,  having  her  cargo  then  on  board,  she  should,  as  the  charter- 
party  says,  "with  all  convenient  speed,  sail  and  proceed  to 
Philadelphia  or  Baltimore."  Moreover,  the  charterers  refused  to 
sign  a  charter-party  with  the  words  "sailed  from,  or  loading  at, 
Benizaf,"  and  both  parties  agreed  on  the  words  in  the  charter- 
party,  which  were  the  words  of  authority  used  by  the  agents  in 
Philadelphia  of  the  owners  of  the  vessel.  The  erasing  of  the 
printed  words,  as  to  the  option  of  cancelling,  was  in  harmony 
with  the  refusal  of  the  owners  to  guarantee  the  arrival  by  a  cer- 
tain day.  So,  also,  when  the  charterers  learned,  on  the  9th  of 
August,  that  the  vessel  did  not  leave  Gibraltar  till  that  day,  they 
proceeded  to  look  for  another  vessel.  It  was  then  apparent  that 
the  vessel  had  not  left  Benizaf  by  the  1st  of  August,  or  with  such 
reasonable  dispatch  thereafter,  that  she  could  have  had  her  cargo 
on  board,  ready  to  sail  on  the  1st  of  August. 

That  the  stipulation  in  the  charter-party,  that  the  vessel  is 
"  now  sailed,  or  about  to  sail,  from  Benizaf,  with  cargo,  for  Phila- 
delphia," is  a  warranty,  or  a  condition  precedent,  is,  we  think, 
quite  clear.  It  is  a  substantive  part  of  the  contract,  and  not  a 
mere  representation,  and  is  not  an  independent  agreement,  serv- 
ing only  as  a  foundation  for  an  action  for  compensation  in 
damages.  AJbreach_of  it  by  one  party  justifies  a  repudiation  of 
the  contract  by  the  other  party,  if  it  has  not  been  partially  exe- 
cuted in  his  favor.  The  case  falls  within  the  class  of  which 
Glaholm  v.  Hays  (2  Man.  &  Gr.  257),  Ollive  v.  Booker  (1  Exch. 
416),  Oliver  v.  Fielden  (4  Exch.  135),  Oorrissen  v.  Perrin  (2  C.  B. 
N.  S.  681),  Croockewit  v.  Fletcher  (1  H.  &  N.  893),  {Seeger  v. 
Duthie  (8  C.  B.  N.  S.  45),  Behn  v.  Burness  (3  B.  &  S.  751),  Cork- 
ling  V.  Massey  (L.  E.  8  C.  P.  395),  and  Lowher  v.  Bangs  (2  Wall. 


268  FORMATION  OF  CONTRACT.  [Pabt  H 

728)  are  examples ;  and  not  within  the  class  illustrated  by  Tarra- 
hochia  V.  Hickie,  1  H.  &  N.  183;  Dimech  v.  Corlett,  12  Moore  P.  C. 
199;  and  CUpsham  v.  Vertue,  5  Q.  B,  265.  It  is  apparent,  from 
the  averments  in  the  pleadings  of  the  charterers,  of  facts  which 
are  established  by  the  findings,  that  time  and  the  situation  of  the 
vessel  were  material  j^d  essential  parts  of  the  contract.  Con- 
struing the  contract  by  the  aid  of,  and  in  the  light  of,  the  cir- 
cumstances existing  at  the  time  it  was  made,  averred  in  the 
pleadings  and  found  as  facts,  we  have  no  difficulty  in  holding  the 
stipulation  in  question  to  be  a  warranty.  See  Abbott  on  Shipping, 
11th  ed.  by  Shee,  pp.  227,  228.  But  the  instrument  must  be 
construed  with  reference  to  the  intention  of  the  parties  when  it 
was  made,  irrespective  of  any  events  afterwards  occurring;  and 
we  place  our  decision  on  the  ground  that  the  stipulation  was 
originally  intended  to  be,  and  by  its  term  imports,  a  condition 
precedent.  The  position  of  the  vessel  at  Benizaf,  on  the  1st  of 
August  —  the  fact  that,  if  she  had  not  then  sailed,  she  was  laden 
with  cargo,  so  that  she  could  sail  —  these  were  the  only  data  on 
which  the  charterers  could  make  any  calculation  as  to  whether 
she  could  arrive  so  as  to  discharge  and  reload  in  August.  They 
rejected  her  as  loading;  but  if  she  was  in  such  a  situation,  with 
cargo  in  her,  that  she  could  be  said  to  be  "  about  to  sail, "  because 
she  was  ready  to  sail,  they  took  the  risk  as  to  the  length  of 

her  voyage. 

The  decree  of  the  Circuit  Court  is  affirmed.* 


(m.)   Effects  of  misrepresentation. 

a.    In  contracts  generally. 

WILCOX  V.  IOWA  WESLEYAN  UNIVERSITY. 

32  IOWA,  367.  — 1871. 

Action  to  foreclose  a  mortgage  executed  by  defendant  college 
to  secure  a  promissory  note.     Defense,  accord  and  satisfaction  of 

1  See  also  Norrington  v.  Wright,  115  U.  S.  203,  post,  p.  584 ;  Wells,  Fargo 
&  Co.  V.  Pacific  Ins.  Co.,  U  Cal.  397  ;  Morrill  v.  Wallace,  9  N.  H.  113 ; 
Wolcott  V.  Mount,  36  N.  J.  L.  262,  post,  Pt.  V.  Ch.  III.  §  2. 


Chap.  IV.  §2.]    REALITY  OF  CONSENT:   MISREPRESENTATION.         269 

note  and  mortgage,  in  consideration  of  certain  lands  agreed  by 
defendant  to  be  given  and  by  plaintiff  to  be  taken  as  payment. 
Plaintiff  sets  up  that  he  was  induced  to  enter  into  such  agreement 
by  the  false  representations  of  defendant  as  to  the  location,  char- 
acter, and  value  of  the  land.  Such  representations  are  found 
to  be  in  fact  false,  but  also  that  the  agent  of  the  defendant 
made  them  in  good  faith,  believing  each  piece  of  land  to  be  as 
described. 

A  decree  was  entered  by  the  trial  court  cancelling  the  note 
and  mortgage  and  releasing  defendant  from  all  liability  thereon. 
Plaintiff  appeals. 

Miller,  J.  ...  Is  the  plaintiff  entitled  to  be  relieved  from  his 
agreement  compounding  his  claim  against  defendant,  and,  if  so, 
to  what  extent? 

The  appellee  cites  Holmes  v.  Clark  (10  Iowa,  423),  which  holds, 
that  in  order  to  sustain  an  action  on  the  ground  of  false  and 
fraudulent  representations  in  the  sale  of  land,  it  must  be  shown 
that  the  representations  were  false  and  fraudulent  within  the 
knowledge  of  the  party  making  them ;  and  he  argues  that  appel- 
lant is,  in  view  of  the  law,  without  remedy  in  this  case.  The 
rule  laid  down  in  that  case  is  well  established  and  universally 
followed  in  all  actions  at  law  for  damages  sustained  by  false  and 
fraudulent  representations  in  a  sale  (see  cases  cited  by  appellant 
in  that  case) ;  but  equity  will  grant  relief  on  the  ground  of  fraud, 
although  the  party  representing  a  material  fact  made  the  asser- 
tion without  knowing  whether  it  was  true  or  not.  The  conse- 
quences to  the  person  who  acted  on  the  faith  of  the  representations 
are  the  same  whether  he  who  made  them  knew  them  to  be  false 
or  was  ignorant  whether  they  were  true  or  not.  And  if  the 
representations  were  made  to  influence  the  conduct  of  another 
party  in  a  matter  of  business,  and  they  did  influence  him  to 
his  prejudice,  equity  will  interfere  and  grant  him  relief. 
Willard's  Eq.  Jur.  150;  Ainslie  v.  Medlycott,  9  Ves.  21;  Hard- 
ing V.  Randall,  15  Me.  332;  Smith  v.  Richards,  13  Pet.  38; 
Turnbull  v.  Gadsden,  2  Strobh.  (S.  C.)  Eq.  14;  McFerran  v. 
Taylor,  3  Cranch,  281. 

And  even  if  by  mistake,  and  innocently,  a  party  misrepresents 
a  material  fact,  upon  which  another  party  is  induced  to  act, 


esents  / 
t,  it  is/ 


270  FORMATION  OF  CONTRACT.  [Part  II, 

as  conclusive  a  ground  of  relief  in  equity  as  a  wilful  and  false 
assertion.  Taylor  v.  Ashton,  11  Mees.  &  Wels.  400;  Foster  v. 
Charles,  6  Bing.  396. 

Kow  it  is  entirely  clear,  from  the  evidence,  that  the  plaintiff 
was  thus  induced  to  act  in  this  case.  The  lots  were  represented 
to  be  of  particular  situations  and  values,  when  they  were  in  fact 
otherwise;  and  while  the  agent  informed  plaintiff  that  he  had 
never  seen  the  lots  himself,  and  did  not  make  the  representations 
from  his  own  knowledge,  yet  he  did  what  was,  substantially,  the 
same  thing,  by  stating  what  the  donors  said  in  respect  to  their 
situations  and  values,  and  that  he  (the  agent)  knew  one  of  the 
donors,  whom  he  represented  to  be  a  smart  business  man  and  a 
leading  member  of  the  church,  whose  statements  could  be  relied 
upon.  Through  the  representations  and  persuasions  of  the  agent, 
the  plaintiff  generously  donated  or  agreed  to  donate  forty  per 
centum  of  his  claim  to  the  university,  and  receive  in  payment  of 
the  balance  real  property  at  cash  prices.  This  he  was,  in  equity  and 
conscience,  entitled  to  receive.  He  selected  the  two  lots  before 
mentioned  upon  the  representations  of  the  agent,  relying  entirely, 
as  he  had  a  right  to  do  under  the  circumstances,  thereon  respect- 
ing the  situation  and  value  of  the  same.  The  lots  were  not  as 
represented.  They  were  represented  by  the  agent  to  be  worth)  in 
the  aggregate,  the  sum  of  $1000,  whereas  they  were  worth  less 
than  one-fifth  that  sum.  Under  these  circumstances  the  plain- 
tiff is  clearly  entitled  to  equitable  relief  from  so  unconscionable 
a  bargain.  Nor  do  we  think,  under  all  the  circumstances  of  the 
case,  that  he  has  lost  his  right  to  relief  by  any  delay  or  laches  on 
his  part.  And  as,  by  his  agreement,  he  was  to  receive  land  at 
cash  prices,  to  the  extent  of  sixty  per  centum  of  his  claim,  which 
the  university  has  failed  to  pay  or  convey  to  him,  he  will  be  entitled 
to  recover  the  money  instead  of  these  lots,  according  to  his  con- 
tract entered  into  June  6,  1861,  viz. :  $1000  with  six  per  centum 
interest  from  that  date,  upon  reconveying  the  lots  to  the  uni- 
versity or  to  whom  it  shall  direct. 


The  judgment  of  the  District  Court  is  reversed,  and  the  cause 
will  be  remanded  for  further  proceedings  not  inconsistent  with 


Chap.  IV.  §2.]    REALITY  OF  CONSENT:   MISREPRESENTATION.         271 

this  opinion,  or  the  appellant  may,  if  he  so  elect,  have  final  judg- 
ment in  this  court. 

Reversed.* 


SCHOOL  DIRECTORS  v.  BOOMHOUR. 

83  ILLINOIS,  17.  — 1876. 


■J 


I 


Action  for  damages  for  breach  of  contract.  Verdict  for  plain- 
tiff, from  which  defendants  appeal. 

Scott,  J.  The  finding  and  judgment  of  the  court  are  plainly 
and  manifestly  against  the  weight  of  evidence,  and  so  palpable  is  ,  ^ 
the  error,  the  judgment,  for  that  cause,  must  be  reversed.  When  .^nA 
plaintiff  applied  to  defendants  to  teach  their  district  school,  they 
distinctly  informed  him  it  was  conditionally  engaged  to  Miss 
Swartz,  and  if  she  succeeded  in  getting  a  certificate  of  qualifica- 
tion that  week  at  the  teachers'  institute,  then  in  session  at  Lena, 
she  was  to  have  the  school ;  but  he  assured  them  she  could  not  get 
a  certificate,  for  the  reason,  as  he  "understood,  there  would  be 
no  examination  for  teachers  that  week."  Other  testimony  is 
mucn  stronger,  but  this  is  plaintiff's  own  statement,  and  in  that 
he  was  clearly  mistaken.  One  object  in  holding  the  institute,  as 
stated  by  the  county  superintendent  of  schools,  was,  that  an 
examination  of  teachers  might  be  had,  and,  he  states,  public 
announcement  was  made  that  such  examination  would  take 
place.  Plaintiff  was  present  at  that  meeting  of  the  institute, 
but  whether  he  heard  the  announcement  or  not,  the  superin- 
tendent does  not  know.  That  such  examination  would  be  held 
was  a  matter  of  public  notoriety,  and  as  it  was  of  special 
interest  to  those  assembled,  it  must  have  been  the  subject  of 
conversation. 

The  fact  is  uncontroverted.  Miss  Swartz  was  at  that  session  of 
the  institute,  was  examined,  and  received  the  usual  certificate  of 
qualification.     On  presenting  it  to  defendants,  they  gave  her  the 

1  Accord:  Doggett  v.  Emerson,  3  Story  (U.  S.  C.  C),  700  ;  Spurr  v.  Bene- 
dict, 99  Mass.  463 ;  Hammond  v.  Pennock,  61  N.  Y.  145 ;  Taylor  v.  Leith, 
26  Ohio  St.  428 ;  Lewis  v.  McLemore,  10  Yerg.  (Tenn.)  206.  See  also  note 
to  Chatham  Furnace  Co.  v.  Moffatt,  post,  p.  301. 


^ 


\ 


272  FORMATION  OF  CONTRACT.  [Part  H. 

school,  according  to  their  original  agreement  with  her,  and  refused 
to  allow  plaintiff  to  teach,  and  so  notified  him  at  once  by  letter. 
In  this  they  did  right.  Plaintiff's  employment  was  induced  either 
by  a  misrepresentation  or  a  misapprehension  of  facts,  and  he  could 
not  demand  the  performance  of  his  alleged  contract.  Defendants 
were  misled  by  the  erroneous  information  communicated  by  plain- 
*  tiff,  and  he  will  not  be  permitted  to  make  his  wrongful  conduct  a 

y^  y  ground  of  an  action  in  his  favor.  Whether  his  representations 
of  facts  were  wilfully  or  innocently  untrue,  is  a  question  about 
which  we  need  express  no  opinion.  The  effect  is  the  same, 
whether  he  knew  they  were  untrue  or  not. 

Legally,  Miss  Swartz  was  entitled  to  the  benefit  of  her  contract 
with  defendants,  and  they  never  would  have  negotiated  with 
plaintiff  concerning  the  school  had  it  not  been  for  his  representa- 
tion she  could  not  obtain  the  requisite  certificate.  On  these 
principal  facts  there  is  absolutely  no  conflict  in  the  testimony. 
It  is  all  one  way.  There  is  not  a  shadow  of  justice  in  the  claim 
put  forth  by  plaintiff,  and  in  no  view  that  can  be  taken,  can  he 
be  permitted  to  recover. 

The  judgment  of  the  court  below  will  be  reversed. 

Judgment  reversed. 


WOODRUFF  &  CO.  v.   SAUL. 

70  GEORGIA,  271.— 1883. 

Action  on  an  account.  Defense,  composition  and  release. 
Judgment  for  defendant.     Plaintiffs  appeal. 

Plaintiffs  sued  defendant  on  an  account,  and  in  reply  to  the 
defense  of  composition  and  release,  set  up  that  the  agreement  was 
procured  by  the  false  representations  of  the  defendant. 

Ckawfobd,  J.  .  .  .  The  error  complained  of  in  the  charge 
given,  is  that  the  debtor  must  know  his  representations  to  be  false, 
to  make  the  settlement  void.  It  is  thoroughly  well  settled  by  the 
common  law  that  the  misrepresentation  of  a  material  fact,  made 
by  one  of  the  parties  to  a  contract,  though  made  by  mistake  and 
innocently,  if  acted  on  by  the  opposite  party,  constitutes  legal 


Chap.  IV.  §2.]     REALITY  OF  CONSENT:   MISREPRESENTATION.         273 

fraud.      Story's  Eq.,  191  et  seq. ;  Kerr  on  Fraud  and  Mistake,  63 
et  seq. ;  6  Ga.  458. 

«  *  «  «  « 

Judgment  reversed.* 


6.    In  contracts  uberrimae  fidei. 
WALDEN  V.  LOUISIANA  INSUKANCE  CO. 

12  LOUISIANA,  134.  — 1838. 

Martin,  J.  The  plaintiff  is  appellant  from  a  judgment,  ■which 
rejected  his  claim  for  the  value  of  a  house,  insured  by  the  defend- 
ants, and  which  was  destroyed  by  fire. 

The  facts  of  the  case  are  these:  A  ropewalk,  which  was  so 
contiguous  to  the  house,  that  the  destruction  of  the  former  by  fire, 
must  necessarily  have  involved  the  latter  in  the  like  calamity ;  it 
was  rumored,  that  an  attempt  had  been  made  to  set  fire  to  the 
ropewalk,  which  induced  the  plaintiff  to  insure  the  house.     The 

1  Where  the  defense  to  notes  given  to  aid  in  the  building  of  a  railway  was 
that  they  were  obtained  by  false  representations,  the  court  said :  "  Even 
where  the  representations,  however  innocently  made,  are  untrue  in  fact,  the 
party  who  relies  upon  them  ought  not  to  be  bound  by  a  misrepresentation 
which  positively  and  directly  deceives  him ;  and  where  an  expressed  repre- 
sentation turns  out  to  be  untrue,  it  is  immaterial  whether  the  party  making 
it  knew  it  to  be  false  or  not.  If  he  did  not  know  it  to  be  true  (and  he  could 
not  know  it  to  be  so  if  it  were  false) ,  he  is  as  answerable  as  if  he  made  it, 
knowing  it  to  be  false.  As  the  defendant  by  confiding  in  the  false  and 
erroneous  representations  of  Carlson  was  induced  to  sign  the  notes,  he  ought 
in  equity  and  good  conscience  not  to  pay  them.  Waters  v.  Mattingly, 
1  Bibb,  244;  East  v.  Matheny,  1  A.  K.  Marsh,  192."  Horton,  C.  J.,  in 
Wickham  v.  Grant,  28  Kan.  517. 

But  in  Gregory  v.  Schoenell  (56  Ind,  101),  where  the  action  was  replevin 
to  recover  possession  of  property  delivered  under  a  contract  alleged  to  have 
been  induced  by  false  representations,  the  court  said :  "In  such  a  case,  to 
establish  fraud  and  authorize  a  rescission  of  the  contract  for  that  cause,  the 
representatio;ns  made  must  have  been  such  as  were  calculated  to  deceive  a 
person  of  common  prudence  ;  they  must  have  been  false,  and  known  to  be 
false  at  the  time,  by  the  person  who  made  them,  and  the  person  to  whom 
they  were  made  must  have  believed  them  to  be  true  and  relied  upon  them  ; 
and  they  must  have  been  the  inducement  which  caused  him  to  part  with  hiB 
property," 

T 


\ 


274  FORMATION  OF  CONTRACT.  [Part  IL 

defendants  resisted  his  claim,  on  the  ground,  that  he  had  not 
communicated  the  circumstance,  which  had  excited  his  alarm  and 
determined  him  to  insure. 

It  appears  to  us,  the  District  Court  did  not  err.  The  under- 
writer had  an  undoubted  right  to  be  informed  of  every  circum- 
stance, which,  creating  or  increasing  the  risk  against  which 
insurance  is  sought,  may  induce  him  to  decline  the  insurance,  or 
demand  a  higher  premium.  It  appears,  from  the  plaintiff's 
own  confession,  that  the  attempt  which  had  been  made  to  set  on 
fire  a  building,  which  could  not  have  been  consumed  without 
materially  endangering  his  house,  created  in  him  an  alarm,  which 
prompted  him  to  guard  against  the  danger. 

It  is  true,  he  evidently  acted  in  good  faith;  for  when  he  called 
on  the  defendants  for  indemnification,  he  candidly  informed  them 
of  the  circumstance  which  had  alarmed  him.  His  ignorance  of 
his  duty  cannot  protect  him  against  his  omission  to  give  informa- 
tion of  a  material  fact,  which  the  defendants  had  a  right  to  know, 
in  order  to  establish  the  proper  rate  of  insurance. 

It  is  therefore  ordered,  adjudged,  and  decreed  that  the  judg- 
ment of  the  District  Court  be  affirmed,  with  costs.  ^ 

^  "  In  respect  to  the  duty  of  disclosing  all  material  facts,  the  case  of  rein- 
surance does  not  differ  from  that  of  an  original  insurance.  The  obligation 
in  both  cases  is  one  uberrimce  fidei.  The  duty  of  communication  indeed  is 
independent  of  the  intention,  and  is  violated  by  the  fact  of  concealment 
even  where  there  is  no  design  to  deceive.  The  exaction  of  information  in 
some  instances  may  be  greater  in  a  case  of  reinsurance  than  as  between  the 
parties  to  an  original  insurance.  In  the  former  the  party  seeking  to  shift 
the  risk  he  has  taken  is  bound  to  communicate  his  knowledge  of  the  charac- 
ter of  the  original  insured,  where  such  information  would  be  likely  to  influ- 
ence the  judgment  of  an  underwriter  ;  while  in  the  latter  the  party,  in  the 
language  of  Bronson,  J.,  in  the  case  of  the  Nexo  York  Bowery  Fire  Ins.  Co. 
v.  New  York  Fire  Ins.  Co.,  17  Wend.  (N.  Y.)  359,  367,  is  'not  bound  nor 
could  it  be  expected  that  he  should  speak  evil  of  himself.'"  —  Mr.  Justice 
Matthews,  in  Sun  Mut.  Ins.  Co.  v.  Ocean  Ins.  Co.,  107  U.  S.  485,  610. 

For  concealment  in  marine  insurance,  see  Ely  v.  Hallett,  2  Caines' 
Rep.  57. 

For  innocent  misrepresentation,  see  Goddard  v.  Monitor  Ins.  Co.,  108 
Mass.  56. 


Chap.  IV.  §2.]    REALITY  OF  CONSENT.   MISREPRESENTATION.         276 
PHOJNIX  LIFE   INS.  CO.    v.   RADDIN. 

120  UNITED  STATES,   183.  — 1867. 

Action  at  law  to  recover  upon  a  life  insurance  policy  issued  by- 
defendant  upon  the  life  of  plaintiff's  son. 

Judgment  for  plaintiff.     Defendant  appeals. 

The  policy  contained  a  provision  that,  "  if  any  of  the  declara- 
tions or  statements  made  in  the  application  for  this  policy,  upon 
the  faith  of  which  this  policy  is  issued,  shall  be  found  in  any 
respect  untrue,  this  policy  shall  be  null  and  void."  Question  28 
and  the  answer  were  as  follows : 

"28.  Has  any  application  been 
made  to  this  or  any  other  company 
for  assarance  on  the  life   of  the 

party  ?    If  so,  with   what  result  ?  "  |10,000,  Equitable  Life  Assur- 

What  amounts  are  now  assured  on      ance  Society." 
the  life  of  the  party,  and  in  what 
companies  ?     If  already  assured  in 
this  company,  state  the  No.  of  the 
policy." 

Defendant  offered  to  prove  that  the  assured,  within  three  weeks 
before  the  application  for  the  policy  in  suit,  had  made  applica- 
tions to  two  other  companies  for  insurance  on  the  life  of  the 
insured,  each  of  which  had  been  declined.  The  court  excluded 
the  evidence  and  ruled,  "  that  if  the  answer  to  one  of  the  inter- 
rogatories of  question  28  was  true,  there  would  be  no  breach  of 
warranty ;  that  the  failure  to  answer  the  other  interrogatories  of 
question  28  was  no  breach  of  the  contract;  and  that  if  the 
company  took  the  defective  application,  it  would  be  a  waiver 
on  their  part  of  the  answers  to  the  other  interrogatories  of  that 
question." 

Mr.  Justice  Gray.  .  .  .  The  jury  having  returned  a  verdict 
for  the  plaintiff  in  the  full  amount  of  the  policy,  the  defendant's 
exceptions  to  the  refusal  to  rule  as  requested  and  to  the  rulings 
aforesaid  present  the  principal  question  in  the  case. 

The  rules  of  law  which  govern  the  decision  of  this  question  are 
well  settled,  and  the  only  difficulty  is  in  applying  those  rules  to 
the  facts  before  us. 


276  FORMATION  OF  CONTRACT.  [Pabt  n. 

Answers  to  questions  propounded  by  the  insurers  in  an  applica- 
tion for  insurance,  unless  they  are  clearly  shown  by  the  form  of 
the  contract  to  have  been  intended  by  both  parties  to  be  war- 
ranties, to  be  strictly  and  literally  complied  with,  are  to  be 
construed  as  representations,  as  to  which  substantial  truth  in 
everything  material  to  the  risk  is  all  that  is  required  of  the 
applicant.  Moulor  v.  American  Ins.  Co.,  Ill  U.  S.  335;  Campbell 
V.  New  England  Ins.  Co.,  98  Mass.  381;  Thomson  v.  Weems,  9 
App.  Cas.  671. 

The  misrepresentation  or  concealment  by  the  assured  of  any 
material  fact  entitles  the  insurers  to  avoid  the  policy.  But  the 
parties  may  by  their  contract  make  material  a  fact  that  would 
otherwise  be  immaterial,  or  make  immaterial  a  fact  that  would 
otherwise  be  material.  Whether  there  is  other  insurance  on  the 
same  subject,  and  whether  such  insurance  has  been  applied  for 
and  refused,  are  material  facts,  at  least  when  statements  regard- 
ing them  are  required  by  the  insurers  as  part  of  the  basis  of  the 
contract.  Carpenter  v.  Providence  Washington  Ins.  Co.,  16  Pet. 
495;  Jeffries  v.  Life  Ins.  Co.,  22  Wall.  47;  Anderson  r.  Fitzgerald, 
4  H.  L.  Cas.  484;  Macdonald  v.  Law  Union  Ins.  Co.,  L.  R.  9  Q.  B. 
328;  Edington  v.  uEtna  Life  Ins.  Co.,  77  N.  Y.  564,  and  100 
N.  Y.  536. 

Where  an  answer  of  the  applicant  to  a  direct  question  of  the 
insurers  purports  to  be  a  complete  answer  to  the  question,  any 
I  iSubstantial  misstatement  or  omission  in  the  answer  avoids  a 
I  policy  issued  on  the  faith  of  the  application.  Cazenove  v.  British 
Equitable  Assurance  Co.,  29  Law  Journal  (N.  S.),  C.  P.  160,  affirm- 
ing «S.  C  6  C.  B.  N.  S.  437.  But  where  upon  the  face  of  the  appli- 
cation a  question  appears  to  be  not  answered  at  all,  or  to  be 
imperfectly  answered,  and  the  insurers  issue  a  policy  without 
further  inquiry,  they  waive  the  want  or  imperfection  in  the 
answer,  and  render  the  omission  to  answer  more  fully  immaterial. 
Connecticut  Ins.  Co.  v.  Luchs,  108  U.  S.  498 ;  Hall  v.  People's  Ins. 
Co.,  6  Gray,  185;  LoriUard  Ins.  Co.  v.  McCulloch,  21  Ohio  St.  176; 
American  Ins.  Co.  v.  Mdhone,  56  Mississippi,  180;  Carson  v. 
Jersey  City  Ins.  Co.,  14  Vroom,  300,  and  15  Vroom,  210;  Lebanon 
Ins.  Co.  v.  Kepler,  106  Penn.  St.  28. 

The  distinction  between  an  answer  apparently  complete,  but  in 


Chap.  IV.  §  2.]    REALITY  OF  CONSENT:  MISREPRESENTATION.         277 

fact  incomplete  and  therefore  untrue,  and  an  answer  manifestly 
incomplete,  and  as  such  accepted  by  the  insurers,  may  be  illus- 
trated by  two  cases  of  fire  insurance,  which  are  governed  by  the 
same  rules  in  this  respect  as  cases  of  life  insurance.  If  one 
applying  for  insurance  upon  a  building  against  fire  is  asked 
whether  the  property  is  incumbered,  and  for  what  amount,  and  in 
his  answer  discloses  one  mortgage,  when  in  fact  there  are  two,  ^ 
the  policy  issued  thereon  is  avoided.  Toione  v.  Fitchburg  Ins. 
Co.,  7  Allen,  51.  But  if  to  the  same  question  he  merely  answers 
that  the  property  is  incumbered,  without  stating  the  amount  of 
incumbrances,  the  issue  of  the  policy  without  further  inquiry  is 
a  waiver  of  the  omission  to  state  the  amount.  Nichols  v.  Fayette 
Ins.  Co.,  1  Allen,  63. 

In  the  contract  before  us,  the  answers  in  the  application  are 
nowhere  called  warranties,  or  made  part  of  the  contract.  In  the 
policy  those  answers  and  the  concluding  paragraph  of  the  appli- 
cation are  referred  to  only  as  "  the  declarations  or  statements  upon 
the  faith  of  which  this  policy  is  issued;  "  and  in  the  concluding 
paragraph  of  the  application  the  answers  are  declared  to  be  "  fair 
and  true  answers  to  the  foregoing  questions,"  and  to  "form  the 
basis  of  the  contract  for  insurance."  They  must  therefore  be 
considered,  not  as  warranties  which  are  part  of  the  contract,  but 
as  representations  collateral  to  the  contract,  and  on  which  it 
is  based. 

The  28th  printed  question  in  the  application  consists  of  four 
successive  interrogatories,  as  follows :  "  Has  any  application  been 
made  to  this  or  any  other  company  for  assurance  on  the  life  of 
the  party?  If  so,  with  what  result?  What  amounts  are  now 
assured  on  the  life  of  the  party,  and  in  what  companies?  If 
already  assured  in  this  company,  state  the  number  of  policy." 
The  only  answer  written  opposite  this  question  is,  "$10,000, 
Equitable  Life  Assurance  Society." 

The  question  being  printed  in  very  small  type,  the  answer  is 
written  in  a  single  line  midway  of  the  opposite  space,  evidently 
in  order  to  prevent  the  ends  of  the  letters  from  extending  above 
or  below  that  space;  and  its  position  with  regard  to  that  space, 
and  to  the  several  interrogatories  combined  in  the  question,  does 
not  appear  to  us  to  have  any  bearing  upon  the  construction  and 
effect  of  the  answer. 


278  rORMATION  OF  CONTRACT.  [Part  II. 

But  the  four  interrogatories  grouped  together  in  one  question, 
and  all  relating  to  the  subject  of  other  insurance,  would  naturally 
be  understood  as  all  tending  to  one  object,  the  ascertaining  of  the 
amount  of  such  insurance.  The  answer  in  its  form  is  responsive, 
not  to  the  first  and  second  interrogatories,  but  to  the  third  inter- 
rogatory only,  and  fully  and  truly  answers  that  interrogatory  by 
stating  the  existing  amount  of  prior  insurance  and  in  what  com- 
pany, and  thus  renders  the  fourth  interrogatory  irrelevant.  If 
the  insurers,  after  being  thus  truly  and  fully  informed  of  the 
amount  and  the  place  of  prior  insurance,  considered  it  material  to 
know  whether  any  unsuccessful  applications  had  been  made  for 
additional  insurance,  they  should  either  have  repeated  the  first 
two  interrogatories,  or  have  put  further  questions.  The  legal 
effect  of  issuing  a  policy  upon  the  answer  as  it  stood  was  to  waive 
their  right  of  requiring  further  answers  as  to  the  particulars 
mentioned  in  the  28th  question,  to  determine  that  it  was  imma- 
terial, for  the  purposes  of  their  contract,  whether  any  unsuccess- 
ful applications  had  been  made,  and  to  estop  them  to  set  up  the 
omission  to  disclose  such  applications  as  a  ground  for  avoiding 
the  policy.  The  insurers,  having  thus  conclusively  elected  to 
treat  that  omission  as  immaterial,  could  not  afterwards  make  it 
material  by  proving  that  it  was  intentional. 

The  case  of  London  Assurance  v.  Mansel  (11  Ch.  D,  363),  on 
which  the  insurers  relied  at  the  argument,  did  not  arise  on  a 
question  including  several  interrogatories  as  to  whether  another 
application  had  been  made,  and  with  what  result,  and  the  amount 
of  existing  insurance,  and  in  what  company.  But  the  application 
or  proposal  contained  two  separate  questions;  the  first,  whether 
a  proposal  had  been  made  at  any  other  office,  and,  if  so,  where ; 
the  second,  whether  it  was  accepted  at  the  ordinary  premium,  or 
at  an  increased  premium,  or  declined;  and  contained  no  third 
question  or  interrogatory  as  to  the  amount  of  existing  insurance, 
and  in  what  company.  The  single  answer  to  both  questions  was, 
"Insured  now  in  two  offices  for  £16,000  at  ordinary  rates. 
Policies  effected  last  year. "  There  being  no  specific  interrogatory 
as  to  the  amount  of  existing  insurance,  that  answer  could  apply 
only  to  the  question  whether  a  proposal  had  been  made,  or  to  the 
question  whether  it  had  been  accepted,  and  at  what  rates,  or 


Chap.  IV.  §2.]    REALITY  OF  CONSENT:  MISREPRESENTATION.  279 

declined;  and  as  applied  to  either  of  those  questions  it  was  in 
fact,  but  not  upon  its  face,  incomplete  and  therefore  untrue.  As 
applied  to  the  first  question,  it  disclosed  only  some  and  not  all 
of  the  proposals  which  had  in  fact  been  made ;  and  as  applied  to 
the  second  question,  it  disclosed  only  the  proposals  which  had 
been  accepted,  and  not  those  which  had  been  declined,  though  the 
question  distinctly  embraced  both.  That  case  is  thus  clearly 
distinguished  in  its  facts  from  the  case  at  bar.  So  much  of  the 
remarks  of  Sir  George  Jessel,  M.  R.,  in  delivering  judgment,  as 
implies  that  an  insurance  company  is  not  bound  to  look  with  the 
greatest  attention  at  the  answers  of  an  applicant  to  the  great 
number  of  questions  framed  by  the  company  or  its  agents,  and 
that  the  intentional  omission  of  the  insured  to  answer  a  question 
put  to  him  is  a  concealment  which  will  avoid  a  policy  issued 
without  further  inquiry,  can  hardly  be  reconciled  with  the 
uniform  current  of  American  decisions. 

For  these  reasons,  our  conclusion  upon  this  branch  of  the  case 
is  that  there  was  no  error,  of  which  the  company  had  a  right  to 
complain,  either  in  the  refusals  to  rule,  or  in  the  rulings  made. 
•  «  »  •  • 

The  only  objection  remaining  to  be  considered  is  that  of  vari- 
ance between  the  declaration  and  the  evidence,  which  is  thus 
stated  in  the  bill  of  exceptions :  "  After  the  plaintiff  had  rested, 
the  defendant  asked  the  court  to  rule  that  there  was  a  variance 
between  the  declaration  and  the  proof,  inasmuch  as  the  declaration 
stated  the  consideration  of  the  contract  to  be  the  payment  of  the 
sum  of  $152.10  and  of  an  annual  premium  of  $304.20,  while  the 
policy  showed  the  consideration  to  be  the  representations  made 
in  the  application  as  well  as  payment  of  the  aforesaid  sums  of 
money,  and  that  an  amendment  to  the  declaration  was  necessary; 
but  this  the  court  declined  to  rule,  to  which  the  defendant 
excepted." 

But  the  "consideration,"  in  the  legal  sense  of  the  word,  of  a 
contract  is  the  quid  pro  quo,  that  which  the  party  to  whom  a 
promise  is  made  does  or  agrees  to  do  in  exchange  for  the  promise. 
In  a  contract  of  insurance,  the  promise  of  the  insurer  is  to  pay  a 
certain  amount  of  money  upon  certain  conditions;  and  the  con- 
sideration on  the  part  of  the  assured  is  his  payment  of  the  whole 


280  FORMATION  OF  CONTRACT.  .      [Pakt  IL 

premium  at  the  inception  of  the  contract,  or  his  payment  of  part 
then  and  his  agreement  to  pay  the  rest  at  certain  periods  while 
it  continues  in  force.  In  the  present  case,  at  least,  the  applica- 
tion is  collateral  to  the  contract,  and  contains  no  promise  or 
agreement  of  the  assured.  The  statements  in  the  application  are 
only  representations  upon  which  the  promise  of  the  insurer  is 
based,  and  conditions  limiting  the  obligation  which  he  assumes. 
If  they  are  false,  there  is  a  misrepresentation,  or  a  breach  of 
condition,  which  prevents  the  obligation  of  the  insurer  from  ever 
attaching,  or  brings  it  to  an  end;  but  there  is  no  breach  of  any 
contract  or  promise  on  the  part  of  the  assured,  for  he  has  made 
none.  In  short,  the  statements  in  this  application  limit  the 
liability  of  the  insurer,  but  they  create  no  liability  on  the  part  of 
the  assured.  The  expression  at  the  beginning  of  the  policy,  that 
the  insurance  is  made  "in  consideration  of  the  representations 
made  in  the  application  for  this  policy,"  and  of  certain  sums  paid 
and  to  be  paid  for  premiums,  does  not  make  those  representations 
part  of  the  consideration,  in  the  technical  sense,  or  render  it 
necessary  or  proper  to  plead  them  as  such. 

Judgment  affirmed.* 


(iv.)   Remedies  for  misrepresentation;  estoppel. 
STEVENS  V.   LUDLUM. 

46  MINNESOTA,  160.  — 1891. 

Action  brought  in  the  municipal  court  of  Minneapolis,  the 
complaint  alleging  that  defendant  was  engaged  in  business  under 
the  name  of  the  "  New  York  Pie  Company, "  and  that  on  Decem- 
ber 20,  1889,  plaintiff  drew  a  bill  of  exchange  for  $100  upon 
defendant  under  that  name,  which  was  on  the  same  day  accepted 
by  him,  the  acceptance  being  signed  "  New  York  Pie  Company, 
E.  J.  White,  Mgr."  The  answer  was  a  general  denial.  At  the 
trial  (before  the  court,  without  a  jury)  there  was  evidence  tend- 

1  In  National  Bank  v.  Union  Ins.  Co.  (88  Cal.  497),  the  clause,  "Fraud, 
false  swearing,  misrepresentation,  or  concealment  of  a  material  fact  by  the 
insured  .  .  .  shall  render  this  policy  void,"  was  construed  to  mean  intentional 
misstatements  only. 


Chap.  IV.  §2.]     REALITY  OF  CONSENT:  MISREPRESENTATION.       281 

ing  to  prove,  and  the  court  found,  among  other  things,  that  the 
bill  was  drawn  for  the  price  of  goods  sold  and  delivered  by  plain- 
tiff; that  the  goods  were  ordered  by  White  in  the  name  of  the 
pie  company,  and,  before  delivering  them,  the  plaintiff  made 
inquiry  at  Bradstreet's  and  at  Dun's  commercial  agencies  (to 
which  he  was  a  subscriber),  and  was  informed  that  the  defendant 
was  the  proprietor  of  the  business  carried  on  in  that  name,  and 
he  relied  on  this  information  in  making  the  sale ;  and  that  the 
information  so  given  by  the  agencies  had  been  received  by  them 
from  defendant.  Judgment  was  ordered  for  plaintiff,  and  the 
defendant  appeals  from  an  order  refusing  a  new  trial. 

GiLFiLLAN,  C.  J.     The  facts  found  by  the  court  below  are 
sufficient  to  create  an  equitable  estoppel  against  defendant  as  to 
the  ownership  of  the  concern  doing  business  as  the  "  New  York 
Pie  Company."  /  To  raise  such  an  estoppel,  it  is  not  necessary 
that  the   representations   should   have   been  made  with  actual 
fraudulent  intent.     If  he  knows  or  ought  to  know  the  truth,  and 
they  are  intentionally  made  under  such  circumstances  as  show 
that  the  party  making  them  intended,  or  might  reasonably  have 
anticipated,  that  the  party  to  whom  they  are  made,  or  to  whom 
they  are  to  be  communicated,  will  rely  and  act  on  them  as  true, 
and  the  latter  has  so  relied  and  acted  on  them,  so  that  to  permit 
the  former  to  deny  their  truth  will  operate  as  a  fraud,  the  formerNL—* 
is,  in  order  to  prevent  the  fraud,  estopped  to  deny  their  truth.  I      / 
Coleman  v.  Pearce,  26  Minn.  123  (1  N.  W.  Rep.  846) ;  Beebe  v.^*"'"'^ 
Wilkinson,  30  Minn.  648  (16  N.  W.  Rep.  450).     Nor  need  the  i 
representations  be  made  directly  to  the  party  acting  on  them.     It  1 
is  enough  if  they  were  made  to  another,  and  intended  or  expected  | 
to  be  communicated  as  the  representations  of  the  party  making- 
them  to  the  party  acting  on  them,  for  him  to  rely  and  act  on. 
"  The  representation  may  be  intended  for  a  particular  individual 
alone,  or  for  several,  or  for  the  public,  or  for  any  one  of  a  par- 
ticular class,  or  it  may  be  made  to  A,  to  be  communicated  to  B. 
Any  one  so  intended  by  the  party  making  the  representation  will    I 
be  entitled  to  relief  or  redress  against  him,  by  acting  on  the 
representation  to  his  damage."     Bigelow,  Fraud,  445.     If  one  act  /^ 
on  a  representation  not  made  to  nor  intended  for  him,  he  will  da/ 
so  at  his  own  risk.     An  instance  of  a  right  to  act  on  a  representa- 


282  FORMATION  OF  CONTRACT.  [Pakt  EL 

tion  not  made  directly  to  the  person  acting  on  it,  but  intended  for 

him  if  he  had  occasion  to  act  on  it,  is  furnished  by  Pence  v. 

Arbuckle,  22  Minn.  417.     The    representations  a  business  man 

makes  to  a  bank  or  commercial  agency,  especially  to  the  latter, 

[Telating  to  his  business  or  to  his  pecuniary  responsibility,  are 

imong  those  expected  to  be  communicated  to  others  for  them  to 

ict  on.     The  business  of  a  commercial  agency  is  to  get  such 

information   as    it   can  relative  to  the  business  and  pecuniary 

ability  of  business  men  and  business  concerns,  and  communicate 

it  to  such  of  its  patrons  as  may  have  occasion  to  apply  for  it. 

Any  one  making  representations  to  such  an  agency,  relating  to 

his  business  or  to  the  business  of  any  concern  with  which  he  is 

connected,  must  know,  must  be  held  to  intend,  that  whatever  he 

so  represents  will  be  communicated  by  the  agency  to  any  patron 

who   may  have   occasion   to   inquire.     His   representations   are 

intended  as  much  for  the  patrons  of  the  agency,  and  for  them  to 

iict  on,  as  for  the  agency  itself.     When  the  representations  so 

made  are  communicated,  as  those  of  the  person  making   them, 

to  a  patron  of  the  agency,  and  he  relies  and  acts  on  them,  he  is 

in  position  to  claim  an  estoppel. 

The  findings  of  fact  in  the  case  are  fully  sustained  by  the 

evidence. 

Order  affirmed. 


§  3.   Fraud. 

(t . )   Essential  features . 

a.   Fraud  is  a  false  representation. 

LAIDLAW   V.   OKGAN. 

2  WHEATON   (U.   S.),   178.— 1817. 

Petition  or  libel  for  the  possession  of  one  hundred  and  eleven 
hogsheads  of  tobacco,  and  for  the  sequestration  of  the  same  pend- 
ing the  final  decision  of  the  court.  Answer  by  defendants  dis- 
claiming any  interest  in  the  tobacco,  and  bill  of  interpleader  by 
Boorman  and  Johnson,  who  claimed  the  ownership  of  the  same. 
Writ  of  sequestration  was  granted,  and  on  the  trial  a  verdict  was 


Chap.  IV.  §3.]     REALITY  OF  CONSENT:  FRAUD.  283 

directed  for  the  plaintiff,  and  final  judgment  entered  for  the  pos- 
session of  the  tobacco,  and  for  costs.   Writ  of  error  by  defendants. 
The  bill  of  exceptions  was  in  part  as  follows : 

"  And  it  appearing  in  evidence  in  the  said  cause,  that  on  the  night  of 
the  18th  of  February,  1815,  Messrs.  Livingston,  White,  and  Shepherd 
brought  from  the  British  fleet  the  news  that  a  treaty  of  peace  had  been 
signed  at  Ghent,  by  the  American  and  British  commissioners,  contained 
in  a  letter  from  Lord  Bathurst  to  the  Lord  Mayor  of  London,  published 
in  the  British  newspapers,  and  that  Mr.  White  caused  the  same  to  be 
made  public,  in  a  handbill,  on  Sunday  morning,  8  o'clock,  the  19th  of 
February,  1815,  and  that  the  brother  of  Mr.  Shepherd,  one  of  these 
gentlemen,  and  who  was  interested  in  one-third  of  the  profits  of  the  pur- 
chase set  forth  in  said  plaintiff's  petition,  had  on  Sunday  morning,  the 
19th  of  February,  1815,  communicated  said  news  to  the  plaintiff;  that 
the  said  plaintiff,  on  receiving  said  news,  called  on  Francis  Girault  (with 
whom  he  had  been  bargaining  for  the  tobacco  mentioned  in  the  petition, 
the  evening  previous),  said  Francis  Girault  being  one  of  the  said  house 
of  trade  of  Peter  Laidlaw  &  Co.,  soon  after  sunrise  on  the  morning  of 
Sunday,  the  19th  of  February,  1815,  before  he  had  heard  said  news. 
Said  Girault  asked  if  there  was  any  news  which  was  calculated  to 
enhance  the  price  or  value  of  the  article  about  to  be  purchased;  and 
that  the  said  purchase  was  then  and  there  made,  and  the  bill  of  parcels 
annexed  to  the  plaintiff's  petition,  delivered  to  the  plaintiff,  between 
8  and  9  o'clock  in  the  morning  of  that  day ;  and  that,  in  consequence  of 
said  news,  the  value  of  said  article  had  risen  from  30  to  50  per  cent. 
There  being  no  evidence  that  the  plaintiff  had  asserted  or  suggested 
anything  to  the  said  Girault,  calculated  to  impose  upon  him  with  respect 
to  said  news,  and  to  induce  him  to  think  or  believe  that  it  did  not  exist ; 
and  it  appearing  that  the  said  Girault,  when  applied  to,  on  the  next  day, 
Monday,  the  20th  of  February,  1815,  on  behalf  of  the  plaintiff,  for  an 
invoice  of  said  tobacco,  did  not  then  object  to  the  said  sale,  but  promised 
to  deliver  the  invoice  to  the  said  plaintiff,  in  the  course  of  the  forenoon 
of  that  day;  the  court  charged  the  jury  to  find  for  the  plaintiff.  Where- 
fore, that  justice,  by  due  course  of  law,  may  be  done  in  this  case,  the 
counsel  of  said  defendants,  for  them,  and  on  their  behalf,  prays  the  court 
that  this  bill  of  exceptions  be  filed,  allowed,  and  certified  as  the  law 
directs. 

"  (Signed)  Dominick  A.  Hall,  District  Judge. 

"Nkw  Orleans,  this  3d  day  of  May,  1815." 

Marshall,  C.  J.  The  question  in  this  case  is,  whether  the 
intelligence  of  extrinsic  circumstances,  which  might  influence  the 
price  of  the  commodity,  and  which  was  exclusively  within 
the  knowledge  of  the  vendee,  ought  to  have  been  communicated 


284  FORMATION  OF  CONTRACT.  [Part  II. 

by  him  to  the  vendor?  The  court  is  of  opinion,  that  he  was  not 
bound  to  communicate  it.  It  would  be  difficult  to  circumscribe 
the  contrary  doctrine  within  proper  limits,  where  the  means  of 
intelligence  are  equally  accessible  to  both  parties.  But  at  the 
same  time,  each  party  must  take  care  not  to  say  or  do  anything 
tending  to  impose  upon  the  other. 

The  court  thinks  that  the  absolute  instruction  of  the  judge  was 
erroneous,  and  that  the  question,  whether  any  imposition  was 
practiced  by  the  vendee  upon  the  vendor,  ought  to  have  been  sub- 
mitted to  the  jury.  For  these  reasons,  the  judgment  must  be 
reversed,  and  the  cause  remanded  to  the  District  Court  of 
Louisiana,  with  directions  to  award  a  venire  facias  de  novo. 

Judgment  reversed,  and  venire  de  novo  awarded.* 

1  "  That  case  (Laidlaw  v.  Organ)  seems  to  us  to  go  as  far  as  moral  princi- 
ples will  justify,  even  in  cases  of  that  description,  depending  on  public  intelli- 
gence, and  further  than  the  same  court  seemed  willing  to  go  in  the  case  of 
Etting  v.  Bank  of  United  States,  11  Wheat.  69."  —  Mellin,  C.  J.,  in  Lapish 
V.  Wells,  6  Me.  176, 189.  It  should  be  noticed  that  Etting  v.  Bank  of  United 
States  was  a  case  of  fraud  on  a  surety.  See  also  the  criticism  in  Paddock 
V.  Strobridge,  29  Vt.  470,  and  the  explanation  in  Steioart  v.  Wyomitig  Eanche 
Co.,  128  U.  S.  383. 

In  Croyle  v.  Moses  (90  Pa.  St.  250),  an  action  of  deceit,  the  court  says: 
"  The  question  presented  by  the  points  was  substantially,  if  at  the  time  of 
the  sale  the  horse  was  known  to  the  defendant  to  be  'a  cribber  or  wind- 
sucker,'  and  this  fact  was  artfully  concealed  by  him  to  the  injury  of  the 
plaintiff,  whether  it  was  such  a  concealment  of  a  latent  defect  as  would  avoid 
the  contract.  The  points  submitted  did  not  rest  on  the  mere  facts  that  the 
horse  was  hitched  short  and  the  reasons  assigned  therefor,  but  also  on  the 
additional  facts  that  the  defendant  knew  him  to  be  a  crib- biter,  and  resorted 
to  this  artifice  to  conceal  it,  and  gave  an  untruthful  reason  to  mislead  and 
deceive  the  plaintiff.  The  complaint  is  not  for  a  refusal  or  omission  to 
answer,  but  for  an  evasive  and  artful  answer.  ...  If  the  jury  should 
believe,  as  the  plaintiff  testified,  that  he  said  to  the  defendant,  '  If  there  is 
anything  wrong  with  the  horse,  I  do  not  want  him  at  any  price,'  and  that 
the  defendant,  with  knowledge  he  was  a  crib-biter,  answered  the  plaintiff 
artfully  and  evasively,  with  intent  to  deceive  him,  and  did  thereby  deceive 
him  to  his  injury,  it  was  such  a  fraud  on  the  plaintiff  as  would  justify  him 
in  rescinding  the  contract."     Cf.  Dean  v.  Morey,  33  la.  120. 

In  Steioart  v.  Wyoming  Banche  Co.  (128  U.  S.  383),  the  court  says:  "  In 
an  action  of  deceit,  it  is  true  that  silence  as  to  a  material  fact  is  not  neces- 
sarily, as  matter  of  law,  equivalent  to  a  false  representation.  But  mere 
silence  is  quite  different  from  concealment;  alind  est  tacere,  aliud  celare; 
a  suppression  of  the  truth  may  amount  to  a  suggestion  of  falsehood ;  and  if, 
with  intent  to  deceive,  either  party  to  a  contract  of  sale  conceals  or  sup- 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:   FRAUD.  285 

GRIGSBY  V.   STAPLETON. 

94  MISSOURI,  423.-1887. 

Black,  J.  This  was  a  suit  in  two  counts.  The  first  declares 
for  the  contract  price  of  one  hundred  head  of  cattle  sold  by  the 
plaintiff  to  the  defendant.  The  second  seeks  to  recover  the  value 
of  the  same  cattle.  The  contract  price,  as  well  as  the  value,  is 
alleged  to  have  been  $3431.25.  The  answer  is  (1)  a  general 
denial;  (2)  a  fraudulent  representation  as  to  the  health  and  con- 
dition of  the  cattle ;  (3)  fraudulent  concealment  of  the  fact  that 
they  had  Spanish  or  Texas  fever;  (4)  tender  of  their  value  in 
their  diseased  condition. 

Plaintiff  purchased  one  hundred  and  five  head  of  cattle  at  the 
stock  yards  in  Kansas  City  on  Friday,  July  25,  1884,  at  $3.60  per 
hundred-weight.  He  shipped  them  to  Barnard  on  Saturday. 
Mr.  Ray,  plaintiff's  agent,  attended  to  the  shipment  and  accom- 
panied the  cattle.  Ray  says  it  was  reported  in  the  yards,  before 
he  left  Kansas  City,  that  the  cattle  were  sick  with  Texas  fever; 
some  persons  said  they  were  sick  and  some  said  they  were  not. 
When  the  cattle  arrived  at  Barnard,  Ray  told  the  plaintiff  of  the 
report,  and  that  the  cattle  were  in  a  bad  condition ;  that  one  died 
in  the  yards  at  Kansas  City  before  loading,  and  another  died  in 
the  cars  on  the  way.  On  Sunday  morning  the  plaintiff  started 
with  them  to  his  home.  After  driving  them  a  mile  or  so,  he  says 
he  concluded  to  and  did  drive  them  back  to  the  yards,  because 
they  were  wild.  One  of  them  died  on  this  drive,  and  two  more 
died  in  the  pen  at  Barnard  before  the  sale  to  defendant.  There 
is  much  evidence  tending  to  show  that  plaintiff  drove  the  cattle 
back  because  he  was  afraid  to  take  them  to  his  neighborhood,  and 
that  he  knew  they  were  diseased,  and  dying  from  the  fever.     He 

presses  a  material  fact,  which  he  is  in  good  faith  bound  to  disclose,  this  is 
evidence  of  and  equivalent  to  a  false  representation,  because  the  conceal- 
ment or  suppression  is  in  effect  a  representation  that  what  is  disclosed  is  the 
vrhole  truth.  The  gist  of  the  action  is  fraudulently  producing  a  false  impres- 
sion upon  the  mind  of  the  other  party ;  and  if  this  result  is  accomplished,  it 
is  unimportant  whether  the  means  of  accomplishing  it  are  words  or  acts 
of  the  defendant,  or  his  concealment  or  suppression  of  material  facts  not 
equally  within  the  knowledge  or  reach  of  the  plaintiff." 


286  FORMATION  OF  CONTRACT.  "      [Pabt  IL 

made  no  disclosure  of  the  fact  that  the  cattle  were  sick  to 
defendant,  nor  that  they  were  reported  to  have  the  fever. 
Defendant  bargained  for  the  cattle  on  Sunday  afternoon  and  on 
Monday  morning  completed  the  contract  at  $3.75  per  hundred- 
weight, and  at  once  shipped  them  to  Chicago.  Thirty  died  on 
the  way,  and  twenty  were  condemned  by  the  health  officer. 
It  is  shown  beyond  all  question  that  they  all  had  the  Texas 
fever. 

The  court,  by  the  first  instruction  given  at  the  request  of  the 
plaintiff,  told  the  jury,  that  if 

"Plaintiff  made  no  representations  to  defendant  as  to  the  health  or 
condition  of  said  cattle  to  influence  defendant  to  believe  said  cattle  were 
sound  or  in  healthy  condition,  but,  on  the  contrary,  defendant  bought 
said  cattle  on  actual  view  of  the  same  and  relying  on  his  own  judgment 
as  to  their  health  and  condition,  then  the  jury  will  find  for  plaintiff. 
And  if  the  cattle  were  bought  by  the  defendant  in  the  manner  above 
stated,  it  makes  no  difference  whether  said  cattle,  or  any  of  them,  were 
at  the  time  of  said  sale  affected  with  Texas  fever  or  other  disease,  or 
whether  plaintiff  did  or  did  not  know  of  their  being  so  diseased,  as, 
under  such  circumstances,  he  would  buy  at  his  own  risk  and  peril." 

Caveat  emptor  is  the  general  rule   of  the  common  law.     If 
defects  in  the  property  sold  are  patent  and  might  be  discovered 
by  the   exercise   of   ordinary  attention,  and  the  buyer  has  an 
opportunity  to  inspect  the  property,  the  law  does  not  require  the 
vendor  to  point  out  defects.     But  there  are  cases  where  it  becomes 
the  duty  of  the  seller  to  point  out  and  disclose  latent  defects. 
Parsons  says  the  rule  seems  to  be,  that  a  concealment  or  mis- 
representation as  to  extrinsic  facts,  which  afEect  the  market  value 
j     of  the  thing  sold,  is  not  fraudulent,  while  the  same  concealment 
^     of   defects    in   the    articles   themselves    would   be    fraudulent. 
2  Pars,  on  Cont.  (6th  ed.)  775.     When  an  article  is  sold  for  a 
particular  purpose,  the  suppression  of  a  fact  by  the  vendor,  which 
u  fact  makes  the  article  unfit  for  the  purpose  for  which  it  was  sold, 
'  is  a  deceit;  and,  as  a  general  rule,  a  material  latent  defect  must 
be  disclosed  when  the  article  is  offered  for  sale,  or  the  sale  will 
be  avoided.     1  Whart.  on  Cont.  sec.  248.     The  sale  of  animals 
which  the  seller  knows,  but  the  purchaser  does  not,  have  a  con- 
tagious disease,  should  be  regarded  as  a  fraud  when  the  fact  of 


Chap.  rv.  §3.]  REALITY  OF  CONSENT:   FRAUD.  287 

the  disease  is  not  disclosed.  Cooley  on  Torts,  481.  Kerr  says : 
"Defects,  however,  which  are  latent,  or  circumstances  materially 
affecting  the  subject  matter  of  a  sale,  of  which  the  purchaser  has 
no  means,  or  at  least  has  no  equal  means  of  knowledge,  must,  if 
known  to  the  seller,  be  disclosed."  Kerr  on  Fraud  and  Mi». 
(Bump's  ed.)  101. 

In  Cardwell  v.  McClelland  (3  Sneed,  160)  the  action  was  for 
fraud  in  the  sale  of  an  unsound  horse.  The  court  had  instructed 
that  if  the  buyer  relies  upon  his  own  judgment  and  observations, 
and  the  seller  makes  no  representations  that  are  untrue,  or  says 
nothing,  the  buyer  takes  the  property  at  his  own  risk.  This 
instruction  was  held  to  be  erroneous,  the  court  saying :  "  If  the 
seller  knows  of  a  latent  defect  in  the  property  that  could  not 
be  discovered  by  a  man  of  ordinary  observation,  he  is  bound  to 
disclose  it."  In  Jeffrey  v.  Bigelow  (13  Wend.  518)  the  defendants, 
through  their  agent,  sold  a  flock  of  sheep  to  the  plaintiff;  soon 
after  the  sale,  a  disease  known  as  the  scab  made  its  appearance 
among  the  sheep.  It  was  in  substance  said,  had  the  defendants 
made  the  sale  in  person,  and  known  the  sheep  were  diseased,  it 
would  have  been  their  duty  to  have  informed  the  purchaser ;  and 
the  defendants  were  held  liable  for  the  deceit. 

In  the  case  of  McAdams  v.  Cates  (24  Mo.  223)  the  plaintiff 
made  an  exchange  or  swap  for  a  filly,  unsound  from  loss  of  her 
teeth.  The  court,  after  a  careful  review  of  the  authorities,  as 
they  then  stood,  announced  this  conclusion :  "  If  the  defect  com- 
plained of  in  the  present  case  was  unknown  to  the  plaintiff,  and 
of  such  a  character  that  he  would  not  have  made  the  exchange 
had  he  known  of  it,  and  was  a  latent  defect  such  as  would  have 
ordinarily  escaped  the  observation  of  men  engaged  in  buying 
horses,  and  the  defendant,  knowing  this,  allowed  the  plaintiff  to 
exchange  without  communicating  the  defect,  he  was  guilty  of  a 
fraudulent  concealment  and  must  answer  for  it  accordingly." 
This  case  was  followed  and  the  principle  reasserted  in  Barron  v. 
Alexander,  27  Mo.  530.  Hill  v.  Balls  (2  H.  &  N.  299)  seems  to 
teach  a  different  doctrine,  but  the  cases  in  this  court,  supported 
as  they  are,  must  be  taken  as  the  established  law  of  this  State. 

There  is  no  claim  in  this  case  that  the  defendant  knew  these 
cattle  were  diseased.     It  seems  to  be  conceded  on  all  hands  that 


288  FORMATION  OF  CONTRACT.  [Fart  II. 

Texas  fever  is  a  disease  not  easily  detected,  except  by  those  hav- 
ing had  experience  with  it.  The  cattle  were  sold  to  the  defendant 
at  a  sound  price.  If,  therefore,  plaintiff  knew  they  had  the  Texas 
fever,  or  any  other  disease  materially  affecting  their  value  upon 
the  market,  and  did  not  disclose  the  same  to  the  defendant,  he 
was  guilty  of  a  fraudulent  concealment  of  a  latent  defect.  It  is 
not  necessary  to  this  defense  that  there  should  be  any  warranty 
or  representations  as  to  the  health  or  condition  of  the  cattle. 
Indeed,  so  far  as  this  case  is  concerned,  if  the  cattle  had  been 
pronounced  by  some  of  the  cattlemen  to  have  the  Texas  fever, 
and,  after  knowledge  of  that  report  came  to  plaintiff,  some  of 
them  to  his  knowledge  died  from  sickness,  then  he  should  have 
disclosed  these  facts  to  the  defendant.  They  were  circumstances 
materially  affecting  the  value  of  the  cattle  for  the  purposes 
for  which  they  were  bought,  or  for  any  other  purpose,  and  of 
which  defendant,  on  all  the  evidence,  had  no  equal  means  of 
knowledge. 

To  withhold  these  circumstances  was  a  deceit,  in  the  absence  of 
proof  that  defendant  possessed  such  information.  It  follows  that 
the  first  instruction  is  radically  wrong,  and  that  the  second  given 
at  the  request  of  the  plaintiff  is  equally  vicious. 

The  judgment  is  reversed  and  the  cause  remanded.^ 


6.    The  representation  must  be  a  representation  of  fact. 
FISH  V.   CLELAND. 

33  ILLINOIS,  237.  — 1864. 

Beckwith,  J.  The  appellees  filed  a  bill  in  chancery  to  set 
aside  a  sale  made  by  them  to  the  appellant  of  a  life  estate  in  a 
town  lot  in  Jacksonville,  on  the  ground  of  fraud.     The  specific 

1  See  also  Maynard  v.  Maynard  (49  Vt.  297),  where  it  was  held  a  fraud  to 
conceal  the  impotency  of  an  animal  purchased  for  breeding  purposes  ;  Brown 
V.  Montgomery  (20  N.  Y.  287),  where  it  was  held  a  fraud  for  the  vendors  to 
conceal  the  insolvency  of  the  makers  of  a  check  sold  to  the  vendee.  For  a 
case  showing  a  strict  application  of  the  maxim  caveat  emptor,  see  Beninger 
V.  Corwin,  24  N.  J.  L.  257. 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:   FRAUD.  289 

allegations  on  which  relief  is  sought  are :  First.  That  the  parties 
owning  the  remainder,  held  a  meeting  at  Jacksonville,  at  which 
the  appellant  represented  his  wife,  one  of  the  owners,  when  it 
was  concluded  by  them  to  file  a  bill  in  chancery  for  a  partition  of 
the  property,  and  in  order  to  facilitate  the  same  it  was  deemed 
expedient  to  buy  the  life  estate  of  Mrs.  Cleland  on  joint  account, 
at  the  price  of  $2600  to  $2800,  or  thereabouts ;  that  for  this  pur- 
pose the  appellant,  representing  one  of  the  joint  owners,  went  to 
Rock  Island,  where  Mrs.  Cleland  resided,  and  there  purchased 
her  life  estate,  fraudulently  suppressing  what  had  transpired 
between  the  joint  owners  of  the  remainder  at  Jacksonville. 
Second.  That  the  appellant  on  that  occasion  fraudulently  repre- 
sented to  Mrs.  Cleland  that  the  property  could  not  be  sold  unless 
all  the  persons  interested  therein  were  willing;  and  that  Hatfield, 
one  of  the  joint  owners,  was  not  willing  to  have  it  sold,  when  he 
well  knew  that  Hatfield  wished  it  partitioned  and  sold.  By 
means  of  the  suppression  of  what  had  transpired  between  the 
owners  of  the  remainder,  and  these  representations,  the  appellees 
allege  that  they  were  induced  to  sell  the  life  estate  in  question 
for  a  grossly  inadequate  consideration. 

In  the  present  case  it  is  not  material  to  define  the  nature  and 
extent  of  the  appellant's  obligation  to  the  owners  of  the  remainder. 
He  may  have  been  under  obligation  to  act  for  them  and  not  for 
himself,  but  their  rights  cannot  be  asserted  by  the  appellees,  and 
are  not  involved  in  the  present  controversy.  It  is  mentioned  in 
the  bill  that  the  appellant  was  the  son-in-law  of  Mrs.  Cleland,  but 
it  is  not  alleged  that  this  relationship  occasioned  any  confidence 
between  the  parties.  There  might  have  been  such  a  confidence 
growing  out  of  this  relation  as  to  authorize  the  appellees  to  act 
upon  the  presumption  that  there  could  be  no  concealment  of  any 
material  fact  from  them,  but  a  court  of  equity  cannot  afford 
relief  on  that  ground  in  the  absence  of  any  allegation  that  the 
parties  acted  on  such  presumption,  and  where  there  is  no  evidence 
from  which  that  fact  can  be  inferred.  Undue  concealment  which 
amounts  to  a  fraud  from  which  a  court  of  equity  will  relieve, 
where  there  is  no  peculiar  relation  of  trust  or  confidence  between 
the  parties,  is  the  non-disclosure  of  those  facts  and  circumstances 
which  one  party  is  under  some  legal  or  equitable  obligation  to 


290  FORMATION  OF  CONTRACT.  [Part  H. 

communicate  to  the  other,  and  which  the  latter  has  a  right,  not 
merely  inforo  conscientice,  but  juris  et  de  jure,  to  know.  1  Story' » 
Eq.  §  207.  The  appellant  was  not  required  by  this  well-estab- 
lished rule  to  disclose  that  the  joint  owners  of  the  remainder 
contemplated  a  partition  and  sale  of  the  property,  nor  their  esti- 
mate of  the  value  of  the  life  estate,  nor  the  object  of  his  visit  to 
Rock  Island.  There  is  nothing  shown  in  the  case  creating  a 
legal  or  equitable  obligation  on  his  part  to  do  so.  The  bill  does 
not  allege  any  misrepresentation  of  the  value  of  the  property  or 
of  the  life  estate  therein,  and  we  therefore  dismiss  from  our  con- 
sideration all  the  evidence  in  that  regard.  The  allegata  must 
exist  before  the  court  can  consider  the  probata. 

The  representation  of  the  appellant  that  the  property  could  not 
be  sold  without  all  the  parties  interested  therein  consented,  if 
understood  to  mean  that  a  voluntary  sale  could  not  be  made 
without  such  consent,  was  true,  and  one  which -every  one  must 
know  was  true ;  but  if  the  representation  was  understood  to  mean 
that  a  sale  could  not  be  had  by  an  order  of  court  without  the 
consent  of  all  parties,  then  it  was  a  representation  in  regard  to 
the  law  of  the  land,  of  which  the  one  party  is  presumed  to  know 
as  much  as  the  other.  A  representation  of  what  the  law  will  or 
will  not  permit  to  be  done,  is  one  upon  which  the  party  to  whom 
it  is  made  has  no  right  to  rely,  and  if  he  does  so,  it  is  his  own 
folly,  and  he  cannot  ask  the  law  to  relieve  him  from  the  con- 
sequences. The  truth  or  falsehood  of  such  a  representation  can 
be  tested  by  ordinary  vigilance  and  attention.  It  is  an  opinion 
in  regard  to  the  law,  and  is  always  understood  as  such.  5  Hill, 
303.  We  have  not  deemed  it  material  to  ascertain  the  truth  or 
falsehood  of  the  alleged  representation  that  Hatfield  was  not 
willing  the  property  should  be  sold.  If  untrue,  it  was  only  a 
misrepresentation  in  regard  to  the  sellers'  chance  of  sale,  or  the 
probability  of  their  getting  a  better  price  for  the  property  than 
the  price  offered  by  the  appellant.  Misrepresentations  of  this 
nature  are  not  alone  sufficient  ground  for  setting  aside  a  contract. 
1  Sug.  Vend.  7 ;  12  East,  637.  Our  duty  is  to  administer  the  law, 
and  having  discharged  it,  we  leave  the  parties  before  the  tribunal 
of  an  enlightened  public  and  to  their  own  consciences.  Our  duty 
does  not  require  us  to  become  advocates  for  or  against  them  before 


I 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:   FRAUD.  291 

those  tribunals.     The  decree  of  the  court  below  will  be  reversed, 

and  the  bill  dismissed. 

Decree  reversed.* 

[Again  before  the  court  and  reported  in  43  Illinois,  282,  on  the 
question  of  relation  of  trust  and  confidence.] 


BOSS  V.  DRINKARD'S   ADM'R. 

35  AI.ABAMA,  434.  — 1860. 

Action  by  administrator  on  two  bills  of  exchange  drawn  by  B. 
on  defendant  and  by  him  accepted.  Defense,  that  it  was  repre- 
sented to  defendant  and  to  the  drawer  of  the  bill  by  the  payee, 
that  the  bills  were  promissory  notes  and  that  defendant  was 
signing  as  surety  for  B.  Judgment  for  plaintiff.  Defendant 
appeals. 

A.  J.  Walker,  C.  J.  .  .  .  We  do  not  deem  it  necessary  to  criti- 
cise the  charges,  as  to  what  would  constitute  a  fraud  in  the  execu- 
tion of  the  bill.  We  deem  it  sufficient  for  the  guidance  of  the  court 
upon  a  future  trial  to  say  that,  if  the  person  who  took  the  bill, 
procured  it  by  a  false  statement  that  it  was  an  ordinary  note, 
when  he  knew  it  to  be  a  bill  of  exchange ;  and  if  the  parties  who 
gave  the  bill,  did  it  in  ignorance  that  it  was  a  bill  of  exchange, 
and,  trusting  in  the  statement  made  to  them,  were  misled  by  it, 
a  fraud  has  been  committed,  and  the  defendant  would  be  entitled 
to  relief,  to  the  extent  of  the  injury  done  by  the  fraud,  as  against 
an  indorsee  who  did  not  pay  value.  We  think  the  law  upon  this 
point  is  correctly  stated  in  Townsend  &  MilliJcen  v.  Cowles  (31 
Ala.  428)  in  the  following  words : 

"If  the  defendant  was  in  fact  ignorant  of  the  law,  and  the  other 
party,  knowing  him  to  be  so  and  knowing  the  law,  took  advantage  of 

*  Accord :  Duffany  v.  Ferguson,  66  N.  Y.  482 ;  Upton  v.  Tribilcock,  91 
U.  S.  45.  "  Trust  and  confidence  reposed  in  a  brother-in-law  by  his  widowed 
sister-in-law  requires  the  utmost  good  faith  and  fair  dealing  in  any  contract 
of  sale  between  them.  A  misrepresentation  of  the  law  by  the  brother-in-law 
to  his  sister-in-law,  whereby  she  is  led  to  believe  her  title  to  property  held 
by  her  is  invalid,  and  on  this  account  she  sells  it  to  him,  which  sale  is  much 
to  his  advantage,  vitiates  the  sale  at  her  election,  even  though  such  repre- 
sentation was  made  in  good  faith."  —  Sims  v.  Feri'ill,  45  Ga.  585,  598.  ^ 


cU^.Ju^^^'^'^' 


^^  292  FOR]VIATION  OF  CONTRACT.  [Paet  IL 

J  such  ignorance  to  mislead  him  by  a  false  statement  of  the  law,  it  would 

constitute  a  fraud." 

It  is  conceivable  that  injury  might  result  from  a  fraudulent 
representation  that  a  bill  of  exchange  was  an  ordinary  promissory 
note;  for,  under  our  law,  the  incident  of  damages  upon  protest 
does  not  attach  to  notes,  and  the  makers  of  such  notes  are  not 
precluded  from  making  defenses  existing  between  the  original 
parties,  when  they  have  passed  into  the  hands  of  an  innocent 
holder,  as  is  the  case  with  bills  of  exchange,  which  are  governed 
by  the  commercial  law. 

The  judgment  of  the  court  below  is  reversed,  and  the  cause 
remanded.^ 


DAWE  V.  MORRIS. 

149  MASSACHUSETTS,  188.— 1889. 

Tort.  Defendant  demurred.  The  Superior  Court  sustained 
the  demurrer,  and  plaintiff  appeals. 

Devens,  J.  The  alleged  misrepresentations  of  the  defendant, 
by  which  the  plaintiff  avers  that  he  was  induced  to  enter  into  a 
contract  for  building  thirty  miles  of  the  Florida  Midland  Rail- 
"way,  are  that  the  defendant  had  purchased  a  certain  quantity  of 
rails  at  a  certain  price,  and  that  he  would  sell  those  rails  to  the 
plaintiff  at  the  same  price  if  he  would  make  such  contract.  The 
plaintiff's  declaration  alleges  that  the  defendant  had  not  then 
purchased  the  rails,  and  did  not  sell,  and  did  not  intend  to  sell, 
any  rails  so  purchased  to  the  plaintiff;  and  that  by  reason  of  the 
■contract  into  which  the  plaintiff  was  induced  to  enter,  he  was 
obliged  to  purchase  a  large  number  of  rails  at  a  much  higher  price 
than  that  named  by  the  defendant,  to  his  great  injury.  If  the 
formalities  required  by  law  in  order  that  contracts  for  the  sale  and 
delivery  of  goods  of  the  value  here  in  question  had  been  complied 
with,  that  these  facts  would  constitute  a  contract  upon  a  valuable 
consideration,  will  not  be  questioned.  The  plaintiff  «^pr  not 
_aeek^o  recover  upon  this  contract,  but  in  an  action  of  tort  in  the 

1  See  also  Moreland  v.  Atchison,  19  Tex.  303  ;  Cooke  v.  Nathan,  16  Barb. 
(N.  Y.)  342  ;  Burns  v.  Lane,  138  Mass.  350. 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:  FRAUD. 

nature  of  deceit,  because  he  was  induced  to  enter  into  the  contract 
with  the  Florida  Eailway  Company  by  reason  of  the  representa- 
tions above  set  forth. 

A  representation,  in  order  that,  if  material  and  false,  it  may 
form  the  ground  of  an  action  where  one  has  been  induced  to  act 
by  reason  thereof,  should  be  one  of  some  existing  fact.  A  state- 
ment promissory  in  its  character  that  one  will  thereafter  sell 
goods  at  a  particular  price  or  time,  will  pay  money,  or  do  any 
similar  thing,  or  any  assurance  as  to  what  shall  thereafter  be 
done,  or  as  to  any  further  event,  is  not  properly  a  representation, 
but  a  contract,  for  the  violation  of  which  a  remedy  is  to  be  sought 
by  action  thereon.  The  statement  by  the  defendant  that  he 
would  thereafter  sell  rails  at  a  particular  price  if  the  plaintiff 
would  contract  with  the  railway  company  was  a  promise,  the 
breach  of  which  has  occasioned  the  injury  to  the  plaintiff. 
Knowlton  v.  Keenan,  146  Mass.  86. 

The  plaintiff  contends  that,  even  if  this  is  so,  the  representation 
that  the  defendant  had  thus  purchased  the  rails  at  the  price  named 
was  material  and  false;  but  if  the  allegation  that  the  defendant 
had  purchased  the  rails  be  separated  from  that  of  the  promise  to 
sell  them  to  the  plaintiff,  it  is  seen  at  once  to  be  quite  unimpor- 
tant and  immaterial.  Had  the  defendant  actually  sold,  or  had  he 
been  ready  to  sell,  the  rails  at  the  time  and  price  he  promised 
that  he  would,  no  action  could  have  been  maintained  by  reason 
of  any  false  representation  that  he  had  purchased  them  when  he 
made  his  promise,  and  no  possible  injury  could  thereby  have 
resulted  to  the  plaintiff. 

It  is  urged  that,  independent  of  any  promise  to  sell  to  him,  if 
the  plaintiff  had  believed  that  the  defendant  had  purchased  rails 
at  the  price  at  which  he  said  he  had  purchased  them,  the  plaintiff 
might  thus  have  been  induced  to  believe  that  he  himself  could 
thereafter  purchase  them  at  the  same  price.  But  the  injury  from 
a  false  representation  must  be  direct,  and  the  probability  or 
possibility  that,  because  the  defendant  had  purchased  at  a  par- 
ticular price,  the  plaintiff  would  be  able,  or  might  believe  himself 
to  be  able,  to  do  so  also,  is  too  remote  to  afford  any  ground  for 
action. 

It  must  be  shown,  not  only  that  the  defendant  has  committed 


294 


FORMATION  OF  CONTRACT. 


[Pakt  II. 


V 


X 


i 


a  tort  and  that  the  plaintiff  has  sustained  damage,  but  that  the 
damage  is  the  clear  and  necessary  consequence  of  the  tort,  and 
such  as  can  be  clearly  defined  and  ascertained.  Lamb  v.  Stone, 
^11  Pick.  527;  Bradley  v.  Fuller,  118  Mass.  239.  Quite  a  different 
case  would  be  presented  if  the  defendant  had  falsely  represented 
to  the  plaintiff,  if  unskilled  in  the  price  of  rails,  what  their 
market  value  then  was,  and  what  was  the  price  at  which  they 
could  then  be  purchased. 

It  is  also  said,  that  if  the  plaintiff  believed  that  the  defendant 
had  actually  purchased  the  rails,  at  the  time  of  the  transaction, 
and  that  if  he  knew  that  the  completion  of  the  railroad  was  of 
vital  importance  to  the  interests  of  the  defendant,  he  would  more 
readily  have  confided  in  the  defendant's  promise  to  sell  them, 
and  thus  that  this  representation  was  material.  But  in  order  that 
a  false  representation  may  form  the  foundation  of  an  action  of 
deceit,  it  must  be  as  to  some  subject  material  to  the  contract 
itself.  If  it  merely  affect  the  probability  that  it  will  be  kept,  it 
is  collateral  to  it.  "Representations  as  to  matters  which  are 
merely  collateral,  and  do  not  constitute  essential  elements  of  the 
contract  into  which  the  plaintiff  is  induced  to  enter,  are  not 
sufficient."     Hedden  v.  Griffin,  136  Mass.  229. 

Wiiether  the  allegation  as  to  the  purchase  of  the  rails  by  the 
defendant  was  material  Avas  a  question  for  the  court,  which  was 
to  construe  the  contract,  and  determine  its  legal  effect  on  the 
duties  and  liabilities  of  the  parties.  It  was  for  it  to  determine 
(there  being  on  the  declaration  of  the  plaintiff  no  dispute  as  to 
the  facts)  whether  the  alleged  misrepresentations  were  material, 
and  such  as  would  invalidate  the  contract  or  form  the  foundation 
of  an  action  of  tort.     Penn  Ins.  Co.  v.  Crane,  134  Mass.  56. 

The  plaintiff  further  contends  that,  as  when  goods  have  been 
obtained  under  the  form  of  a  purchase  with  the  intent  not  to  pay 
for  them,  the  seller  may,  on  discovery  of  this,  rescind  the  contract 
and  repossess  himself  of  the  goods  as  against  the  purchaser  or 
any  one  obtaining  the  goods  from  him  with  notice  or  without 
consideration,"* an  action  of  tort  should  be  maintained  on  an 
unfulfilled  promise  which,  at  the  time  of  making,  the  promisor 
intended  not  to  perform,  by  reason  of  which  non-performance  the 
I  plaintiff  has  suffered  injury  in  having  been  induced  to  enter  into 


ni: 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:   FRAUD.  295 

a  contract  which  depended  for  its  successful  and  profitable  per- 
formance upon  the  performance  by  the  defendant  of  his  promise. 

Assuming  that  the  plaintiff's  declaration  enables  him  to  raise)' 
this  question, —  which  may  be  doubted,  as  the  averment  that  "  s^iu 
defendant  had  not  then  purchased  said  rails,  or  any  part  of  them, 
which  the  defendant  then  knew,  and  therefore  did  Jiot  sell,  and 
did  not  intend  to  sell,  said  rails  already  purchased  by  them  to  the 
plaintiff,"  is  not  an  averment  that  the  defendant  intended  not  to 
perform  his  contract, —  there  is  an  obvious  difference  between  the 
case  where  a  contract  is  rescinded,  and  thus  ceases  to  exist,  and 
one  in  which  the  injury  results  from  the  non-performance  of  that 
which  it  is  the  duty  of  the  defendant  to  perform,  and  where  there 
is  no  other  wrong  than  such  non-performance.  To  term  this  a 
tort  would  be  to  confound  a  cause  of  action  in  contract  with  one 
in  tort,  and  would  violate  the  policy  of  the  statute  of  frauds  by 
relieving  a  party  from  the  necessity  of  observing  those  statutory 
formalities  which  are  necessary  to  the  validity  of  certain  execu- 
tory contracts. 

It  was  not  disputed  that  the  plaintiff's  declaration  sets  forth  in 
the  second  count  a  good  cause  of  action.  The  result  is,  that  as  to 
the  first  count  the  entry  must  be. 

Judgment  for  the  defendant  affirmed. 


SHELDON  V.   DAVIDSON. 

86  WISCONSIN,  138.  — 1893. 

Action  for  deceit.  Demurrer  to  complaint  sustained.  Plain- 
tiff appeals. 

The  complaint  set  up  that  defendant  leased  to  the  plaintiff 
certain  premises  on  the  front  of  which  there  was  a  brick  dwelling- 
house  and  store,  and  on  the  east  sixty  feet  a  barn,  the  lease  stipu- 
lating that  it  should  not  take  effect  as  to  the  east  sixty  feet  until 
the  expiration  (six  months  later)  of  an  existing  lease  between 
defendant  and  one  Veidt;  that  plaintiff  made  due  inquiry  of 
defendant  as  to  the  terms  and  conditions  of  Veidt' s  lease,  and  that 
the  defendant, 


296  FORMATION  OF  CONTRACT.  [Part  IL 

"  With  intent  to  deceive  and  defraud  the  plaintiff,  and  for  the  purpose 
of  inducing  him  to  sign  said  lease,  falsely  and  fraudulently  concealed 
from  the  plaintiff  the  fact  that  the  barn  standing  upon  the  said  east  sixty 
feet  [of  said  lot]  was  not  the  property  of  said  defendant,  but  was  the 
property  of  said  Veidt,  and  that  the  plaintiff  could  not  obtain  possession 
thereof  on  the  10th  day  of  September  next  ensuing,  and  falsely  repre- 
sented to  the  plaintiff,  and  for  the  purpose  of  inducing  the  plaintiff  to 
execute  said  lease,  that  he  could  have  possession  of  said  sixty  feet  and 
the  stable  standing  thereon  on  and  after  September  10th  next  ensuing ; 
that  the  plaintiff,  relying  upon  the  said  representations,  was  thereby 
induced  to  sign  the  aforesaid  lease,  and  did  so  sign  it  within  a  few  days 
thereafter." 

The  complaint  further  alleged  that  the  representation  was  false 
in  that  the  barn  belonged  to  Veidt  and  was  removed  by  him  at  the 
expiration  of  his  lease.  There  was  no  stipulation  in  the  lease 
regarding  the  buildings. 

Orton,  J.  [After  stating  the  above  facts,]  The  gravamen  of 
the  complaint  is  the  fraudulent  concealment  of  the  fact  that  the 
building  on  the  east  sixty  feet  of  the  lot  was  not  the  property  of 
the  defendant,  but  was  the  property  of  Veidt,  the  lessee ;  and  the 
false  representation  that  the  plaintiff  could  have  possession  of  the 
said  sixty  feet,  and  the  stable  standing  thereon,  on  and  after  Sep- 
tember 10th  next  ensuing. 

1.  As  to  the  concealment  as  a  cause  of  action.  That  barn  on 
the  sixty  feet  must  have  been  placed  there  by  the  tenant,  Veidt, 
temporarily  for  his  own  use,  with  the  privilege  of  removal  at  the 
end  of  his  term,  and  was  never  a  part  of  the  realty.  It  could  not 
have  been  so  attached  to  the  soil  as  to  become  a  part  of  the  realty. 
If  it  had  been,  the  plaintiff  would  have  been  entitled  to  it  by  the 
terms  of  his  lease,  and  he  could  have  prevented  its  removal. 
We  conclude,  therefore,  that  the  barn  was  a  tenant's  fixture  in 
fact  as  well  as  by  the  terms  of  the  Veidt  lease,  and  removable  by 
him  during  his  term.  The  Veidt  lease  is  referred  to  in  the 
plaintiff's  lease.  The  plaintiff  does  not  state  that  he  did  not 
know  all  about  that  lease,  and  all  about  the  character  of  that 
building  as  having  been  placed  there  by  the  tenant,  and  remov- 
able. He  states  only  that  he  inquired  of  the  defendant  about  the 
terms  and  conditions  of  that  lease,  and  does  not  state  whether  the 
defendant  told  him  what  they  were  or  not.     He  does  not  state 


Chap.  IV.  §  3.] 


REALITY  OF  CONSENT:    FRAUD. 


29T 


that  the  defendant  knew,  or  had  reason  to  know,  that  he,  the 
plaintiff,  was  ignorant  of  the  fact  that  the  defendant  did  not  own 
the  barn.  The  defendant  might  well  have  supposed  that  the 
plaintiff  knew  the  terms  of  that  lease  referred  to  in  his  own 
lease,  and  the  character  of  the  barn  as  a  fixture  was  open  to  com- 
mon observation.  But  more  material  than  even  this  is  the 
absence  of  any  averment  that  the  plaintiff  was  induced  to  sign 
the  lease  by  such  fraudulent  concealment.  It  states  merely  that 
the  concealment  was  for  the  purpose  of  inducing  him  to  do  so, 
but  fails  to  state  that  he  was  actually  induced  to  do  so  by  it.  It 
is  yery_clear  that  there  are-notsufficient-aUegations  in  the  com-: 
^laintjio. make. the.  fra,udiilfiat.  cQncfiaJmejjt  u  cause  of  action. 

2.  As  to  the  false  representation  that  the  plaintiff  "  could  have 
possession  of  said  east  sixty  feet,  and  the  stable  standing  thei'eon, 
on  and  after  September  10th  next  ensuing."  The  plaintiff  did 
have  possession  of  the  sixty  feet,  so  that  such  part  of  the  repre- 
sentation at  least  was  not  false.  As  to  the  other  part  of  the 
representation,  it  relates  to  a  future  event,  and  is  not  of  an  exist- 
ing fact  or  of  a  past  event,  and  therefore  is  not  actionable  if  such 
event  should  not  occur.  It  is  a  mere  opinion,  prediction,  or 
promise  of  a  future  condition  of  things,  upon  which  the  plaintiff 
had  no  right  to  rely.  In  Morrison  v.  Koch  (32  Wis.  254)  the 
representation  was  that  a  certain  dam  "would  always  in  the 
future  continue  to  furnish  the  full  amount  of  power  conveyed." 
Mr.  Justice  Lyon  said  in  the  opinion :  *'  It  seems  quite  clear  that 
no  charge  of  fraud  can  be  predicated  upon  it.  At  most  there  was 
a  mere  expression  of  opinion  that  in  the  future  the  conditions  on 
which  the  water  supply  depended  would  remain  favorable  to  a 
continuance  of  the  supply.  ...  It  is  wanting  in  all  the  essen- 
tial elements  which  constitute  a  fraud."  In  Patterson  v.  Wright 
(64  Wis.  289)  the  representation  was  that  the  party  "said  or 
promised  that  he  would  pay  a  certain  sum  of  money  as  a  con- 
sideration of  and  to  induce  the  giving  of  certain  notes,  and  upon 
which  they  were  obtained."  It  was  held  "that  the  representation 
must  relate  to  a  present  or  past  state  of  facts,  and  that  relief  as 
for  deceit  cannot  be  obtained  for  the  non-performance  of  a 
promise  or  other  statement  looking  to  the  future ; "  citing  the 
above  case,  Bigelow,  Frauds,  11,  12,  and  Fenwick  v.  Grimes,  5- 


298  FORMATION  OF  CONTRACT.  [Part  H 

Cranch  C.  C.  439.  In  Malthy  v.  Austin  (G5  "Wis.  527)  the  repre- 
sentation was  "of  the  value  of  a  certain  tract  of  land,"  and  in 
Prince  v.  Overholser  (75  Wis.  646)  it  was  "  that  a  certain  bounty- 
land  warrant  would  locate  any  kind  of  government  land,"  and 
neither  was  held  actionable.  The  principle  has  become  elemen- 
tary in  respect  to  all  representations  relating  to  the  future  and 
as  mere  expressions  of  opinion.  This  representation  is  not 
fraudulent  or  actionable  for  both  reasons.  It  relates  to  a  future 
event,  and  is  a  mere  opinion,  viz.,  "that  the  plaintiff  could  have 
possession  of  the  building  on  the  east  sixty  feet  of  the  lot  on  and 
after  September  10th  next  ensuing."  This  statement  was  made 
before  March  16,  1891. 

This  disposes  of  all  the  pretended  deceit  or  fraud  alleged  in  the 
complaint.     The  demurrer  was  properly  sustained. 

By  the  court.  The  order  of  Superior  Court  is  affirmed,  and  the 
<;ause  remanded  for  further  proceedings  according  to  law. 


c.  The  representation  must  be  made  with  knowledge  of  its  false- 
hood or  without  belief  in  its  truth. 

CHATHAM  FURNACE  CO.  v.  MOFFATT. 

147  MASSACHUSETTS,  403.— 1888. 

Tort  for  false  and  fraudulent  representations  made  by  the 
■defendant,  whereby  the  plaintiff  was  induced  to  take  a  lease  of  a 
mine,  and  to  purchase  certain  mining  machinery.  Judgment  for 
plaintiff. 

C.  Allen,  J.  It  is  well  settled  in  this  commonwealth  that  the 
charge  of  fraudulent  intent,  in  an  action  for  deceit,  may  be  main- 
tained by  proof  of  a  statement  made,  as  of  the  party's  own 
knowledge,  which  is  false,^rovided  the  thing  stated  is  not  merely 
a  matter  of  opinion,  estimate,  or  judgment^  but  is  susceptible  of 
actual  knowledge;  and  in  such  case  it  is  not  necessary  to  make 
any  further  proof  of  an  actual  intent  to  deceive.  The  fraud 
I  consists  in  stating  that  the  party  knows  the  thing  to  exist,  when 
'he  does  not  know  it  to  exist;  and  if  he  does  not  know  it  to  exist, 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:  FRAUD.  299 

he  must  ordinarily  be  deemed  to  know  that  he  does  not.  For- 
getfulness  of  its  existence  after  a  former  knowledge,  or  a  mere  a 
belief  of  its  existence,  will  not  warrant  or  excuse  a  statement  of 
actual  knowledge.  This  rule  has  been  steadily  adhered  to  in  this 
commonwealth,  and  rests  alike  on  sound  policy  and  on  sound 
legal  principles.  Cole  v.  Cassidy,  138  Mass.  437;  Savage  v. 
Stevens,  126  Mass.  207;  Tucker  v.  White,  125  Mass.  344;  Litch- 
field  V.  Hutchinson,  117  Mass.  195;  Milliken  v.  Thorndike,  103 
Mass.  382;  Fisher  v.  Mellen,  103  Mass.  503;  Stone  v.  Denny,  4 
Met.  151;  Page  v.  Bent,  2  Met.  371;  Hazard  v.  Irwin,  18  Pick. 
95.  And  though  this  doctrine  has  not  always  been  fully  main- 
tained elsewhere,  it  is  supported  by  the  following  authorities, 
amongst  others:  Cooper  v.  Schlesinger,  111  U.  S.  148;  Bowery. 
Fenn,  90  Penn.  St.  359;  Broionlie  v.  Campbell,  5  App.  Cas.  925, 
953,  by  Lord  Blackburn;  Reese  River  Mining  Co.  v.  Smith,  L.  R. 
4  H.  L.  64,  79,  80,  by  Lord  Cairns;  Slim  v.  Croucher,  1  De  G., 
F.  &  J.  518,  by  Lord  Campbell.  See  also  Peek  v.  Derry,  59  L.  T. 
(N.  S.)  78,  which  has  been  published  since  this  decision  was 
announced. 

In  the  present  case,  the  defendant  held  a  lease  of  land,  in  which 
there  was  iron  ore.  The  mine  had  formerly  been  worked,  but  ' 
-operations  had  ceased,  and  the  mine  had  become  filled  with  water 
and  debris.  The  defendant  sought  to  sell  this  lease  to  the  plain- 
tiff, and  represented  to  the  plaintiff,  as  of  his  own  knowledge, 
that  there  was  a  large  quantity  of  iron  ore,  from  8000  to  10,000 
tons,  in  his  ore  bed,  uncovered  and  ready  to  be  taken  out,  and 
visible  when  the  bed  was  free  from  water  and  debris.  (The 
material  point  was,  whether  this  mass  of  iron  ore,  which  did  in 
truth  exist  under  the  ground,  was  within  the  boundaries  of  the 
land  included  in  the  defendant's  lease,  and  the  material  part  of 
the  defendant's  statement  was,  that  this  was  in  his  ore  bed;]  and 
the  representations  were  not  in  fact  true  in  this,  that  while  in  a 
mine  connecting  with  the  defendant's  shafts  there  was  ore  suffi- 
cient in  quantity  and  location  relative  to  drifts  to  satisfy  his 
representations,  if  it  had  been  in  the  land  covered  by  the  defend- 
ant's lease,  that  ore  was  not  in  the  defendant's  mine,  but  was  in 
the  adjoining  mine;  and  the  defendant's  mine  was  in  fact 
worked  out. 


300  FORMATION  OF  CONTRACT,  [Part  H 

During  the  negotiations,  the  defendant  exhibited  to  the  plain- 
tiff a  plan  of  a  survey  of  the  mine,  which  had  been  made  for  him, 
and  the  plaintiff  took  a  copy  of  it.  In  making  this  plan,  the 
surveyor,  with  the  defendant's  knowledge  and  assent,  did  not 
take  the  course  of  the  first  line  leading  from  the  shaft  through 
which  the  mine  was  entered,  but  assumed  it  to  be  due  north ;  and 
the  defendant  never  took  any  means  to  verify  the  course  of  this 
line.  In  point  of  fact,  this  line  did  not  run  due  north,  but  ran  to 
the  west  of  north.  If  it  had  run  due  north,  the  survey,  which 
was  in  other  respects  correct,  would  have  correctly  shown  the 
mass  of  iron  ore  in  question  to  have  been  within  the  boundaries 
of  the  land  covered  by  the  defendant's  lease ;  but  in  consequence 
of  this  erroneous  assumption  the  survey  was  misleading,  the 
iron  ore  being  in  fact  outside  of  those  boundaries.  It  thus 
appears  that  the  defendant  knew  that  what  purported  to  be  a 
survey  was  not  in  all  respects  an  actual  survey,  and  that  the  line 
upon  which  all  the  others  depended  had  not  been  verified,  but 
was  merely  assumed;  and  this  was  not  disclosed  to  the  plaintiff. 
(The  defendant  took  it  upon  himself  to  assert,  as  of  his  own 
knowledge,  that  this  large  mass  of  ore  was  in  his  ore  bed,  that 
is,  within  his  boundaries  j)  and  in  support  of  this  assertion  he 
exhibited  the  plan  of  the  survey,  the  first  line  of  which  had  not 
been  verified,  and  was  erroneous.  Now  this  statement  was  clearly 
of  a  thing  which  was  susceptible  of  knowledge.  A  real  survey, 
all  the  lines  of  which  had  been  properly  verified,  would  have 
shown  with  accuracy  where  the  ore  was  situated.  It  was  within 
the  defendant's  knowledge  that  the  first  line  of  the  plan  had  not 
been  verified.  If  under  such  circumstances  he  chose  to  take  it 
upon  himself  to  say  that  he  knew  that  the  mass  of  ore  which  had 
been  discovered  was  in  his  ore  bed,  in  reliance  upon  a  plan  which 
he  knew  was  not  fully  verified,  it  might  properly  be  found  that 
the  charge  of  fraudulent  misrepresentation  was  sustained,  although 
he  believed  his  statement  to  be  true. 

The  case  of  Milliken  v.  Thorndike  (103  Mass.  382)  bears  a  con- 
siderable resemblance  to  the  present  in  its  facts.  That  was  an 
action  by  a  lessor  to  recover  rent  of  a  store,  which  proved  unsafe, 
certain  of  the  walls  having  settled  or  fallen  in  shortly  after  the 
execution  of  the  lease.     The  lessor  exhibited  plans,  and,  in  reply 


Chap.  IV.  §3.]     REALITY  OF  CONSENT:  FRAUD.  301 

to  a  question  if  the  drains  were  where  they  were  to  be  according 

to  the  plans,  said  that  the  store  was  built  according  to  the  plans 
in  every  particular;  but  this  appeared  by  the  verdict  of  the  jury 
to  be  erroneous.  The  court  said,  by  Mr.  Justice  Colt,  that  the 
representation  "was  of  a  fact,  the  existence  of  which  was  not 
open  and  visible,  of  which  the  plaintiff  (the  lessor)  had  superior 
means  of  knowledge,  and  the  language  in  which  it  was  made 
contained  no  words  of  qualification  or  doubt.  The  evidence  fully 
warranted  the  verdict  of  the  jury. " 

In  respect  to  the  rule  of  damages,  the  defendant  does  not  in 
argument  contend  that  the  general  rule  adopted  by  the  judge  was 
incorrect,  but  that  it  does  not  sufficiently  appear  what  considera- 
tions entered  into  his  estimate.  No  requests  for  rulings  upon 
this  subject  were  made,  and  there  was  no  error  in  the  course 
pursued  by  the  judge. 

Exceptions  overruled.^ 


McKOWN  V.  rURGASOK 

47  IOWA,  636.— 1878. 

Action  for  deceit  in  the  sale  of  a  note.  Judgment  for  plaintiff. 
Defendant  appeals. 

Day,  J.     The  court  instructed  the  jury  as  follows : 

"  3.  If  [you  find  that]  at  the  time  defendant  sold  the  note  in  question 
to  the  plaintiff,  he  represented  said  note  was  good,  and  that  the  maker 

1  Accord:  Lynch  v.  Mercantile  Trust  Co.,  18  Fed.  Rep.  486;  Dulaney  y. 
Sogers,  64  Mo.  201 ;  Haven  v.  Neal,  43  Minn.  316. 

That  a  defendant  is  not  liable  in  an  action  for  deceit  where  the  misrepre- 
sentation was  made  innocently,  see  Cowley  v.  Smyth,  46  N.  J.  L.  380  ;  Da  Lee 
V.  Blackburn,  11  Kans.  150 ;  Tucker  v.  ]Vhite,  125  Mass.  344 ;  Wakeman  v. 
Dalley,  51  N.  Y.  27.  Contra:  Holcomb  v.  Noble,  69  Mich.  396;  Davis  v. 
Nuzum,  72  Wis.  439,  in  which  States  no  such  distinction  is  taken. 

If  an  independent  action  of  deceit  could  not  be  maintained,  it  would  seem 
that  a  claim  for  damages  for  deceit  could  not  be  interposed  as  a  defense  to 
an  action  for  the  price.  Mcfntyre  v.  Buell,  132  N.  Y.  192  ;  King  v.  Eagle 
Mills,  10  Allen,  548 ;  First  N.  B.  v.  Yocum,  11  Neb.  328.  Contra:  Mulvey 
V.  King,  39  Ohio  St.  491 ;  Loper  v.  Bobinson,  54  Tex.  510. 

But  it  would  be  a  defense  to  an  action  for  damages  for  breach  of  a  bilateral 
contract.    School  Directors  v.  Boomhour,  83  111.  17,  ante,  p.  271. 


302  FORMATION  OF  CONTRACT.  [Part  IL 

thereof,  H.  E.  Stewart,  was  solvent ;  that  the  plaintiff  relied  upon  said 
representations  in  purchasing  said  note;  and  that  said  representations 
wei'e  untrue  at  the  time  they  were  made ;  and  that  said  defendant  knew 
they  were  untrue,  or  had  no  reasonable  grounds  for  believing  them  true, 
your  verdict  should  be  for  the  plaintiff  for  the  amount  paid  for  said 
note,  together  with  six  per  cent  interest  from  the  date  of  said  payment." 

The  giving  of  this  instruction  is  assigned  as  error.  It  was  not 
proper  to  give  this  instruction  under  the  issues  presented.  The 
plaintiff  claims  of  defendant  damages  for  fraudulently  making 
representations,  with  full  knowledge  when  he  made  them  that 
they  were  false.  Upon  this  question  the  case  of  Pearson  v.  Howe 
(1  Allen,  207)  is  directly  in  point.  In  that  case  it  was  held  that 
(in  an  action  for  deceit  a  declaration  which  alleges  that  the 
representations  made  were  well  known  by  defendant  to  be  untrue 
is  not  supported  by  proof,  simply,  that  the  defendant  had 
reasonable  cause  to  believe  that  they  were  untruej 

,  Judgment  reversed.* 

^  "  The  plaintiff  requested  the  court  to  charge  that  if  the  defendant 
knew  or  had  reason  to  believe  there  was  not  one  hundred  and  twenty- 
five  acres  of  land,  he  was  guilty  of  fraud  in  representing  that  there  was 
that  quantity.  The  court  declined  to  adopt  that  precise  language,  but 
repeated  what  had  been  previously  said,  tliat  if  defendant,  intending  to 
cheat  and  defraud,  misrepresented  or  concealed  a  material  fact,  he  was 
liable  for  the  wrong.  The  request  was  erroneous.  It  sought  to  substi- 
tute for  the  fraudulent  intent  a  fact  which  might  or  might  not,  in  the 
minds  of  the  jury,  establish  that  intent.  The  defendant  might  have  had 
reason  to  believe  that  there  was  less  than  one  hundred  and  twenty-five 
acres  of  land,  and  yet  not  have  believed  it,  but  have  honestly  believed 
the  reverse.  The  cases  cited  in  support  of  the  request  to  charge,  when 
carefully  read,  are  found  to  guard  against  any  such  misapprehension. 
(Meyer  v.  Amidon,  45  N.  Y.  169  ;  Wakeman  v.  Dalley,  51  Id.  27.)  They 
treat  the  fact  that  one  'has  reason  to  believe'  his  statement  to  be  false 
merely  as  evidence  tending  to  prove  the  fraudulent  intent,  and  require 
that  intent  to  be  established.  The  court  applied  the  needed  correction 
to  the  request,  and  declined  to  make  conclusive  as  matter  of  law  what 
was  properly  but  evidence  upon  the  question  of  fact."  —  Finch,  J.,  in 
Salisbury  v.  Howe,  87  N.  Y.  128,  135. 


Chap.  IV.  §3.]  REALITY   OF  CONSENT:   FRAUD.  308 

d.    The  representation  must  be  made  with  the  intention  that  it 
should  be  acted  upon  by  the  injured  party. 

STEVEKS   V.   LUDLUM. 

46  MINNESOTA,  160.— 1891. 
[Beported  herein  at  p.  280.] 


HUNNEWELL  v.  DUXBURY. 

154  MASSACHUSETTS,  286.  — 1891. 

Barker,  J.  The  action  is  tort  for  deceit,  in  inducing  the 
plaintiff  to  take  notes  of  a  corporation  by  false  and  fraudulent 
representations,  alleged  to  have  been  made  to  him  by  the  defend- 
ants, that  the  capital  stock  of  the  corporation,  amounting  to 
$150,000,  had  been  paid  in,"  and  that  patents  for  electrical 
advertising  devices,  of  the  value  of  f  149, 650,  had  been  trans- 
ferred to  it. 

Erom  the  exceptions,  it  appears  that  the  corporation  was 
organized  in  January,  1885,  under  the  laws  of  Maine,  and  engaged 
in  business  in  Massachusetts ;  that  it  filed  with  the  commissioner 
of  corporations  a  certificate  containing  the  above  statements,  dated 
August  11,  1885,  as  required  by  the  St.  of  1884,  c.  330,  §  3,  signed 
by  the  defendants,  with  a  jurat  stating  that  on  that  date  they 
had  severally  made  oath  that  the  certificate  was  true,  to  the  best 
of  their  knowledge  and  belief;  that  before  the  plaintiff  took  the 
notes  the  contents  of  this  certificate  had  been  communicated  to 
him  by  an  attorney  whom  he  had  employed  to  examine  the 
records ;  and  that  he  relied  upon  its  statements  in  accepting  the 
notes.  There  was  no  other  evidence  of  the  making  of  the  alleged 
representations. 

The  main  question,  which  is  raised  both  by  the  demurrer  to  the 
second  count  of  the  declaration  and  by  the  exception,  is  whether 
the  plaintiff  can  maintain  an  action  of  deceit  for  alleged  mis- 
statements contained  in  the  certificate.  In  the  opinion  of  a 
majority  of  the  court  this  question  should  have  been  decided 
adversely  to  the  plaintiff.     The  execution  by  the  defendants  of 


S04  FORMATION  OF  CONTRACT.  [Part  II 

the  certificate  to  enable  the  corporation  to  file  it  under  the  St.  of 
1884,  c.  330,  §  3,  was  too  remote  from  any  design  to  influence 
the  action  of  the  plaintiff  to  make  it  the  foundation  of  an  action 
of  deceit. 

To  sustain  such  an  action,  misrepresentations  must  either  have 
been  made  to  the  plaintiff  individually,  or  as  one  of  the  public, 
or  as  one  of  a  class  to  whom  they  are  in  fact  addressed,  or  have 
been  intended  to  influence  his  conduct  in  the  particular  of  which 
he  complains. 

(jChis  certificate  was  not  communicated  by  the  defendants,  or 
by  the  corporation,  to  the  public  or  to  the  plaintiff.  It  was  filed 
with  a  state  official  for  the  definite  purpose  of  complying  with  a 
requirement  imposed  as  a  condition  precedent  to  the  right  of  the 
corporation  to  act  in  Massachusetts.  Its  design  was  not  to  pro- 
cure credit  among  merchants,  but  to  secure  the  right  to  transact 
business  in  the  State?) 

The  terms  of  the  statute  carry  no  implication  of  such  a  liability. 
Statutes  requiring  similar  statements  from  domestic  corporations 
have  been  in  force  here  since  1829,  and  whenever  it  was  intended 
to  impose  a  liability  for  false  statements  contained  in  them  there 
has  been  an  express  provision  to  that  effect;  and  a  requisite  of 
the  liability  has  uniformly  been  that  the  person  to  be  held  signed 
knowing  the  statement  to  be  false.  St.  1829,  c.  53,  §  9;  Eev. 
Sts.  c.  38,  §  28;  Gen.  Sts.  c.  60,  §  30;  St.  1870,  c.  224,  §  38,  cl. 
5;  Pub.  Sts.  c.  106,  §  60,  cl.  5.  To  hold  that  the  St.  of  1884,  c. 
330,  §  3,  imposes  upon  those  officers  of  a  foreign  corporation  who 
sign  the  certificate,  which  is  a  condition  of  its  admission,  the 
added  liability  of  an  action  of  deceit,  is  to  read  into  the  statute 
what  it  does  not  contain. 

If  such  an  action  lies,  it  might  have  been  brought  in  many 
instances  upon  representations  made  in  returns  required  of 
domestic  corporations,  and  yet  there  is  no  instance  of  such  an 
action  in  our  reports.  In  Fogg  v.  Pew  (10  Gray,  409)  it  is  held 
that  the  misrepresentations  must  have  been  intended  and  allowed 
by  those  making  them  to  operate  on  the  mind  of  the  party 
induced,  and  have  been  suffered  to  influence  him.  In  Bradley  v. 
Poole  (98  Mass.  169)  the  representations  proved  and  relied  on 
were  made  personally  by  the  defendant  to  the  plaintiff,  in  the 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:   FRAUD.  305 

course  of  tlie  negotiation  for  the  shares  the  price  of  which  the 
plaintiff  sought  to  recover.  Felker  v.  Standard  Yarn  Co.  (148 
Mass.  226)  was  an  action  under  the  Pub.  Sts.  c.  106,  §  60,  to 
•enforce  a  liability  explicitly  declared  by  the  statute. 

Nor  do  we  find  any  English  case  which  goes  to  the  length 
necessary  to  sustain  the  plaintiff's  action.  The  English  cases 
fall  under  two  heads:  1.  Those  of  officers,  members,  or  agents 
of  corporations,  who  have  issued  a  prospectus  or  report  addressed 
to  and  circulated  among  shareholders  or  the  public  for  the  pur- 
pose of  inducing  them  to  take  shares.  2.  Those  of  persons  who, 
to  obtain  the  listing  of  stocks  or  securities  upon  the  stock 
exchange  in  order  that  they  may  be  more  readily  sold  to  the 
public,  have  made  representations  to  the  officials  of  the  exchange, 
which  in  due  course  have  been  communicated  to  buyers.  Bagshaw 
y.  Seymour,  32  L.  T.  81;  Bedford  v.  Bagshaw,  4  H.  &  N.  538; 

Watson  V.  Earl  of  Charlemont,  12  Q.  B.  856;  Clarke  v.  Dickson, 
6  C.  B.  (N.  S.)  453;  Jarrett  v.  Kennedy,  6  C.  B.  319;  Campbell  v. 
Fleming,  1  A.  &  E.  40;  Peek  v.  Derry,  37  Ch.  D.  541,  and  14 
App.  Cas.  337;  Angus  v.  Clifford  (1891),  2  Ch.  449.  In  these 
cases  the  representations  were  clearly  addressed  to  the  plaintiffs 
among  others  of  the  public  or  of  a  class,  and  were  plainly  intended 
and  calculated  to  influence  their  action  in  the  specific  matter  in 
which  they  claimed  to  have  been  injured.  So,  too,  in  the 
American  cases  relied  on  to  support  the  action.  Morgan  v. 
Skiddy,  62  N.  Y.  319;  Terwilliger  v.  Great  Western  Telegraph 
Co.,  59  111.  249;  Paddock  v.  Fletcher,  42  Vt.  389.  The  numerous 
cases  cited  in  the  note  to  Pasley  v.  Freeman,  in  2  Smith's  Lead. 
Cas.  (9th  Am.  ed.)  1320,  are  of  the  same  character. 

(Jn  the  case  at  bar,  the  certificate  was  made  and  filed  for  the 
definite  purpose,  not  of  influencing  the  public,  but  of  obtaining 
from  the  State  a  specific  right,  which  did  not  affect  the  validity 
of  its  contracts,  but  merely  relieved  its  agents  in  Massachusetts 
of  a  penalty^  ^It  was  not  addressed  to  or  intended  for  the  public, 
and  was  known  to  the  plaintiff  only  from  the  search  of  his 
attorney.]  It  could  not  have  been  intended  or  designed  by  the 
defendants  that  the  plaintiff  should  ascertain  its  contents  and  be 
induced  by  them  to  take  the  notes.  It  is  not  such  a  representa- 
tion, made  by  one  to  another  with  intent  to  deceive,  as  will  sus- 


306  FORMATION  OF  CONTRACT.  [Part  IL 

tain  the  action.  Its  statements  are  in  no  fair  sense  addressed  to 
the  person  who  searches  for,  discovers,  and  acts  upon  them,  and 
cannot  fairly  be  inferred  or  found  to  have  been  made  with  the 
intent  to  deceive  him. 

This  view  of  the  law  disposes  of  the  case,  and  makes  it  unnec- 
essary to  consider  the  other  questions  raised  at  the  trial. 

Demurrer  and  exceptions  sustained/ 


e.    The  representation  must  actually  deceive. 
LEWIS   V.   JEWELL. 

151  MASSACHUSETTS.  3i5.  — 1890. 

Tort,  by  the  administratrix  of  the  estate  of  Edward  Lewis,  for 
false  and  fraudulent  representations  made  by  the  defendant  to 
the  intestate  in  a  sale  of  carpets  represented  to  amount  to  900 
yards,  which  in  fact  amounted  to  only  595  yards.  Exceptions  by 
defendant  to  refusal  of  court  to  charge  that  if  intestate  had  full 
means  of  ascertaining  the  number  of  yards  and  had  an  opportu- 
nity to  inspect  and  measure  them,  the  representations  of  defend- 
ant, though  false  and  intentional,  would  not  entitle  plaintiff  to 
recover,  and  to  the  charge  of  the  court  that  if  defendant  made  an 
intentional  false  representation  to  induce  the  intestate  to  pur- 
chase, and  if  the  intestate,  in  the  exercise  of  due  care,  relied 
on  it,  the  jury  would  be  justified  in  finding  for  the  plaintiff. 
Verdict  for  the  plaintiff. 

KxowLTOx,  J.  The  carpets  bought  by  the  plaintiff's  intestate 
covered  four  floors,  consisting  of  twelve  rooms,  besides  the  hall 
and  stairs,  in  a  dwelling-house.  The  number  of  yards  of  material 
contained  in  them  was  an  important  element  in  determining  their 
value,  which  might  be  the  subject  of  a  fraudulent  representation. 
y^The  representation  of  the  defendant  was  not  a  mere  estimate,  but 
a  statement  purporting  to  be  made  as  of  her  own  knowledge,  and 
there  was  evidence  tending  to  show  that  it  was  knoAvn  by  her  to 

1  See  also  Nash  v.  Minnesota  &c.  Co.,  159  Mass.  437  ;  Eaton  v.  Avery ^ 
83  N.  Y.  31. 


Chap.  IV.  §3.]  REALITY  OF  CONSENT:  FRAUD.  307 

be  false.  There  was  also  evidence  that  the  purchaser  relied  upon 
it;  and  if  the  testimony  introduced  by  the  plaintiff  was  true,  the 
defendant  was  liable  for  fraud,  unless  the  purchaser  was  bound 
to  measure  the  carpets  for  himself,  or  to  avail  himself  of  his 
other  opportunities  of  ascertaining  the  quantity  .J 

Upon  the  evidence  presented,  it  could  not  properly  have  been 
ruled,  as  matter  of  law,  that  the  facts  were  so  obvioiis  or  so 
easily  discoverable  that  the  plaintiff's  intestate  had  no  right  to 
rely  on  the  defendant's  representations.  In  this  commonwealth, 
and  in  other  American  States,  in  regard  to  representations  by  a 
vendor  in  a  sale  of  land,  it  has  been  held  that,  in  the  absence  of 
other  fraud,  a  vendee  to  whom  boundaries  are  pointed  out  has  no 
right  to  rely  on  the  vendor's  statements  as  to  quantity,  but  if  he 
deems  the  quantity  material,  he  should  ascertain  it  for  himself. 
Gordon  v.  Parmelee,  2  Allen,  212 ;  Noble  v.  Googins,  99  Mass.  231, 
and  cases  cited;  Parker  v.  Moidton,  114  Mass.  99.  We  are  of 
opinion  that  this  rule  should  not  be  extended  so  as  to  include  a 
case  like  the  present,  and  that  the  instructions  under  which  the 
questions  were  submitted  to  the  jury  were  correct  and  sufficient. 

Exceptions  overruled.* 

1  "Where  the  means  of  knowledge  are  at  hand  and  equally  available  to 
both  parties,  and  the  subject  of  purchase  is  alike  open  to  their  inspection,  if 
the  purchaser  does  not  avail  himself  of  these  means  and  opportunities,  he  /\ 
will  not  be  heard  to  say  that  he  has  been  deceived  by  the  vendor's  misrepre- 
sentations. If,  having  eyes,  he  will  not  see  matters  directly  before  them, 
where  no  concealment  is  made  or  attempted,  he  will  not  be  entitled  to  favor- 
able consideration  when  he  complains  that  he  has  suffered  from  his  own 
voluntary  blindness,  and  has  been  misled  by  overconfidence  in  the  state- 
ments of  another.  And  the  same  rule  obtains  when  the  complaining  party 
does  not  rely  upon  the  misrepresentations,  but  seeks  from  other  quarters 
means  of  verification  of  the  statements  made,  and  acts  upon  the  information 
thus  obtained."  —  Mr.  Justice  Field,  in  Slaughter'' s  Adni'r  v.  Oerson,  13 
Wall.  (U.  S.)  379,  383. 

For  an  extreme  application  of  the  above  rule,  see  Long. v.  Warren,  68 
N.  Y.  426,  and  see  the  criticisms  on  it  in  Albany  City  Savings  Institution 
V.  Burdick,  87  N.  Y.  40,  and  Schumaker  v.  Mother,  133  N.  Y.  690.  See  also 
Sheldon  v.  Davidson,  85  Wis.  138,  ante,  p.  295. 


308  FORMATION  OF  CONTRACT.  [Part  II. 

§  4.   Duress. 

MORSE  V.   WOODWORTH. 

155  MASSACHUSETTS,  233.  — 1892. 

Action  of  contract  to  recover  the  amount  of  three  promissory 
notes  given  by  defendant  to  plaintiff,  and  delivered  up  to  defend- 
ant by  plaintiff  and  mutual  releases  executed  under  threats  of 
prosecution  and  arrest  on  a  criminal  charge  of  embezzling 
defendant's  money. 

The  court  charged  the  jury  in  substance  that  to  constitute 
duress  by  threats  of  imprisonment  the  threats  must  be  such  as 
actually  overcame  the  will  of  the  plaintiff,  and  that  in  testing  the 
question  the  jury  might  consider  whether  they  were  such  as 
would  overcome  the  will  of  a  man  of  ordinary  firmness;  and 
refused  to  charge,  at  the  request  of  defendant,  that  if  the  defend- 
ant believed  plaintiff  had  wrongfully  taken  money  belonging  to 
defendant,  and  no  civil  or  criminal  proceeding  had  been  begun, 
then  mere  threats  of  prosecution  or  arrest  would  not  constitute 
duress,  that  mere  threats  of  criminal  prosecution  or  arrest,  when 
no  warrant  has  been  issued  or  proceedings  commenced,  do  not 
constitute  duress.  The  court  referred  to  the  ambiguity  in  the 
word  "mere,"  and  reiterated  its  former  charge.  Defendant 
•excepted.     Verdict  for  plaintiff. 

Knowlton,  J.  .  .  .  The  only  remaining  exceptions  relate  to 
the  requests  of  the  defendant  and  the  rulings  of  the  court  in  regard 
to  duress.  The  plaintiff  contended  that  he  gave  up  the  notes  and 
signed  the  release  under  duress  by  threats  of  imprisonment. 
The  question  of  law  involved  is  whether  one  who  believes  and 
has  reason  to  believe  that  another  has  committed  a  crime,  and 
who,  by  threats  of  prosecution  and  imprisonment  for  the  crime, 
overcomes  the  will  of  the  other,  and  induces  him  to  execute  a 
contract  which  he  would  not  have  made  voluntarily,  can  enforce 
the  contract  if  the  other  attempts  to  avoid  it  on  the  ground  of 
duress. 

Duress  at  the  common  law  is  of  two  kinds,  duress  by  imprison- 
ment and  duress  by  threats.     Some  of  the  definitions  of  duress 


Chap.  IV.  §4.]  REALITY  OF  CONSENT:   DURESS.  309 

per  minas  are  not  broad  enough  to  include  constraint  by  threats 
of  imprisonment.  But  it  is  well  settled  that  threats  of  unlawful 
imprisonment  may  be  made  the  means  of  duress,  as  well  as 
threats  of  grievous  bodily  harm.  The  rule  as  to  duress  per  minas 
has  now  a  broader  application  than  formerly.  It  is  founded  on 
the  principle  that  a  contract  rests  on  the  free  and  voluntary 
action  of  the  minds  of  the  parties  meeting  in  an  agreement  which 
is  to  be  binding  upon  them.  If  an  influence  is  exerted  on  one  of 
them  of  such  a  kind  as  to  overcome  his  will  and  compel  a  formal 
assent  to  an  undertaking  when  he  does  not  really  agree  to  it,  and 
so  to  make  that  appear  to  be  his  act  which  is  not  his  but 
another's,  imposed  on  him  through  fear  which  deprives  him  of 
self-control,  there  is  no  contract  unless  the  other  deals  with  him 
in  good  faith,  in  ignorance  of  the  improper  influence,  and  in  the 
belief  that  he  is  acting  voluntarily. 

To  set  aside  a  contract  for  duress  it  must  be  shown,  first,  that 
the  will  of  one  of  the  parties  was  overcome,  and  that  he  was  thus 
subjected  to  the  power  of  another,  and  that  the  means  used  to 
induce  him  to  act  were  of  such  a  kind  as  would  overcome  the 
mind  and  will  of  an  ordinary  person.  It  has  often  been  held  that 
threats  of  civil  suits  and  of  ordinary  proceedings  against  property 
are  not  enough,  because  ordinary  persons  do  not  cease  to  act 
voluntarily  on  account  of  such  threats.  But  threats  of  imprison- 
ment may  be  so  violent  and  forceful  as  to  have  that  effect.  It 
must  also  be  shown  that  the  other  party  to  the  contract  is  not, 
through  ignorance  of  the  duress  or  for  any  other  reason,  in  a 
position  which  entitles  him  to  take  advantage  of  a  contract  made 
under  constraint  without  voluntary  assent  to  it.  If  he  knows 
that  means  have  been  used  to  overcome  the  will  of  him  with  whom 
he  is  dealing,  so  that  he  is  to  obtain  a  formal  agreement  which  is 
not  a  real  agreement,  it  is  against  equity  and  good  conscience  for 
him  to  become  a  party  to  the  contract,  and  it  is  unlawful  for  him 
to  attempt  to  gain  a  benefit  from  such  an  influence  improperly 
exerted. 

A  contract  obtained  by  duress  of  unlawful  imprisonment  is 
voidable.  And  if  the  imprisonment  is  under  legal  process  in 
regular  form,  it  is  nevertheless  unlawful  as  against  one  who 
procured  it  improperly  for  the  purpose  of  obtaining  the  execution 


310  FORMATION  OF  CONTRACT.  [Paet  II. 

of  a  contract;  and  a  contract  obtained  by  means  of  it  is  voidable 
for  duress.  So  it  has  been  said  that  imprisonment  under  a  legal 
process  issued  for  a  just  cause  is  duress  that  will  avoid  a  contract 
if  such  imprisonment  is  unlawfully  used  to  obtain  the  contract. 
Richardson  v.  Duncan,  3  N.  H.  508.  See  also  Foshay  v.  Ferguson, 
5  Hill  (N.  Y.),  154;  United  States  v.  Huckabee,  16  Wall.  414, 
431;  Miller  v.  Miller,  68  Penn.  St.  486;  Walbridge  v.  Arnold,  21 
Conn.  424;    Wood  v.  Graves,  144  Mass.  365,  and  cases  cited. 

It  has  sometimes  been  held  that  threats  of  imprisonment,  to 
constitute  duress,  must  be  of  unlawful  imprisonment.  But  the 
question  is,  whether  the  threat  is  of  imprisonment  which  will  be 
unlawful  in  reference  to  the  conduct  of  the  threatener  who  is 
seeking  to  obtain  a  contract  by  his  threat.  Imprisonment  that 
is  suffered  through  the  execution  of  a  threat  which  was  made  for 
the  purpose  of  forcing  a  guilty  person  to  enter  into  a  contract 
may  be  lawful  as  against  the  authorities  and  the  public,  but 
unlawful  as  against  the  threatener,  when  considered  in  reference 
to  his  effort  to  use  for  his  private  benefit  processes  provided  for 
the  protection  of  the  public  and  the  punishment  of  crime.  One 
who  has  overcome  the  mind  and  will  of  another  for  his  own 
advantage,  under  such  circumstances,  is  guilty  of  a  perversion 
and  abuse  of  laws  which  were  made  for  another  purpose,  and  he 
is  in  no  position  to  claim  the  advantage  of  a  formal  contract 
obtained  in  that  way,  on  the  ground  that  the  rights  of  the  parties 
are  to  be  determined  by  their  language  and  their  overt  acts,  with- 
out reference  to  the  influences  which  moved  them.  In  such  a 
case,  there  is  no  reason  why  one  should  be  bound  by  a  contract 
obtained  by  force,  which  in  reality  is  not  his,  but  another's. 

We  are  aware  that  there  are  cases  which  tend  to  support  the 
contention  of  the  defendant.  Harmon  v.  Harmon,  61  Maine, 
227;  Bodine  v.  Morgan,  10  Stew.  426,  428;  Landa  v.  Obert,  45 
Texas,  539;  Knapp  v.  Hyde,  60  Barb.  80.  But  we  are  of  opinion 
that  the  view  of  the  subject  heretofore  taken  by  this  court,  which 
we  have  followed  in  this  opinion,  rests  on  sound  principles,  and 
is  in  conformity  with  most  of  the  recent  decisions  in  such  cases, 
both  in  England  and  America.  Hackett  v.  King,  6  Allen,  58; 
Taylor  v.  Jaques,  106  Mass.  291 ;  Harris  v.  Carmody,  131  Mass. 
51;  Bryant  v.  Peck  &  Whipple  Co.,  154  Mass.  460;    Williams  v. 


Chap.  IV.  §5.]    REALITY  OF  CONSENT:  UNDUE  INFLUENCE.  311 

Bayley,  L.  R.  1  H.  L.  200;  S.  C,  ^  Giff.  638,  663,  note;  Eadie  v. 
summon,  26  IST.  Y.  9;  Adams  v.  Irving  National  Bank,  116  N.  Y. 
606;  Foley  v.  Greene,  14  R.  I.  618;  Sharon  v.  Gager,  46  Conn. 
189;  Bane  v.  Detrick,  52  111.  19;  i^by  v.  OafZey,  6  Wis.  42. 

We  do  not  intimate  that  a  note  given  in  consideration  of  money 
embezzled  from  the  payee  can  be  avoided  on  the  ground  of  duress, 
merely  because  the  fear  of  arrest  and  imprisonment,  if  he  failed 
to  pay,  was  one  of  the  inducements  to  the  embezzler  to  make  the 
note.  But  if  the  fact  that  he  is  liable  to  arrest  and  imprisonment 
is  used  as  a  threat  to  overcome  his  will  and  compel  a  settlement 
which  he  would  not  have  made  voluntarily,  the  case  is  different. 
The  question  in  every  such  case  is,  whether  his  liability  to 
imprisonment  was  used  against  him,  by  way  of  a  threat,  to  force 
a  settlement.  If  so,  the  use  was  improper  and  unlawful,  and  if 
the  threats  were  such  as  would  naturally  overcome  the  mind  and 
will  of  an  ordinary  man,  and  if  they  overcame  his,  he  may  avoid 
the  settlement.     The  rulings  and  refusals  to  rule  were  correct. 

Exceptions  overruled. 


§  5.   Undue  influence. 

HALL  V.   PERKINS. 

3  WENDELL    (N.  Y.),    626.  — 1829. 

Bill  in  equity  against  defendants,  as  executors,  for  an  account- 
ing.    Decree  for  an  accounting.     Defendants  appeal. 

Complainant  when  nine  years  old  was  apprenticed  to  his 
maternal  grandfather,  the  testator,  it  being  agreed  that  he  should 
serve  until  he  was  twenty-one  and  should  then  receive  the  sum  of 
^500.  After  he  became  twenty-one  the  testator  deeded  to  him 
forty  acres  of  land,  the  deed  being  executed  on  an  election  day  in 
order  to  make  complainant  a  voter.  The  deed  recited  the  con- 
sideration of  $500  and  reserved  a  rent,  but  was  never  delivered. 
After  the  death  of  the  testator,  a  settlement  took  place  between 
defendant,  G.  H.,  an  uncle  of  complainant,  and  the  complainant, 
at  which  it  was  agreed  that  the  land  should  be  taken  in  payment 
of  the  $500  and  a  further  sum  of  $39.58  should  be  paid  com- 


312  FORMATION  OF  CONTRACT.  [Part  IL 

plainant  for  services  rendered  after  lie  arrived  at  age.  In  pursu- 
ance of  this  agreement  defendants  gave  complainant  a  quit-claim 
deed  of  the  land  and  the  sum  mentioned  and  complainant  gave 
defendants  a  receipt  in  full  of  all  claims  against  the  estate. 

Savage,  C.  J.  This  is  a  short  and  simple  case,  addressing 
itself  to  the  common  sense  and  common  justice  of  the  plainest 
man,  and  seems  to  require  no  legal  learning  to  decide  it.  The 
deed  from  the  testator  to  the  complainant  when  executed  was  a 
fraud  upon  the  elective  franchise;  it  conveyed  no  estate,  for  it 
was  never  delivered  by  the  grantor.  It  was  not  considered  by 
him  as  a  compensation  for  services,  for  he  spoke  of  it  as  a  gift, 
and  at  the  same  time  admitted  he  owed  the  complaiilant  $500. 
There  can  be  no  dispute  that  at  the  death  of  Rowland  Hall  the 
estate  honestly  owed  Perkins  $500.  How  has  this  acknowledged 
debt  of  $500  been  paid?  I  answer  by  compelling  or  persuading 
this  simple  and  ignorant  young  man  to  receive  the  forty  acres  of 
rocks  in  compensation  for  his  services.  The  land  is  estimated 
by  some  of  the  witnesses  at  $4,  and  by  others  at  $8  or  $9;  a 
fair  medium  is  $6.  We  may  therefore  consider  the  land  worth 
$6  per  acre,  amounting  to  $240,  which  these  uncles  gave  their 
nephew  instead  of  $500  and  about  two  years'  interest. 

It  is  said  that  inadequacy  alone  is  no  evidence  of  fraud.  It. 
has  indeed  been  so  decided;  but  inadequacy  here  does  not  stand 
alone.  The  contracting  parties  and  their  capacities  should  also 
be  considered:  on  the  one  side,  a  simple,  uneducated  boy,  who 
knew  only  how  to  work  on  a  farm ;  on  the  other,  a  man  who  had 
been  a  justice  of  the  peace,  and  therefore  may  be  presumed  to 
have  some  knowledge  of  law.  He  was  no  longer  a  justice,  but 
his  practice  was  that  of  advocating  causes  before  justices,  and 
probably  he  was  not  unacquainted  with  the  tricks  and  quibbles 
which  too  often  disgrace  inferior  tribunals,  and  bring  a  reproach 
upon  that  branch  of  our  jurisprudence.  The  inadequacy  then 
consists,  1.  In  conveying  40  acres  of  mountain  rocks,  worth  $240, 
in  satisfaction  of  a  debt  of  about  $5G5,  much  less  than  half; 
2.  One  of  the  contracting  parties  arrived  at  mature  age,  perfectly 
acquainted  with  the  value  of  property,  and  from  his  very  "  voca- 
tion," in  the  habit  of  taking  every  advantage  which  the  law 
would  permit;  the  other  an  ignorant,  simple,  unsuspecting  boy. 


Chap.  IV.  §5.]    REALITY  OF  CONSENT:   UNDUE  INFLUENCE.  313^ 

unacquainted  with  property  and  with  the  arts  and  intriguea 
which  too  often  attend  more  advanced  age;  3.  On  the  one  side 
the  uncle,  and  the  other  the  naphew.  The  grandfather  had 
hitherto  been  the  guardian  and  guide  of  the  complainant;  and 
after  his  decease,  to  whom  could  this  ignorant  youth  more 
naturally  look  for  advice  and  protection  than  to  his  mother's 
brother,  the  executor  of  his  grandfather's  will,  as  one  every  way 
capable  of  advising  him?  The  result,  however,  shows  that  there 
was  some,  reason  in  the  ancient  law  which  refused  to  relations, 
who  might  inherit  from  minors,  the  guardianship  of  their  persons, 
because  it  was,  as  Lord  Coke  says,  "  quasi  agnum  lupo  committere 
ad  devorandum."  I  have  thus  far  cited  no  authority;  it  seems  to 
me  that  none  can  be  necessary  beyond  an  appeal  to  the  moral 
sense. 

It  is  contended  by  the  appellants  that  there  is  not  in  the  bill 
a  sufficient  allegation  of  fraud  to  justify  the  admission  of  evi- 
dence on  that  subject,  and  if  there  be  a  sufficient  allegation,  there 
is  no  evidence  of  fraud.  The  bill  charges,  that  if  the  defendants 
should  produce  a  receipt  in  full  from  the  complainant,  that  such 
receipt  was  fraudulently  and  unjustly  obtained.  This  is  suffi- 
cient. The  ground  of  the  plaintiff's  claim  was  matter  of  contract, 
and  he  resorted  to  a  court  of  equity  because  the  written  contract 
signed  by  Rowland  Hall  was  lost  or  destroyed ;  the  allegation  of 
fraud  was  in  anticipation  of  the  defense  contemplated,  and  it 
seems  to  me  when  thus  set  up,  it  need  not  be  so  full  as  if  made 
the  substantive  ground  of  complaint.  Had  the  plaintiff  below 
been  in  possession  of  the  written  contract,  he  might  have  sued"  in. 
a  court  of  law,  and  the  question  of  fraud  might  have  been 
inquired  into  in  rebutting  the  defense. 

Fraud  is  often  the  subject  of  inquiry  in  a  court  of  law  as  well 
as  in  equity;  there  is  this  difference,  however,  that  at  law  fraud 
must  be  proved;  it  must  be  what  Lord  Hardwicke  calls  dolu» 
malus,  actual  fraud  arising  from  facts  and  circumstances  of 
imposition.  At  law,  the  contract  of  every  man  who  is  compos 
mentis,  is  binding  and  cannot  be  avoided  in  general  without  proof 
of  actual  fraud  in  obtaining  it.  Neither  will  a  court  of  equity 
measure  the  extent  of  men's  understandings  and  say  there  is  an 
equitable  incapacity  where  there  is  a  legal  capacity ;  yet  if  a  weak 


S14  FORMATION  OF  CONTRACT.  [Part  U. 

man  gives  a  bond  for  a  pretended  consideration,  when  in  truth 
there  was  none  or  not  near  so  much  as  is  pretended,  equity  will 
relieve  against  it.  3  P.  W.  180,  131.  Fraud  is  sometimes  also 
apparent  from  the  intrinsic  nature  of  the  contract.  It  may  be 
such  as  no  man  in  his  senses  and  not  under  delusion  would  make, 
and  such  as  no  honest  and  fair  man  would  accept,  which  is  Lord 
Hardwicke's  second  class  of  frauds;  and  his  third  is  that  which 
may  be  presumed  from  the  circumstances  and  condition  of  the 
parties  contracting.     2  Vesey,  Sen.  155,  156. 

This  case  partakes  of  both  the  two  last  classes  of  frauds,  if  not 
of  the  first.  Here  was  a  contract  made  which  no  sensible  man 
not  under  delusion  would  make,  on  the  one  hand,  and  which  no 
man  who  had  not  lost  all  consciousness  of  shame  would  accept, 
on  the  other.  One  of  the  parties  was  a  weak  boy,  the  other  a 
man  of  capacity,  who  may  be  presumed,  from  the  circumstances  of 
this  case,  an  artful  intriguer  in  small  matters.  It  was  a  contract 
made  by  an  unsuspecting  youth  with  a  man  in  whom,  from  the 
connection  existing  between  them,  he  must  have  reposed  confi- 
dence, and  to  whom  he  naturally  looked  for  advice  and  protection. 
It  is  clearly  a  case,  therefore,  where  from  the  nature  of  the  trans- 
action and  the  situation  of  the  parties,  fraud  and  imposition  are 
to  be  presumed.     4  Coioen,  220. 

I  am  of  opinion  the  decree  of  his  honor  the  chancellor  should 
"be  afiirmed  with  costs. 

Mr.  Senator  S.  Allen  also  delivered  an  opinion  in  favor  of  an 
affirmance  of  the  decree. 

And  this  being  the  unanimous  opinion  of  the  court,  the  decree 
of  the  chancellor  was  accordingly  affirmed,  with  costs  to  be  paid 
by  the  appellants.^ 

1  See  also  Fish  v.  Cleland,  33  111.  237,  ante,  p.  288  ;  S.  C,  43  111.  282.  The 
relation  of  an  alleged  spiritualistic  medium  to  one  relying  on  such  medium 
for  advice,  and  believing  implicitly  in  the  existence  of  the  medium's  pro- 
fessed power,  is  one  of  trust  and  confidence,  and  throws  on  the  medium  the 
burden  of  showing  that  a  contract  between  the  two  is  free  from  undue 
influence.     Connor  v.  Stanley,  72  Cal.  556. 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  315 


CHAPTER  V. 

LEGALITY    OF    OBJECT. 

§  1.   Nature  of  illegality  in  contract. 

(t.)    Contracts  which  are  made  in  breach  of  statute, 
a.    General  rules  of  construction. 
PANGBOEN  V.   WESTLAKE. 

36  IOWA,  546.— 1873. 

Action  to  foreclose  a  mortgage  given  by  Westlake  and  wife  to 
Pangborn,  to  secure  the  payment  of  a  note. 

The  defendant  Westlake,  by  his  answer,  admitted  the  due 
execution  of  the  note  and  mortgage,  and  that  the  same  was  exe- 
cuted to  secure  the  purchase  money  of  the  real  estate  therein 
described;  and  also  averred  that  the  sale  and  conveyance  of  said 
real  estate  made  by  plaintiff  to  defendant  was  illegal  and  contrary 
to  the  statute;  that  the  lots  sold  were  embraced  in  an  addition  to 
Maquoketa,  which  was  laid  out  and  platted  prior  to  the  sale,  but 
was  neither  acknowledged  or  recorded,  or  filed  for  record  previous 
to  the  sale  as  required  by  law.  To  this  answer  the  plaintiff 
demurred,  because  the  matters  contained  therein  did  not  consti- 
tute any  defense  to  the  action.  The  demurrer  was  sustained  by 
the  court.  The  defendant  appeals,  and  here  assigns  that  ruling 
as  error. 

Cole,  J.  The  single  question  presented  by  the  demurrer  is, 
whether  the  contract  for  the  sale  of  a.  lot  in  a  town  or  city,  or 
addition  thereto,  the  plat  of  which  has  not  been  recorded,  is 
void,  so  that  no  right  of  action  can  be  based  thereon.  Our  statute 
enacts  (Rev.  §  1027)  : 

"  That  any  person  or  persons  who  shall  dispose  of,  or  offer  for  sale  or 
lease,  for  any  time,  any  out  or  in  lots,  in  any  town,  or  addition  to  any 


316  FORMATION  OF  CONTRACT.  [Part  II. 

town  or  city,  or  any  part  thereof,  which  has  been  or  shall  hereafter  be 
laid  out,  until  the  plat  thereof  has  been  duly  acknowledged  and  recorded, 
as  provided  for  in  chapter  41  of  the  Code  of  Iowa,  shall  forfeit  and  pay 
^50  for  each  and  every  lot  or  part  of  lot  sold  or  disposed  of,  leased,  or 
offered  for  sale." 

There  is  no  doubt  that  the  well-settled  general  rule  is  that 
when  a  statute  prohibits  or  attaches  a  penalty  to  the  doing  of  an 
act,  the  act  is  void  and  will  not  be  enforced,  nor  will  the  law 
assist  one  to  recover  money  or  property  which  he  has  expended  in 
the  unlawful  execution  of  it;  or,  in  other  words,  a  penalty  implies 
a  prohibition  though  there  are  no  prohibitory  words  in  the  statute, 
and  the  prohibition  makes  the  act  illegal  and  void.  BartUtt  v. 
Vinor,  Carth.  252;  Lyon  v.  Strong,  6  Vt.  219;  Roheson  v. 
French,  12  Mete.  (Mass.)  24;  Gregg  v.  Wyman,  4  Gush.  322; 
Pattee  v.  Greely,  13  Mete.  (Mass.)  284;  Etyia  Ins.  Co.  v.  Harvey, 
11  Wis.  394;  Miller  v.  Larson,  19  Id.  463;  Pike  v.  King,  16 
Iowa,  50,  and  cases  cited;  Cope  v.  Rowlands,  2  Mees.  &  Welsh. 
149,  and  very  numerous  other  cases  there  cited.  But,  notwith- 
standing this  general  rule,  it  must  be  apparent  to  every  legal  mind, 
that  when  a  statute  annexes  a  penalty  for  the  doing  of  an  act,  it 
does  not  alivays  imply  such  a  prohibition  as  will  render  the  act 
void.  Suppose,  for  instance,  the  act  itself  expressly  provided 
that  the  penalty  annexed  should  not  have  the  effect  of  rendering 
the  act  void.  Surely  in  such  case  the  courts  would  not  give  such 
force  to  the  legal  implication,  under  the  general  rule  above 
quoted,  as  to  override  the  express  negation  of  it  in  the  statute 
itself.  Then,  upon  this  conclusion,  we  are  prepared  for  the  next 
step,  which  is  equally  plain,  that  if  it  is  manifest  from  the  lan- 
guage of  the  statute,  or  from  its  subject  matter  and  the  plain 
intent  of  it,  that  the  act  was  not  to  be  made  void,  but  only  to 
punish  the  person  doing  it  with  the  penalty  prescribed,  it  is 
equally  clear  that  the  courts  would  readily  construe  the  statute 
in  accordance  with  its  language  and  its  plain  intent.  We  are, 
therefore,  brought  to  the  true  test,  which  is,  that  while,  as  a 
general  rule,  a  penalty  implies  a  prohibition,  yet  the  courts  will 
always  look  to  the  language  of  the  statute,  the  subject  matter  of 
it,  the  wrong  or  evil  which  it  seeks  to  remedy  or  prevent,  and  the 
purpose  sought  to  be  accomplished  in  its  enactment;  and  if,  from 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  317 

all  these,  it  is  manifest  that  it  was  not  intended  to  imply  a  pro- 
hibition or  to  render  the  prohibited  act  void,  the  courts  will  so 
hold,  and  construe  the  statute  accordingly.  The  following  cases 
will  abundantly  vindicate  as  well  as  illustrate  this  statement  of 
the  law :  Fergusson  v.  Norman,  5  Bingham's  New  Cases,  76  (opin- 
ion of  Tindal,  C.  J.,  p.  83);  S.  C.  in  35  E.  C.  L.  Rep.  37  (i.e.  40); 
Harris  v.  Runnels,  12  How.  (U.  S.)  79;  Johnson  v.  Hudson,  11 
East,  180;  Brown  v.  Duncan,  10  Barn.  &  Cress.  93;  Hodgson  v. 
Temple,  5  Taunt.  181;  Fackler  v.  Ford  et.  al,  24  How.  (U.  S.) 
322;  The  Oneida  Bank  v.  The  Ontario  Bank,  21  N.  Y.  490  (see 
opinion  by  Comstock,  C.  J.,  on  p.  495). 

We  are  relieved  from  the  necessity  of  making  an  analysis  of 
and  construing  our  statute  as  an  original  interpretation  of  it, 
because  our  statute  above  quoted,  like  our  general  municipal 
incorporations  act,  was  taken  from  the  Ohio  statute,  and  is  essen- 
tially the  same  as  that.  See  Swanks  Rev.  Stat,  of  Ohio,  Derby's 
edition,  1854,  §  10,  p.  940.  Prior  to  our  adoption  of  that  statute, 
it  had  received  a  judicial  construction  by  the  Supreme  Court  of 
that  State,  and  it  was  held  that  the  penalty  did  not  render  the 
contract  illegal,  so  as  to  prevent  a  recovery  by  the  vendor  of  the 
consideration  agreed  to  be  paid  by  the  vendee,  for  a  lot  sold  him 
prior  to  the  proper  survey  and  making  and  recording  of  the  plat. 
Strong  &c.  v.  Darling,  9  Ohio,  201.  And  it  is  a  well-settled  rule 
that  when  the  legislature  of  one  State  adopts  a  statute  from 
another  which  has  received  judicial  construction  there,  such  con- 
struction will  be  presumed  to  have  been  known  to  and  approved 
by  the  legislature,  and  will  be  followed  by  the  courts  of  the  State 
adopting  the  statute.  See  Bemis  v.  Becker,  1  Kan.  226  {i.e.  249), 
where  the  rule  was  applied  to  a  statute  like  the  one  now  in  ques- 
tion. Under  this  rule  we  must  hold  that  the  note  and  mortgage 
in  this  case  are  not  illegal  and  may,  therefore,  be  enforced. 

There  are  two  cases  in  Missouri,  to  which  our  attention  has 
been  called,  construing  a  statute  similar  to  ours:  Downing  v. 
Ringer,  7  Mo.  585,  and  Mason  v.  Pitt,  21  Id.  391.  In  the  former, 
and  apparently  without  much  investigation,  it  was  held,  under 
the  general  rule  first  above  stated,  that  the  penalty  rendered  the 
contract  illegal,  and  that  the  vendor  of  a  lot  in  an  unrecorded 
plat  could  not,  under  the  Missouri  statute,  recover  from  the 


318  FORMATION  OF  CONTRACT.  [Pabt  II. 

vendee  the  consideration  agreed  to  be  paid  therefor.  In  the  last 
case  it  was  held,  that  the  failure  to  record  the  plat  prior  to  the 
cohveyance,  did  not  prevent  the  title  from  passing  to  the  vendee. 
The  Kansas  court,  in  Bemis  v.  Becker,  supra,  followed  the  last, 
without  referring  to  the  former. 

But,  further  than  this,  the  question  has  been,  in  effect,  deter- 
mined by  this  court  in  Watj-ous  &  Snouffer  v.  Blair  (32  Iowa,  58), 
where  it  was  held,  that  the  vendees  of  certain  lots,  having,  as  in 
this  case,  actual  knowledge  that  at  the  time  of  their  purchase  the 
plat  had  not  been  recorded,  were  entitled  to  a  specific  perform- 
ance, by  their  vendor,  of  their  contract  of  purchase.  Surely,  we 
could  hardly  be  expected  to  compel  a  vendor  to  convey,  and  then 
to  deny  him  the  right  to  recover  the  consideration  for  such  con- 
veyance. In  that  case  we  required  the  conveyance  to  the  vendee; 
in  this,  we  enforce  the  payment  by  the  vendee. 

Affirmed.^ 


h.    Contracts  in  breach  of  Sunday  statutes. 
HANDY  V.    ST.  PAUL  GLOBE  PUBLISHING  CO. 

41  MINNESOTA,  188.  — 1889. 

GiLFiLLAN",  C.  J.  The  action  is  upon  a  contract  pleaded  in 
the  complaint,  not  in  hcec  verba,  but  according  to  its  supposed 
effect.  The  answer  denied  it;  and,  on  the  trial,  the  plaintiff 
offered  in  evidence  a  written  contract  between  the  parties,  the 
provisions  of  which  material  to  this  controversy  were  as  follows : 
The  plaintiff,  in  consideration  of  being  allowed  the  difference 
between  the  rates  he  might  charge  for  advertising  in  the  various 
issues  of  the  St.  Paul  Globe  newspaper  and  the  rates  thereinafter 
mentioned,  agreed  and  contracted  to  take  entire  charge  and  con- 
trol of  the  real-estate  advertising  business  in  the  daily  and  Sun- 
day and  weekly  Globe,  and  the  defendant  agreed,  in  consideration 
of  such  services,  to  put  under  his  full  charge  and  control  all  real- 
estate  advertising  business  of  defendant  in  the  daily  and  Sunday 
and  weekly  Globe.     The  plaintiff  agreed  to  pay  the  defendant 

1  See  Miller  v.  Ammon,  145  U.  S.  421  ;  Hull  v.  Buggies,  56  N.  Y.  424. 


^/ 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  319 

certain  specified  rates  for  said  real-estate  advertising,  and  the 
defendant  agreed  to  receive  said  rates  as  full  payment  for  all  said 
real-estate  advertisements  which  might  appear  in  the  daily, 
weekly,  or  Sunday  Globe,  without  regard  to  the  amount  plaintiff 
might  charge  and  receive  from  advertisers.  The  contract  was  to 
continue  for  the  term  of  five  years,  with  the  option  in  plaintiff  to 
renew  it  for  another  term  of  five  years,  or  for  a  shorter  time;  he 
to  have  the  right  to  annul  the  agreement  on  giving  thirty  days' 
notice  of  his  intention  to  do  so.  It  was  admitted  by  plaintiff,  at 
the  time  of  making  the  offer  of  this  contract,  that  the  Sunday 
Globe  referred  to  in  the  contract  was  issued,  published,  and  cir- 
culated on  Sundays,  though  set  up  and  printed  on  Saturdays. 
The  contract  was  objected  to  as  void  upon  its  face  for  want  of 
mutuality,  and  as  being  against  public  policy ;  and  it  appears  to 
have  been  argued  that  it  was  against  public  policy  because  it  was 
an  agreement  for  a  violation  of  the  law  in  regard  to  Sunday.  The 
court  below  sustained  the  objection.  The  plaintiff,  of  course, 
failed  in  his  action,  and  he  appeals  from  an  order  denying  his 
motion  for  a  new  trial.  The  same  objections  are  made  to  the 
contract  here  as  were  made  below. 

The  plaintiff  contends  that,  not  having  pleaded  the  illegality  of 
the  contract,  defendant  could  not  assert  it  on  the  trial.  It  is 
sometimes  necessary  to  plead  the  facts  upon  which  the  illegality 
of  a  contract  or  transaction  depends,  but  it  is  never  necessary  to 
plead  the  law.  When  the  facts  appear,  either  upon  the  pleadings 
or  proofs,  either  party  may  insist  upon  the  law  applicable  to  such 
facts.  In  this  case  the  plaintiff  had,  under  the  pleadings,  to 
prove  the  contract  upon  which  he  sued.  If  it  be  void  on  its  face, 
he,  not  the  defendant,  showed  its  illegality. 

Though  the  contract  appears  in  some  respects  a  much  more 
favorable  one  to  the  plaintiff  than  to  the  defendant,  it  is  not 
wanting  in  mutuality  of  promises  and  engagements,  so  as  to  be 
without  mutual  considerations.  What  the,  plaintiff  is  to  do 
appears  by  implication  rather  than  by  express  terms.  Fairly 
construed,  the  contract  created  the  relation  of  principal  and  agent 
between  the  defendant,  as  principal,  and  the  plaintiff,  as  agent, 
for  the  management  of  defendant's  real-estate  advertising  busi- 
ness,—  that  is,  in  the  charge  of  procuring  advertisements  for  so 


J^ 


320  FORMATION  OF  CONTRACT.  [Part  II. 

much  of  the  space  in  the  defendant's  paper  as  it  deroted  to  real- 
estate  advertising, — and  in  this  business  there  would  arise  the 
duty  in  the  contract.  There  was,  by  implication,  the  promise  of 
plaintiff  to  manage  the  business  faithfully,  and  with  due  regard 
to  the  interest  of  his  principal. 

The  question  of  the  legality  of  the  contract  is,  therefore, 
squarely  presented;  and  with  a  view  to  that  question,  and  to 
some  propositions  that  are  made  in  connection  with  it,  it  is 
necessary  to  say  that  the  contract  is  entire,  so  that  any  taint  of 
illegality  in  one  part  affects  the  whole  of  it.  There  is  no  way  of 
severing  it,  so  we  can  say  that,  although  its  stipulations  as  to  the 
Sunday  Globe  may  be  in  violation  of  law,  and  therefore  void,  yet 
those  as  to  the  daily  and  weekly  Globe  may  be  upheld,  or  so 
that,  although  for  what  was  to  be  done  under  it  prior  to  January 
1,  1886,  when  the  Penal  Code  went  into  effect,  it  was  void,  it 
might  yet  be  upheld  for  all  that  it  provided  for  after  that 
date.  To  attempt  that  would  be  to  attempt  making  another  con- 
tract for  the  parties, —  one  that  the  present  contract  furnishes  no 
reason  to  suppose  they  would  have  made  for  themselves.  All 
of  the  provisions  of  the  contract  must,  therefore,  stand  or  fall 
together. 

The  plaintiff  insists  that  the  contract  was  not  illegal,  for  it 
neither  was  executed  on  Sunday  nor  required  plaintiff  or  defend- 
ant to  do  anything  on  Sunday.  It  bound  defendant  to  maintain 
and  issue  a  weekly,  a  daily,  and  Sunday  Globe  for  the  time 
specified  in  it,  and  it  required  plaintiff's  services  in  the  prepara- 
tion and  procuring,  so  far  as  related  to  the  real-estate  advertise- 
ments, of  material  for  each  of  those  editions  of  the  paper. 
According  to  the  terms  of  the  contract,  the  defendant  was  no  more 
at  liberty  to  discontinue  its  Sunday  edition  than  to  discontinue 
its  daily  or  weekly  edition,  or  all  its  editions.  The  theory  of 
the  complaint  is  that  it  was  bound  to  continue  them  all ;  so  that, 
if  to  issue,  publish,  and  circulate  a  newspaper  on  Sunday  was 
against  the  law  as  it  existed  when  this  contract  was  made,  then 
the  parties  contemplated  and  stipulated  for  a  violation  of  the  law 
by  each.  The  law  in  reference  to  Sunday,  in  force  at  the  time 
when  the  contract  was  made,  was  section  20,  c.  100,  Gen.  St.  1878, 
as  follows : 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  321 

"No  person  shall  keep  open  his  shop,  warehouse,  or  workhouse,  or 
shall  do  any  manner  of  labor,  business,  or  work,  except  only  works  of 
necessity  and  charity,  on  the  Lord's  day,  commonly  called  Sunday ;  and 
every  person  so  offending  shall  be  punished  by  a  fine,"  etc. 

A  contract  which  requires  or  contemplates  the  doing  of  an  act 
prohibited  by  law  is  absolutely  void.  No  cases  of  the  kind  have 
been  more  frequently  before  the  courts  than  contracts  which  were 
made  on  Sunday,  or  which  required  or  provided  that  something 
prohibited  by  the  statute  should  be  done  on  Sunday;  and  in  no 
instance  has  any  court  failed  to  declare  such  a  contract  void. 
Unless  the  issuing  and  circulating  a  newspaper  on  Sunday  is, 
within  the  meaning  of  the  statute,  a  work  of  necessity,  it  is  pro- 
hibited by  it  as  much  as  any  other  business  or  work.  The  news- 
paper is  a  necessity  of  modern  life  and  business,  but  it  does  not 
follow  that  to  issue  and  circulate  it  on  Sunday  is  a  necessity. 
There  are  a  great  many  other  kinds  of  business  just  as  necessary ; 
many,  indeed  most,  kinds  of  manufactures  and  nlercantile  busi- 
ness are  indispensable  to  the  present  needs  of  men,  but  no  one 
would  say  that,  because  necessary  generally,  the  prosecution  of 
such  business  on  Sunday  is  a  work  of  necessity.  That  carrying 
on  any  business  on  Sunday  may  be  profitable  to  the  persons 
engaged  in  it;  that  it  may  serve  the  convenience  or  the  tastes  or 
wishes  of  the  public  generally, —  is  not  the  test  the  statute 
applies.  To  continue  on  that  day  the  sale  of  dry  goods  or 
groceries,  or  the  keeping  open  of  markets,  saloons,  theaters,  or 
places  of  amusement,  might  be  regarded  by  many  as  convenient 
and  desirable,  but  that  would  not  bring  such  business  within  the 
exception  in  the  statute. 

At  the  time  this  contract  was  made,  the  issuing,  publishing, 
and  circulating  a  newspaper  on  Sunday  was  contrary  to  law ;  anc 
as  the  contract  provided  for  that,  and  as  it  was  indivisible,  it  wa 
thereby  rendered  wholly' void.  The  Penal  Code  went  into  effe^ 
January  1,  1886.  Section  229  provides  that  certain  kinds  of 
articles,  among  them  newspapers,  may  be  sold  in  a  quiet  and 
orderly  manner  on  Sunday.  'Plaintiff  contends  that  the  recogni- 
tion of  this  contract,  and  the  continuance  of  business  under  it  for 
more  than  a  year  after  the  issuance  of  the  Sunday  paper  became 
legal  by  the  provisions  of  the  Penal  Code,  constituted  such  a  ratifi- 


322  FORMATION  OF  CONTRACT.  [Part  H. 

cation  of  the  contract  as  relieved  it  of  any  original  taint  of 
illegality.  There  is  a  difference  in  the  decisions  on  the  question 
whether  a  contract,  void  merely  because  it  was  made  on  Sunday, 
may  be  ratified  on  a  secular  day,  so  as  to  become  valid;  but  there 
is  no  conflict  of  decisions  on  the  proposition  that  a  contract,  void 
because  it  stipulates  for  doing  what  the  law  prohibits,  is  incapable 
of  being  ratified.  That  is  this  case.  The  contract  contemplated 
the  doing  what  the  law  then  in  force  prohibited,  and  for  that 
reason  it  was  void.  It  is  true,  the  law  was  so  changed  after 
the  contract  was  made,  that,  from  the  time  of  the  change,  it 
became,  as  plaintiff  claims,  lawful  to  do  those  things  provided  in 
the  contract  which  were  unlawful  at  the  time  it  was  made,  and 
so  that,  as  he  claims,  a  contract  like  this,  made  after  the  change 
went  into  effect,  would  have  been  valid.  But  that  could  not  affect 
the  validity  of  the  previous  contract,  which  was  void  from  the 
beginning.  The  parties  might  have  made  a  new  contract  to  com- 
mence on  or  after  January  1,  1886 ;  but,  because  of  the  illegality 
in  it,  they  could  not  at  any  time  ratify  this  contract  from  the 
beginning;  and,  because  it  is  entire  and  indivisible,  they  could. 
do  nothing  amounting  to  less  than  the  making  of  a  new  contract, 
which  could  give  vitality  to  it  for  the  time  since  January  1, 
1886.     An  entire  contract  must  be  ratified,  if  at  all,  as  an  entirety. 

Order  affirmed. 


EEYNOLDS  v.   STEVENSON. 

4  INDIANA,  619.— 1853. 

Davisox,  J.  Debt  by  the  plaintiff  in  error  against  the  defend- 
ant on  a  promissory  note.  The  note  is  dated  the  1st  of  April, 
1850.  The  defendant  pleaded  two  pleas.  1.  Nil  debet.  2.  That 
the  said  note  was  not  made  and  executed  on  the  day  the  same 
bears  date;  but  it  was  made,  executed,  and  delivered  on  the  31st 
of  March,  1850,  which  last-mentioned  day  was  the  first  day  of  the 
week,  commonly  called  Sunday ;  wherefore  the  said  note  was  void. 
Demurrer  to  the  second  plea  overruled. 

A  statute  in  force  when  this  note  was  given  provides  that  "  if 
any  person,  etc.,  shall  be  found  on  the  first  day  of  the  week. 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  828 

commonly  called  Sunday,  rioting,  etc.,  or  at  common  labor,  works 
of  charity  and  necessity  only  excepted,  such  person  shall  be 
fined,"  etc.  There  is  a  proviso  to  the  statute,  but  it  has  no 
bearing  in  this  case.     B.  S.  1843,  c.  53,  s.  123. 

It  is  admitted  that  the  note  in  question  was  made  on  Sunday. 
Then  the  record  presents  this  question:  Did  the  making  of  it 
constitute  an  act  of  "common  labor"?  We  think  the  statute 
intended  to  prohibit  every  description  of  secular  business  not 
within  the  exceptions  pointed  out  by  itself.  The  executing  of 
this  note  was  secular  business,  and  not  embraced  by  the  excep- 
tions. This  view  is  sustained  by  various  adjudications  made 
upon  statutes  the  provisions  of  which  are,  in  effect,  the  same  as 
ours.  Allen  v.  Deming,  14  N.  H.  133;  Towle  v.  Larrabee,  26  Me. 
464;  Adams  v.  Hamell,  2  Doug.  (Mich.)  73.  In  LiriJc  v.  Clemmens 
(7  Blackf .  479)  it  was  held  "  that  a  replevin  bond  executed  on 
Sunday  was  void."  This  authority  is  decisive  of  the  case  before 
us.  The  note,  no  doubt,  was  made  in  violation  of  the  statute. 
Therefore  it  must  be  considered  a  nullity. 

Per  Curiam.     The  judgment  is  affirmed  with  costs. ^ 

1  Accord :  Finn  v.  Donahue,  35  Conn.  216  ;  Clough  v.  Ooggins,  40  la.  325  ; 
Cranson  v.  Goss,  107  Mass.  439 ;  Searles  v.  Beed,  63  Mich.  485  ;  Costello  v. 
Ten  Eyclc,  86  Mich.  348 ;  Durant  v.  Rhener,  26  Minn.  362  ;  Troeicert  v. 
Decker,  51  Wis.  46.  But  signing  a  subscription  to  liquidate  the  debt  of 
a  church  is  within  the  exception  of  "works  of  necessity  or  charity."  Bryan 
v.  Watson,  127  Ind.  42. 

Contra:  "A  contract  made  on  Sunday  is  not  void,  and  to  invalidate  a 
transaction  under  the  statute  the  contract  must  necessarily  require  the  act 
to  be  performed  on  Sunday.  Boynton  v.  Page,  13  Wend.  425 ;  Watts  v. 
Van  Ness,  1  Hill,  76."  —  Wright,  J.,  in  Merritt  v.  Earle,  29  N.  Y.  117.  See 
also  Eherle  v.  Mehrbach,  56  N.  Y.  682 ;  Moore  v.  Murdock,  26  Cal.  514 ; 
Bloom  v.  liichards,  2  Ohio  St.  387  ;  Eichmond  v.  Moore,  107  111.  429,  where 
the  subject  is  fully  discussed. 

For  distinction  sometimes  taken  between  contracts  made  in  the  course  of 
"ordinary  calling,"  and  those  outside  that  calling,  see  Allen  v.  Gardiner, 
7  R.  I.  22  ;  Hellams  v.  Abercrombie,  15  S.  C.  110.  See  also  Swann  v.  Swann, 
21  Fed.  Rep.  299. 

On  ratification,  see  Adams  v.  Oay,  19  Vt.  368  ;  Day  v.  McAllister,  15  Gray 
(Mass.),  433. 


324  FORMATION  OF  CONTRACT.  FPabt  H- 

c.  Wagers. 
- 

LOVE  V.   HARVEY. 

114  MASSACHUSETTS,  80.  — 1873. 

Contract.  The  plaintiff  and  the  defendant  made  a  bet  as  to 
the  place  of  burial  in  Holyhood  Cemetery  of  the  body  of  one  Dr. 
Cahill,  the  plaintiff  betting  that  it  was  buried  on  the  left-hand 
side  of  the  main  avenue,  and  the  defendant  betting  that  it  was 
buried  on  the  right-hand  side  of  that  avenue.  The  money  was 
deposited,  twenty  dollars  by  each  party,  in  the  hands  of  one 
James  Stack  as  stakeholder.  It  was  determined  that  the  body 
was  buried  on  the  left-hand  side  of  the  avenue,  yet  the  stake- 
holder delivered  to  the  defendant  the  plaintiff's  twenty  dollars, 
and  the  defendant,  though  requested,  refused  to  repay  the  same 
to  the  plaintiff.  The  declaration  contained  another  count  for 
money  had  and  received  by  the  defendant  to  the  plaintiff's  use. 
The  answer  was  a  general  denial. 

The  presiding  judge  ruled  and  instructed  the  jury  that  courts 
did  not  sit  to  decide  wagers ;  that  it  did  not  matter  whether  the 
plaintiff  was  right  or  not,  regarding  the  situation  of  the  burial- 
place  in  question,  or  whether  the  defendant  received  from  the 
stakeholder  the  same  money  that  was  deposited  with  him  by  the 
plaintiff,  if  the  money  was  paid  and  received  as  money  of 
the  plaintiff;  that  if,  before  the  money  was  paid  over  to  the 
defendant,  the  plaintiff  forbade  payment  thereof  in  the  defend- 
ant's presence,  then  the  defendant  received  it  without  considera- 
tion and  wrongfully,  and  was  liable  in  the  action  for  money  had 
and  received. 

Gray,  C.  J.  In  England  and  in  New  York,  actions  on  wagers 
upon  questions  in  which  the  parties  had  no  previous  interest  were 
frequently  sustained,  until  the  legislature  interposed  and  declared 
all  wagers  to  be  void.  1  Chit.  Con.  (11th  Am.  ed.)  735-738;  3 
Kent.  Com.  277,  278.  In  Scotland,  the  courts  refused  to  entertain 
such  actions.  Bruce  v.  Ross,  3  Paton,  107,  112;  S.  C.  cited  3 
T.  R.  697,  705. 

In  Massachusetts,  the  English  law  on  this  subject  has  never 
been  adopted,  used,  or  approved,  and,  although  the  question  has 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  326 

not  been  directly  adjudged,  it  has  long  been  understood  that  all 
wagers  are  unlawful.  Const.  Mass.  c.  6,  art.  6;  Amory  v.  Gilman, 
2  Mass.  1,  6;  Ball  v.  Gilbert,  12  Met.  397,  399;  Sampson  v.  Shaw, 
101  Mass.  145,  150;  Met.  Con.  239.  There  are  decisions  or 
opinions  to  the  same  effect  in  each  of  the  New  England  States. 
Lewis  V.  Littlejield,  15  Maine,  233;  Perkins  v.  Eaton,  3  N.  H. 
162;  Hoit  v.  Hodge,  6  N.  H.  104;  Collamer  v.  Day,  2  Vt.  144; 
West  V.  Holmes,  26  Vt.  530;  Stoddard  v.  Martin,  1  R.  I.  1,  2; 
Wheeler  v.  Spencer,  15  Conn.  28,  30.  See  also  Edgell  v.  McLaugh- 
lin, 6  Whart.  176;  Rice  v.  Gist,  1  Strob.  82. 

It  is  inconsistent  alike  with  the  policy  of  our  laws,  and  with 
the  performance  of  the  duties  for  which  courts  of  justice  are 
established,  that  judges  and  juries  should  be  occupied  in  answer- 
ing every  frivolous  question  upon  which  idle  or  foolish  persons 
may  choose  to  lay  a  wager. 

The  ruling  at  the  trial  was  therefore  correct,  and  the  defendant, 

having  received  the  money  from  the  stakeholder  after  notice  from 

the  plaintiff  not  to  pay  it  over,  was  liable  to  the  plaintiff  under 

the  count  for  money  had  and  received.     McKee  v.  Manice,  11 

Cush.  367. 

Exceptions  overruled.^ 


d.    Wagers  on  rise  and  fall  of  prices. 
MOHR  V.   MIESEN. 

47  MINNESOTA,  228.  — 1891. 

Appeal  by  defendant  from  an  order  of  the  District  Court  for 
Ramsey  County,  refusing  a  new  trial  after  a  verdict  of  $2005.78 
for  plaintiffs.  The  jury  found  specially  that  "  the  arrangement 
between  plaintiffs  and  defendant  with  reference  to  the  transaction 
in  controversy  contemplated  the  purchase  and  sale  of  actual  grain 
for  future  delivery,  and  did  not  contemplate  the  making  of 
gambling  contracts  only,"  and  also  that  "the  contracts  in  evi- 
dence were  made  by  and  between  the  plaintiffs  and  other  members 
of  the  chamber  of  commerce,  for  the  purchase  and  sale  of  grain 
actually  to  be  delivered  by  warehouse  receipts,  if  either  party  to 

1  See  also  Bernard  v.  Taylor,  23  Ore.  416,  post,  p.  407. 


326  FORMATION  OF  CONTRACT.  [Part  II 

them  should  require  it,  and  that  said  contracts  were  not  simply 
gambling  contracts." 

Vanderburgh,  J.  The  plaintiffs  sue  defendant  for  money 
paid  and  expended  for  his  use  in  the  purchase  and  sale  of  grain. 
The  answer  sets  up  that  the  purchases  and  sales  referred  to  were 
not  actual  or  veritable  purchases  and  sales  of  grain,  but  were 
merely  colorable,  and  ''  were  gambling  transactions,  whereby  the 
plaintiffs  in  form  undertook  to  buy  and  sell  on  the  Chicago  or 
Milwaukee  boards  of  trade,  ostensibly  for  future  deliveries,  but 
"without  any  intention  or  expectation  on  the  part  of  the  plaintiffs 
or  defendant  that  the  same  would  be  actually  delivered,  large 
quantities  of  wheat  and  barley,  with  the  expectation  and  in- 
tention on  the  part  of  both  plaintiffs  and  defendant  of  wagering 
on  the  market  prices,  and  that  the  amounts  which  defendant 
would  win  or  lose  would  be  governed  by  and  determined  upon  the 
fluctuations  in  the  quotations  of  the  boards  of  trade."  The  record 
shows  that  the  plaintiffs  were  members  of  the  Milwaukee  cham- 
ber of  commerce,  and  were  brokers  negotiating  purchases  and 
sales  of  grain,  and  accustomed  to  buy  upon  margins  under  the 
rules  of  the  chamber,  and  to  make  advances  for  customers,  and  to 
charge  commissions  for  their  services.  The  defendant  during  the 
time  of  the  transactions  in  controversy  was  a  dealer  in  wines  and 
liquors  in  the  city  of  St.  Paul.  These  transactions  opened  by  the 
receipt  by  plaintiffs  of  a  telegraphic  dispatch  from  the  defendant 
on  November  11,  1886,  directing  them  to  "sell  ten  thousand 
bushels  May  wheat."  On  the  following  day  they  accordingly 
executed  the  order.  February  10th  defendant  directed  the  plain- 
tiffs to  buy  ten  thousand  bushels  May  wheat,  which  order  was  in 
like  manner  executed  the  same  day.  This  closed  the  transaction, 
so  far  as  the  defendant  was  concerned.  The  two  contracts  were 
adjusted  on  the  basis  of  the  difference  in  prices  at  the  dates  speci- 
fied, and  a  statement  showing  the  difference  sent  to  defendant; 
that  is  to  say,  the  two  contracts  were  adjusted  on  the  basis  of 
such  difference  in  prices,  without  waiting  for  their  literal  fulfil- 
ment, and  without  any  actual  delivery  of  wheat.  A  large  num- 
ber of  other  similar  purchases  and  sales  of  wheat  and  barley, 
amounting  to  hundreds  of  thousands  of  bushels,  were  made  by 
plaintiffs  for  defendant,  and  disposed  of  in  like  manner,  during 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  327 

the  year  1887.  Some  of  the  "  deals  "  were  closed  with  a  profit, 
others  with  a  loss,  to  defendant,  which  was  charged  up  to  him  by 
the  plaintiffs.  During  this  time  the  defendant  paid  out  no  money 
for  grain  whatever,  but  at  plaintiffs'  instance,  to  cover  margins 
for  which  advances  had  been  made  by  them  on  a  falling  market, 
he  had  paid  them,  between  the  10th  day  of  November,  1886,  and 
the  1st  day  of  January,  1888,  the  sum  of  $2462.50,  leaving  due 
them,  as  they  claim,  the  amount  demanded  in  this  action.  The 
last  transactions,  as  per  statement  sent  to  defendant  by  plaintiffs, 
were  the  reported  sale  of  10,000  bushels  February  barley,  Decem- 
ber 30,  1887,  and  the  purchase  of  10,000  bushels  February  barley, 
January  3,  1888,  difference  (loss)  reported  January  4,  1888, 
at  $275. 

Contracts  for  the  purchase  or  sale  of  grain  or  other  commodities 
to  be  delivered  at  a  future  time  are  not  per  se  unlawful,  if  the 
parties  intend  in  good  faith  to  perform  them  by  the  actual  delivery 
of  the  property  according  to  their  terms.  Nor  are  bona  fide  con- 
tracts for  the  future  delivery  of  goods  invalid  because  at  the  time 
of  the  sale  the  vendor  has  not  the  actual  or  potential  possession 
of  the  goods  which  he  has  agreed  to  sell.  He  may  afterwards  go 
into  the  market  and  procure  the  goods  which  he  has  agreed  to 
furnish  his  vendee.  Business  may  be  successfully  and  lawfully 
conducted  in  that  way ;  and,  where  such  contracts  are  intended  in 
good  faith  to  represent  actual  transactions,  they  are  not  unlawful. 
The  law  places  no  unreasonable  limitations  upon  commercial 
dealings ;  and  it  is  no  legal  ground  of  objection  that  bona  fide 
contracts  for  future  delivery  are  entered  into  for  the  purpose  of 
making  a  speculation  through  an  anticipated  rise  in  the  price  of 
commodities.  But  contracts  in  form  for  the  future  delivery 
of  goods  not  intended  to  represent  actual  transactions, —  that  is, 
the  actual  delivery  and  receipt  of  the  goods, — but  merely  to  pay 
and  receive  the  difference  between  the  agreed  price  and  the 
market  price  at  a  future  day,  and  upon  the  risk  of  the  rise  or  fall 
in  prices,  are  generally  held  to  be  in  the  nature  of  wagers  on  the 
future  price  of  the  commodity,  and  void  by  statute  or  as  against 
public  policy.  The  party  dealing  in  futures  in  substance  bets 
that  the  price  of  a  commodity  at  a  future  day  will  be  a  certain 
sum  more  or  less  than  the  market  prices,  which  involve  elements 


328  FORMATION  OF  CONTRACT.  [Pabt  U. 

of  risk  and  uncertainty ;  and  the  "  stake  "  is  the  amount  of  the 
"  margin  "  required  to  cover  differences  in  values,  and  according 
to  the  price  of  the  commodity  on  a  future  day  the  parties  to  the 
contract  must  respectively  gain  or  lose.  22  Am.  Law  Reg. 
613,  note. 

In  Rumsey  v.  Berry  (65  Me.  570)  the  accepted  doctrine  is 
stated  as  follows : 

"  A  contract  for  the  sale  and  purchase  of  wheat  to  be  delivered  in  good 
faith  at  a  future  time  is  one  thing,  and  is  not  inconsistent  with  the  law; 
but  such  a  contract  entered  into  without  an  intention  of  having  any 
wheat  pass  from  one  party  to  the  other,  but  with  an  understanding  that 
at  the  appointed  time  the  purchaser  is  merely  to  receive  or  pay  the  differ- 
ence between  the  contract  and  the  market  price,  is  another  thing,  and 
such  as  the  law  will  not  sustain.  This  is  what  is  called  a  settling  of  the 
differences,  and  as  such  is  clearly  and  only  a  betting  upon  the  price  of 
wheat,  against  public  policy,  and  not  only  void,  but  deserving  of  the 
severest  censure." 

"  The  bargain  represents  not  a  transfer  of  property,  but  a  mere  stake 
or  wager  upon  its  future  price.  The  difference  requires  the  ownership  of 
only  a  few  hundreds  or  thousands  of  dollars,  while  the  capital  to  complete 
an  actual  purchase  or  sale  may  be  hundreds  of  thousands  or  millions. 
Hence  ventures  upon  prices  invite  men  of  small  means  to  enter  into 
transactions  far  beyond  their  capital,  which  they  do  not  intend  to  fulfil, 
and  thus  the  apparent  business  in  the  particular  trade  is  inflated  and 
unreal,  and,  like  a  bubWe,  needs  only  to  be  pricked  to  disappear,  often 
carrying  down  the  bona  fide  dealer  in  its  collapse.  .  .  .  Such  transac- 
tions are  destructive  of  good  morals  and  fair  dealing  and  of  the  best 
interests  of  the  community."     Kirkpatrick  v.  Bonsall,  72  Pa.  St.  155. 

It  becomes  material,  therefore,  to  inquire  into  the  intention  of 
the  parties  in  entering  into  contracts  purporting  to  be  for  the 
future  delivery  of  commodities,  and  the  plaintiffs  must  be  shown 
to  be  in  pari  delicto  to  defeat  a  recovery  in  this  action.  The 
language  or  form  of  the  contract  is  not  conclusive.  The  real 
nature  of  the  transaction  and  the  understanding  and  purpose  of 
the  parties  may  be  shown,  notwithstanding  the  contract  is  fair  on 
its  face.  Indeed,  in  view  of  the  extent  to  which  stock  and  grain 
gambling  is  carried  on  at  the  exchanges  in  the  commercial  centers 
of  the  country,  —  a  fact  of  which  the  courts  are  bound  to  take 
notice, —  time  contracts  of  the  character  under  consideration  will 
be   very  carefully  scrutinized  by  the  courts,  and  they  will  go 


Chap.  V.  §1.]  LEGALITY  OF  OBJECT. 

behind  and  outside  the  language  of  the  contract,  and  look  into  the 
facts  and  circumstances  surrounding  and  connected  with  it,  in 
order  to  determine  its  real  character,  as  in  the  case  of  contracts 
claimed  to  be  void  for  usury  or  fraud.  In  Barnard  v.  Backhaus, 
(52  Wis.  593,  600)  the  court,  speaking  of  contracts  for  future 
delivery,  went  so  far  as  to  say  that  "  to  justify  a  court  in  uphold- 
ing such  an  agreement  it  is  not  too  much  to  require  a  party 
claiming  rights  under  it  to  make  it  satisfactorily  and  affirmatively 
appear  that  the  contract  was  made  with  an  actual  view  to  the 
delivery  and  receipt  of  grain,  not  as  an  evasion  of  the  statute 
against  gaming,  or  as  a  cover  for  a  gambling  transaction."  The 
effect  of  this  would  be  to  shift  the  burden  of  proof  in  such  cases. 
The  courts  of  some  of  the  other  States  have  been  constrained  to 
adopt  the  same  rule,  but  upon  principle  the  proposition  can  hardly 
be  sustained;  and  the  general  rule  is  that  the  burden  of  establish- 
ing the  illegality  rests  upon  the  party  who  asserts  it,  and  such  is 
the  great  weight  of  authority  in  these  as  well  as  other  cases.  It 
is  for  the  legislature  to  change  the  rule  in  this  class  of  cases,  if 
in  its  wisdom  and  for  reasons  of  public  policy  it  shall  be  deemed 
necessary  for  the  public  welfare.  Crawford  v.  Spencer,  92  Mo. 
498,  and  cases. 

The  testimony  of  the  defendant,  which  is  undisputed,  shows  or 
tends  to  show  that  he  did  not  intend  to  make  actual  bonajide 
purchases  and  sales  of  grain,  but  intended  to  "  deal  in  futures  " 
solely,  and  the  manner  in  which  the  business  was  conducted  and 
the  several  "  deals  "  closed  and  adjusted  by  the  plaintiffs  is  con- 
sistent with  this  theory,  and  tends  to  support  it;  and,  while  this, 
circumstance  might  not  alone  be  sufficient  to  establish  the  fact 
that  plaintiffs,'  or  the  third  parties  with  whom  they  dealt  in 
executing  the  orders  of  the  defendant,  had  notice  that  defendant's 
object  was  not  to  buy  and  sell  grain,  but  to  speculate  in  the  price 
of  grain  merely,  yet  the  manner  in  which  the  business  involving 
these  transactions  was  conducted  was  certainly  an  element  to  be 
considered  with  other  circumstances  in  determining  the  question 
of  their  good  faith.  Hill  v.  Johnson,  38  Mo.  App.  383 ;  Crawford 
V.  Spencer,  92  Mo.  498.  It  is  not  necessary  to  prove  that  plain- 
tiffs had  express  notice  of  defendant's  purpose.  The  understand- 
ing between  the  parties  may  be  gathered  from  the  facts  and 


330  FORMATION  OF  CONTRACT.  [Part  II. 

attending  circumstances.  This  is  well  settled,  and  upon  this 
point  evidence  of  the  defendant's  occuparion,  residence,  financial 
ability;  that  he  never  delivered  or  received  or  proposed  to 
deliver  or  receive  any  grain ;  that  he  was  not  a  dealer ;  and  that 
the  orders  to  purchase  were  made  without  reference  to  or  far  in 
«xcess  of  his  ability  to  pay  for,  with  other  facts  of  like  character, 
was  competent.  Cobb  v.  Prell,  5  McCrary,  85;  Carroll  v.  Holmes, 
24  111.  App.  453,  458,  459;  In  re  Green,  7  Biss.  338,  344;  Craw- 
ford V.  Spencer,  supra;  Lowry  v.  Dillman,  59  Wis.  197;  Sprague 
V.  Warren  (Neb.),  41  N.  W.  Rep.  1115;  Watter.  Wickersham,  'It 
Neb.  457;  Williams  y.  Tiedemann,  6  Mo.  App.  269,  276;  Hill  v. 
Johnson,  38  Mo.  App.  383,  392.  The  plaintiffs  concede  that  it 
was  apparent  from  his  correspondence  that  the  defendant's  trans- 
actions were  mostly  for  speculative  purposes.  They  knew  he 
was  in  the  saloon  business,  and  not  in  the  grain  business.  The 
jiiry  might  find  from  the  facts  disclosed  by  the  evidence  that  the 
plaintiffs  knew  that  he  had  not  the  means  to  buy  grain  with,  and 
did  not  desire  or  need  it,  but  was  operating  for  the  differ- 
ences only. 

The  statutes  of  Wisconsin,  where  the  business  was  done,  were 
not  introduced  in  evidence.  The  rights  of  the  parties  will  there- 
fore be  determined  by  the  rules  of  the  common  law,  as  generally 
accepted  and  applied  in  this  country.  Harvey  v.  Merrill,  150 
Mass.  1.  And  it  is  generally  held  as  the  common-law  doctrine 
that  all  wagering  contracts  are  illegal  and  void  as  against  public 
policy.  Inoin  v.  Williar,  110  U.  S.  499,  510;  Harvey  v.  Merrill, 
supra.  No  cause  of  action  arises  in  favor  of  a  party  to  an  illegal 
transaction ;  nor  will  the  law  lend  its  aid  to  enforce  any  contract 
which  is  in  conflict  with  the  terms  of  a  statute,  or  sound  public 
policy  or  good  morals.  In  re  Green,  7  Biss.  338;  Armstrongs. 
Toler,  11  Wheat.  258;  Ruckman  v.  Bryan,  3  Denio,  340.  And 
there  is  no  reason  why  a  broker  or  commission  merchant  should 
be  favored  or  exempted  from  consequences  resulting  to  other 
parties  who  aid  or  assist  in  unlawful  transactions.  Barnard  v. 
Backhaus,  sxipra.  It  was  through  the  agency  of  the  plaintiffs 
that  the  defendant  was  attempting  to  carry  on  an  unlawful  busi- 
ness. They  executed  his  orders,  advanced  money  for  margins, 
and  settled  the  differences.     The  contracts  were  all  made  in  their 


Chap.  V.  §1.]  LEGALITY  OF  OBJECT.  331 

names,  and  he  was  not  known  in  the  transactions  with  third 
parties,  and  they  were  personally  responsible  to  the  persons  with 
whom  they  dealt  in  making  the  purchases  and  sales  in  question. 
Under  such  circumstances  it  would,  of  course,  be  difficult  to  ascer- 
tain whether  the  latter  had  notice  of  the  nature  of  the  agreement 
or  understanding  existing  between  the  parties  to  this  action;  but 
it  was  clearly  important  and  material  to  show  that  the  plaintiffs 
were  cognizant  of  defendant's  illegal  purposes,  and  were  engaged 
in  promoting  them;  and,  if  they  were,  the  court  will  not  aid 
them  to  recover  moneys  advanced  in  furtherance  of  such  schemes. 
The  plaintiffs,  as  brokers  or  commission  merchants,  might  well 
decline  to  aid  in  transactions  of  that  character;  and,  if  they  would 
do  so,  a  great  deal  of  that  kind  of  gambling  would  cease,  as,  in 
the  majority  of  cases,  the  ventures  could  not  be  made  without 
their  financial  assistance.  As  between  them  and  their  customers, 
the  same  strict  rule  should  be  applied  as  in  other  cases.  Carroll 
V.  Holmes,  24  111.  A  pp.  453,  460;  Hill  v.  Johnson,  38  Mo.  App. 
383;   Tied.  Sales,  p.  490,  §  302. 

The  plaintiffs'  counsel,  however,  concedes  in  his  brief  in  this 
court  that  if,  by  the  arrangement  between  the  parties  to  this  suit, 
they  were  to  undertake  gambling  transactions,  then  the  intent  of 
third  parties  was  not  material.  But  the  defendant's  counsel 
insists  that  the  charge  of  the  court  on  this  subject,  including  the 
instructions  asked  by  plaintiffs,  would  warrant  the  jury  to  infer 
that  it  was  necessary  for  the  defendant  to  make  it  appear  that 
the  parties  with  whom  plaintiffs  dealt  were  also  in  pari  delicto. 
Upon  this  point  the  charge,  taken  as  a  whole,  is  perhaps  not 
entirely  clear,  but  we  think  if  there  was  any  ambiguity  or  uncer- 
tainty in  the  charge  on  the  question  the  defendant  should  have 
asked  more  specific  instructions. 

It  is  also  assigned  as  error  that  the  court  erred  in  refusing 
defendant's  second  request  to  charge,  which  was  in  substance 
that,  in  order  to  prove  notice  or  knowledge  on  the  part  of  the 
plaintiffs  of  the  designs  and  intentions  of  the  defendant,  it  is  not 
necessary  that  defendant  should  have  written  or  said  to  any  of  the 
plaintiffs  that  such  was  his  design ;  but  the  jury  were  to  deter- 
mine the  understanding  of  the  parties  from  all  the  circumstances 
connected  with  the  transactions  between  them,  and  that  upon  this 


332  FORMATION  OF  CONTRACT.  [Part  H. 

question  they  were  "  entitled  to  consider  the  fact  that  at  the  time 
the  plaintiffs  sold  the  barley  for  the  defendant  in  October, 
November,  and  December,  1887,  one  of  the  plaintiffs  stated  that 
he  had  no  reason  to  believe  that  the  defendant  had  the  barley  at 
the  time  of  such  sales;  and  the  further  fact  that  during  a  part, 
at  least,  of  the  time  of  such  transactions,  the  defendant  was 
behind  with  his  margin,  and  was  being  pressed  by  plaintiffs  for 
money  to  make  the  margins  good ;  and  that  plaintiffs  immediately 
after  closed  these  deals,  as  well  as  all  prior  deals,  considered  the 
transaction  at  an  end  so  far  as  defendant  was  concerned,  and, 
instead  of  charging  him  with  the  purchase  of  any  wheat,  sent  him 
statements  charging  him  with,  or  crediting  him  with,  as  the  case 
might  be,  the  difference  between  the  purchase  and  the  selling 
price."  These  instructions  were  not  covered  by  the  general 
charge,  and  we  think  should  have  been  given.  Some  of  the  evi- 
dence was  perhaps  of  slight  importance,  but  we  think,  with  other 
facts  and  circumstances  in  the  case,  it  was  all  proper  to  be  con- 
sidered by  the  jury  in  determining  the  knowledge  of  the  plaintiffs 
and  the  real  nature  of  the  arrangement  between  the  parties;  and 
without  such  instructions  the  jury  were  in  danger  of  being  led  to 
believe,  as  the  court  subsequently  stated,  that  there  must  be  an 
express  agreement,  and  that  a  mere  understanding  between  the 
parties  was  not  sufficient. 

We  think  evidence  of  the  general  character  of  transactions  in 
the  chamber  between  other  dealers  was  properly  rejected ;  but  for 
the  error  above  referred  to  there  should  be  a  new  trial. 

Order  reversed. 


HARVEY  V.  MERRILL. 

160  MASSACHUSETTS,  1.— 1889. 

[Reported  herein  at  p.  888.] 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  333 

e.    Wagering  policies. 

WARNOCK  V.   DAVIS. 

104  UNITED  STATES,  775.  — 1881. 

Action  to  recover  a  balance  on  a  life  insurance  policy  issued  to 
plaintiff's  intestate  and  by  him  assigned  to  defendants  to  whom 
the  policy  was  paid.  Judgment  for  defendants.  Plaintiff  brings 
error. 

The  intestate  entered  into  an  agreement  with  defendants  that 
he  would  take  out  a  policy  for  $5000  and  assign  nine-tenths  of 
the  same  to  defendants,  one-tenth  to  be  payable  to  his  wife;  that 
he  would  pay  defendants  $6  in  hand  and  annual  dues  amounting 
to  $2.50.  They  on  their  part  agreed  to  keep  up  the  annual 
premiums  on  the  policy,  and  on  the  death  of  intestate  collect  and 
pay  over  to  his  widow  one-tenth  of  the  policy.  In  pursuance  of 
this  agreement  a  policy  was  taken  out  by  the  intestate  and 
assigned  to  defendants  on  the  terms  stipulated.  On  the  death  of 
intestate  the  defendants  collected  the  policy  and  paid  over  to  the 
widow  one-tenth  of  the  amount,  less  certain  sums  due  under  the 
agreement.  Plaintiff,  as  administrator,  brings  an  action  for 
the  balance  of  the  money  collected  under  the  policy. 

Mr.  Justice  Field.  As  seen  from  the  statement  of  the  case, 
the  evidence  before  the  court  was  not  conflicting,  and  it  was  only 
necessary  to  meet  the  general  allegations  of  the  first  defense.  All 
the  facts  established  by  it  are  admitted  in  the  other  defenses. 
The  court  could  not  have  ruled  in  favor  of  the  defendants  without 
holding  that  the  agreement  between  the  deceased  and  the  Scioto 
Trust  Association  was  valid,  and  that  the  assignment  transferred 
to  it  the  right  to  nine-tenths  of  the  money  collected  on  the  policy. 
For  alleged  error  in  these  particulars  the  plaintiff  asks  a  reversal 
of  the  judgment. 

The  policy  executed  on  the  life  of  the  deceased  was  a  valid 
contract,  and  as  such  was  assignable  by  the  assured  to  the  associa- 
tion as  security  for  any  sums  lent  to  him,  or  advanced  for  the 
premiums  and  assessments  upon  it.  But  it  was  not  assignable  to 
the  association  for  any  other  purpose.  The  association  had  no 
insurable  interest  in  the  life  of  the  deceased,  and  could  not  have 


834  FORMATION  OF  CONTRACT.  [Part  IL 

taken  out  a  policy  in  its  own  name.  Such  a  policy  would  con- 
stitute what  is  termed  a  wager  policy,  or  a  mere  speculative 
contract  upon  the  life  of  the  assured,  with  a  direct  interest  in  its 
early  termination. 

It  is  not  easy  to  define  with  precision  what  will  in  all  cases 
constitute  an  insurable  interest,  so  as  to  take  the  contract  out  of 
the  class  of  wager  policies.  It  may  be  stated  generally,  however, 
to  be  such  an  interest,  arising  from  the  relations  of  the  party 
obtaining  the  insurance,  either  as  creditor  of  or  surety  for  the 
assured,  or  from  the  ties  of  blood  or  marriage  to  him,  as  will 
justify  a  reasonable  expectation  of  advantage  or  benefit  from  the 
continuance  of  his  life.  It  is  not  necessary  that  the  expectation 
of  advantage  or  benefit  should  be  always  capable  of  pecuniary 
estimation;  for  a  parent  has  an  insurable  interest  in  the  life  of 
his  child,  and  a  child  in  the  life  of  his  parent,  a  husband  in  the 
life  of  his  wife,  and  a  wife  in  the  life  of  her  husband.  The 
natural  affection  in  cases  of  this  kind  is  considered  as  more 
powerful  —  as  operating  more  efficaciously  —  to  protect  the  life 
of  the  insured  than  any  other  consideration.  But  in  all  cases 
there  must  be  a  reasonable  ground,  founded  upon  the  relations  of 
the  parties  to  each  other,  either  pecuniary  or  of  blood  or  affinity, 
to  expect  some  benefit  or  advantage  from  the  continuance  of  the 
life  of  the  assured.  Otherwise  the  contract  is  a  mere  wager,  by 
which  the  party  taking  the  policy  is  directly  interested  in  the 
early  death  of  the  assured.  Such  policies  have  a  tendency  to 
create  a  desire  for  the  event.  They  are,  therefore,  independently 
of  any  statute  on  the  subject,  condemned,  as  being  against  public 
policy. 

The  assignment  of  a  policy  to  a  party  not  having  an  insurable 
interest  is  as  objectionable  as  the  taking  out  of  a  policy  in  his 
name.  Nor  is  its  character  changed  because  it  is  for  a  portion 
merely  of  the  insurance  money.  To  the  extent  in  which  the 
assignee  stipulates  for  the  proceeds  of  the  policy  beyond  the  sums 
advanced  by  him,  he  stands  in  the  position  of  one  holding  a  wager 
policy.  The  law  might  be  readily  evaded,  if  the  policy,  or  an 
interest  in  it,  could,  in  consideration  of  paying  the  premiums  and 
assessments  upon  it,  and  the  promise  to  pay  upon  the  death  of 
the  assured  a  portion  of  its  proceeds  to  his  representatives,  be 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  335 

transferred  so  as  to  entitle  the  assignee   to   retain  the  whole 
insurance  money. 

The  question  here  presented  has  arisen,  under  somewhat  dif- 
ferent circumstances,  in  several  of  the  state  courts ;  and  there  is 
a  conflict  in  their  decisions.  In  Franklin  Life  Insurance  Com- 
pany V.  Hazzard,  which  arose  in  Indiana,  the  policy  of  insurance, 
which  was  for  $3000,  contained  the  usual  provision  that  if  the 
premiums  were  not  paid  at  the  times  specified  the  policy  would 
be  forfeited.  The  second  premium  was  not  paid,  and  the  assured, 
declaring  that  he  had  concluded  not  to  keep  up  the  policy,  sold  it 
for  twenty  dollars  to  one  having  no  insurable  interest,  who  took 
an  assignment  of  it  with  the  consent  of  the  secretary  of  the  insur- 
ance company.  The  assignee  subsequently  settled  with  the 
company  for  the  unpaid  premium.  In  a  suit  upon  the  policy, 
the  Supreme  Court  of  the  State  held  that  the  assignment  was 
void,  stating  that  all  the  objections  against  the  issuing  of  a  policy 
to  one  upon  the  life  of  another,  in  whose  life  he  has  no  insurable 
interest,  exist  against  holding  such  a  policy  by  mere  purchase  and 
assignment.  "  In  either  case, "  said  the  court,  "  the  holder  of  such 
policy  is  interested  in  the  death  rather  than  the  life  of  the  party 
assured.  The  law  ought  to  be,  and  we  think  it  clearly  is, 
opposed  to  such  speculations  in  human  life."  41  Ind.  116.  The 
court  referred  with  approval  to  a  decision  of  the  same  purport 
by  the  Supreme  Court  of  Massachusetts,  in  Stevens  v.  Warren, 
101  Mass.  564.  There  the  question  presented  was  whether  the 
assignment  of  a  policy  by  the  assured  in  his  lifetime,  without  the 
assent  of  the  insurance  company,  conveyed  any  right  in  law  or 
equity  to  the  proceeds  when  due.  The  court  was  unanimously 
of  opinion  that  it  did  not;  holding  that  it  was  contrary  not  only 
to  the  terms  of  the  contract,  but  contrary  to  the  general  policy  of 
the  law  respecting  insurance,  in  that  it  might  lead  to  gambling 
or  speculative  contracts  upon  the  chances  of  human  life.  The 
court  also  referred  to  provisions  sometimes  inserted  in  a  policy 
expressing  that  it  is  for  the  benefit  of  another,  or  is  payable  to 
another  than  the  representatives  of  the  assured,  and,  after  remark- 
ing that  the  contract  in  such  a  case  might  be  sustained,  said, 
"that  the  same  would  probably  be  held  in  the  case  of  an  assign- 
ment with  the  assent  of  the  assurers.     But  if  the  assignee  has  no 


336  FORMATION  OF  CONTRACT.  [Pakt  H. 

interest  in  the  life  of  the  subject  which  would  sustain  a  policy  to 
himself,  the  assignment  would  take  effect  only  as  a  designation, 
by  mutual  agreement  of  the  parties,  of  the  person  who  should  be 
entitled  to  receive  the  proceeds  when  due,  instead  of  the  personal 
representatives  of  the  deceased.  And  if  it  should  appear  that 
the  arrangement  was  a  cover  for  a  speculating  risk,  contravening 
the  general  policy  of  the  law,  it  would  not  be  sustained," 

Although  the  agreement  between  the  Trust  Association  and 
the  assured  was  invalid  as  far  as  it  provided  for  an  absolute 
transfer  of  nine-tenths  of  the  proceeds  of  the  policy  upon  the 
conditions  named,  it  was  not  of  that  fraudulent  kind  with  respect 
to  which  the  courts  regard  the  parties  as  alike  culpable  and  refuse 
to  interfere  with  the  results  of  their  action.  !N^o  fraud  or  decep- 
tion vipon  any  one  was  designed  by  the  agreement,  nor  did  its 
execution  involve  any  moral  turpitude.  It  is  one  which  must  be 
treated  as  creating  no  legal  right  to  the  proceeds  of  the  policy 
beyond  the  sums  advanced  upon  its  security ;  and  the  courts  will, 
therefore,  hold  the  recipient  of  the  moneys  beyond  those  sums  to 
account  to  the  representatives  of  the  deceased.  It  was  lawful  for 
the  association  to  advance  to  the  assured  the  sums  payable  to  the 
insurance  company  on  the  policy  as  they  became  due.  It  was, 
also,  lawful  for  the  assured  to  assign  the  policy  as  security  for 
their  payment.  The  assignment  was  only  invalid  as  a  transfer 
of  the  proceeds  of  the  policy  beyond  what  was  required  to  refund 
those  sums,  with  interest.  To  hold  it  valid  for  the  whole  pro- 
ceeds would  be  to  sanction  speculative  risks  on  human  life,  and 
encourage  the  evils  for  which  wager  policies  are  condemned. 

The  decisions  of  the  New  York  Court  of  Appeals  are,  we  are 
aware,  opposed  to  this  view.  They  hold  that  a  valid  policy  of 
insurance  effected  by  a  person  upon  his  own  life,  is  assignable 
like  an  ordinary  chose  in  action,  and  that  the  assignee  is  entitled, 
upon  the  death  of  the  assured,  to  the  full  sum,  payable  without 
regard  to  the  consideration  given  by  him  for  the  assignment,  or 
to  his  possession  of  any  insurable  interest  in  the  life  of  the 
assured.  St.  John  v.  Amei'ican  Mutual  Life  Insurance  Company, 
13  N.  Y.  31 ;  Valton  v.  National  Fund  Life  Assurance  Company, 
20  Id.  32.  In  the  opinion  in  the  first  case  the  court  cite  Ashley 
V.  Ashley  (3  Simons,  149)  in  support  of  its  conclusions;  and  it 


Chap.  V.  §  1]  LEGAIJTY  OF  OBJECT.  337 

must  be  admitted  that  they  are  sustained  by  many  other  adjudi- 
cations. But  if  there  be  any  sound  reason  for  holding  a  policy 
invalid  when  taken  out  by  a  party  who  has  no  interest  in  the  life 
of  the  assured,  it  is  difficult  to  see  why  that  reason  is  not  as 
<jogent  and  operative  against  a  party  taking  an  assignment  of  a 
policy  upon  the  life  of  a  person  in  which  he  has  no  interest.  The 
same  ground  which  invalidates  the  one  should  invalidate  the 
other ;  —  so  far,  at  least,  as  to  restrict  the  right  of  the  assignee 
to  the  sums  actually  advanced  by  him.  In  the  conflict  of  decis- 
ions on  this  subject  we  are  free  to  follow  those  which  seem  more 
fully  in  accord  with  the  general  policy  of  the  law  against  specula- 
tive contracts  upon  human  life. 

In  this  conclusion  we  are  supported  by  the  decision  in  Cam- 
macJc  V.  Lewis,  15  Wall.  643.  There  a  policy  of  life  insurance 
for  $3000,  procured  by  a  debtor  at  the  suggestion  of  a  creditor 
to  whom  he  owed  $70,  was  assigned  to  the  latter  to  secure  the 
debt,  upon  his  promise  to  pay  the  premiums,  and,  in  case  of  the 
death  of  the  assured,  one-third  of  the  proceeds  to  his  widow.  On 
the  death  of  the  assured,  the  assignee  collected  the  money  from 
the  insurance  company  and  paid  to  the  widow  $950  as  her  pro- 
portion after  deducting  certain  payments  made.  The  widow,  as 
administratrix  of  the  deceased's  estate,  subsequently  sued  for  the 
balance  of  the  money  collected,  and  recovered  judgment.  The 
case  being  brought  to  this  court,  it  was  held  that  the  transaction, 
so  far  as  the  creditor  was  concerned,  for  the  excess  beyond  the 
debt  owing  to  him,  was  a  wagering  policy,  and  that  the  creditor, 
in  equity  and  good  conscience,  should  hold  it  only  as  security  for 
what  the  debtor  owed  him  when  it  was  assigned,  and  for  such 
advances  as  he  might  have  afterwards  made  on  account  of  it ;  and 
that  the  assignment  was  valid  only  to  that  extent.  This  decision 
is  in  harmony  with  the  views  expressed  in  this  opinion. 

The  judgment  of  the  court  below  will,  therefore,  be  reversed, 
and  the  cause  remanded  with  direction  to  enter  a  judgment  for 
the  plaintiff  for  the  amount  collected  from  the  insurance  company, 
with  interest,  after  deducting  the  sum  already  paid  to  the  widow, 
and  the  several  sums  advanced  by  the  defendants ;  and  it  is 

So  ordered.^ 
1  Contra :  Clark  v.  Allen,  11  R.  I.  439. 


338  FORMATION  OF  CONTRACT.  [Part  II. 

(ii.)    Contracts  illegal  at  common  law. 
a.  Agreements  to  commit  an  indictable  offense  or  civil  wrong. 

MATERNE  v.   HORWITZ. 

101  NEW  YORK,  469.  — 1886. 

Action  for  damages  for  refusal  to  accept  goods  tendered  under 
contract  of  sale.  Complaint  dismissed.  Plaintiff  appeals  from 
judgment  of  the  General  Term  of  New  York  City  Superior  Court 
affirming  judgment.  (Reported  18  J.  &  S.  41,  where  the  facta 
appear.) 

Plaintiffs  sold  defendants  400  cases  of  "domestic  sardines," 
the  boxes  to  have  "  fancy  labels  "  on  them.  Domestic  sardines 
were  fish  packed  in  Maine,  and  fancy  labels  were  decorated  labels 
containing  a  statement  in  substance  that  the  sardines  were  packed 
in  France  in  olive  oil  by  persons  named  on  the  label.  Imported 
sardines  were  worth  about  50  per  cent  more  than  domestic.  The 
goods  tendered  had  on  them  labels  as  described.  Plaintiffs  and 
defendants  were  wholesale  dealers. 

Miller,  J.  It  must  be  assumed,  we  think,  that  the  defendants 
knew  when  the  agreement  was  made  that  they  intended  to  pur- 
chase sardines  of  the  kind  that  were  tendered  to  them,  and  that 
the  plaintiffs  understood  that  the  defendants  knew  it.  It  is  also 
inferable  that  the  defendants  entered  into  the  agreement,  to  the 
knowledge  of  the  plaintiffs,  for  the  purpose  of  selling  the  goods  to 
others  in  the  condition  in  which  they  were  when  delivered.  It 
is  also  evident  that  the  labels  were  used  to  deceive  the  consumers 
and  not  the  contractors,  and  to  obtain  higher  prices  for  the 
sardines.  The  plaintiffs  procured  and  furnished  the  deceptive 
labels,  after  binding  themselves  by  contract  to  do  so,  and  this  was 
done  for  an  unlawful  purpose,  and  with  a  view  of  furnishing  goods 
for  the  market  in  a  condition  calculated  to  deceive  the  consumers 
who  might  purchase  them.  It  is,  therefore,  apparent  that  it  was 
part  of  the  contract  that  an  unlawful  object  was  intended,  of 
which  both  parties  were  cognizant,  and  that  it  was  designed  by 
them,  under  the  contract,  to  commit  a  fraud  and  thus  promote 
an  illegal  purpose  by  deceiving  other  parties.     In  such  a  case  the 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  339 

courts  will  not  aid  either  party  in  carrying  out  a  fraudulent 
purpose. 

To  carry  out  this  contract  would  be  contrary  to  public  policy, 
and  in  such  a  case,  as  we  have  seen,  the  court  will  not  aid  either 
party. 

Under  the  Penal  Code  (§  438),  it  is  made  a  misdemeanor  to  sell 
or  offer  for  sale  any  package  falsely  marked,  labeled,  etc.,  as  to 
the  place  where  the  goods  were  manufactured,  or  the  quality  or 
grade,  etc.  The  contract  in  question  would  seem  to  be  covered 
by  this  provision  of  the  Code,  but  as  the  Penal  Code  did  not  go 
into  effect  until  May  1,  1882,  and  this  contract  was  made  June 
30,  1881,  the  section  cited  has,  we  think,  no  bearing  on  the 
question  presented. 

The  case  was  properly  disposed  of  upon  the  ground  first  stated, 
which  is  fully  considered  and  elaborated  in  the  opinion  of  the 
General  Term,  Sedgwick,  J.,  in  which  we  concur. 

The  judgment  should  be  affirmed.     All  concur. 

Judgment  affirmed.^ 

1  Where  a  note  was  given  for  the  sale  of  "prolific  oats  "  at  fifteen  doUajs 
a  bushel,  the  payee  agreeing  to  sell  eighty  bushels  for  the  maker  the  next 
year  at  fifteen  dollars  a  bushel,  the  court  said  :  "That  this  contract  is  void 
as  being  against  public  policy,  we  have  no  doubt.  Any  contract  that  binds 
the  maker  to  do  something  opposed  to  the  public  policy  of  the  State  or 
nation,  or  that  conflicts  with  the  wants,  interests  or  prevailing  sentiment  of 
the  people,  or  our  obligations  to  the  world,  or  is  repugnant  to  the  morals 
of  the  times,  is  void.  Any  contract  which  has  for  its  object  the  practice  of 
deception  upon  the  public,  or  upon  any  party  in  interest  as  to  the  ownership 
of  property,  the  nature  of  a  transaction,  the  responsibility  assumed  by  an 
obligation,  or  which  is  made  in  order  to  consummate  a  fraud  upon  the, 
people  or  upon  third  persons,  is  void.  Greenh.  Pub.  Pol.  136,  152.  This 
contract  is  so  out  of  the  usual  course  of  dealings  as  to  awaken  suspicion  of 
its  fairness.  Ordinarily,  contracts  are  made  upon  the  basis  of  what  is 
believed  to  be  actual  values,  but  this  is  confessedly  upon  the  basis  of  most 
extravagant  and  unreal  values.  To  carry  out  this  contract  eighty  bushels  of 
grain  had  to  be  sold  to  some  person  on  or  before  September  1,  1888,  for 
more  than  thirty  times  their  value.  This  could  only  be  done  by  grossly 
deceiving  the  purchaser  as  to  their  value,  or  repeating  the  scheme  upon 
which  this  contract  was  made,  or  one  similar.  That  such  a  scheme  could 
not  be  repeated  year  after  year  is  evident,  so  that  in  the  end  some  person 
must  be  deceived  into  paying  many  times  the  value  of  the  oats.  If  it  was 
not  intended  upon  the  part  of  the  company  to  carry  out  the  contract,  then 
the  fraud  was  consummated  the  sooner.     View  the  transaction  as  you  may, 


340  FORMATION  OP  CONTRACT.  [Pabt  IL 

b.   Agreements  to  do  that  which  it  is  the  policy  of  the  law  to  prevent, 

(a)    Agreements  which  injure  the  state  in  its  relations  with  other 
states. 

UNITED   STATES   v.   GEOSSMAYER. 

9  WALLACE   (U.   S.),  72.  — 1869. 
[Reported  herein  at  p.  218.] 


GRAVES  V.   JOHNSON. 

156  MASSACHUSETTS,  211.— 1892. 
[Keported  herein  at  p.  391.] 


(/3)   Agreements  which  tend  to  injure  the  public  service. 

TRIST  V.   CHILD. 

21  WALLACE   (U.S.),  441.  — 1874. 

Bill  to  enjoin  defendant  from  withdrawing  the  sum  of  $14,559 
from  the  United  States  Treasury,  and  for  a  decree  commanding 
him  to  pay  complainant  $5000,  and  for  general  relief.  Defense, 
illegality.     Decree  for  complainant.     Defendant  appeals. 

Defendant,  having  a  claim  against  the  United  States  for  ser- 
vices, made  an  agreement  with  complainant's  father  (to  whose 
rights  as  partner  and  personal  representative  complainant  suc- 
ceeded) that  he  should  take  charge  of  the  claim  and  prosecute  it 

and  it  discloses  a  cunningly-devised  plan  to  cheat  and  defraud.  '  Whenever 
any  contract  conflicts  with  the  morals  of  the  time  and  contravenes  any  estab- 
lished interests  of  society,  it  is  void  as  being  against  public  policy.'  Story, 
Confl.  Laws,  sec.  546.  Surely  a  contract  that  cannot  be  performed  without 
deception  and  fraud  conflicts  with  the  morals  of  the  time,  and  contravenes 
the  established  interest  of  society.  There  was  no  error  in  instructing  the 
jury  that  this  contract  is  fraudulent  and  void  as  between  the  original  parties 
to  it.  In  this  connection,  see  McNamara  v.  Gargett,  68  Mich.  454  ;  36 
N.  W.  Rep.  218,  wherein  the  Supreme  Court  of  Michigan  held  a  similar  con- 
U'act  void  as  being  against  public  policy.  True,  in  that  case  the  contract  is 
said  to  be  a  gambling  contract,  but  it  is  declared  to  be  against  public  policy 
on  ether  grounds."  — Given,  J.,  in  Merrill  v.  Packer,  80  Iowa,  542. 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  341 

before  Congress,  and  receive  as  compensation  25  per  cent  of  what- 
ever sum  Congress  might  appropriate.  The  father,  and  after  his 
death,  the  complainant,  prosecuted  the  claim  with  the  result  that 
Congress  appropriated  the  sum  of  $14,559  to  pay  it.  Defendant 
refused  to  pay  the  25  per  cent  stipulated  and  complainant  filed 
this  bill  in  the  Supreme  Court  of  the  District  of  Columbia.  From 
the  evidence  it  appeared  that  personal  solicitations  were  used  to 
carry  the  bill,  but  there  was  no  evidence  that  bribes  were  offered 
or  contemplated. 

Mb.  Justice  Swayne.  The  court  below  decreed  to  the 
appellee  the  amount  of  his  claim,  and  enjoined  Trist  from  receiv- 
ing from  the  treasury  "  any  of  the  money  appropriated  to  him  " 
by  Congress,  until  he  should  have  paid  the  demand  of  the  appellee. 

This  decree,  as  regards  that  portion  of  the  fund  not  claimed  by 
the  appellee,  is  an  anomaly.  Why  the  claim  should  affect  that 
part  of  the  fund  to  which  it  had  no  relation,  is  not  easy  to  be 
imagined.  This  feature  of  the  decree  was  doubtless  the  result  of 
oversight  and  inadvertence.  The  bill  proceeds  upon  the  grounds 
of  the  validity  of  the  original  contract,  and  a  consequent  lien  in 
favor  of  the  complainant  upon  the  fund  appropriated.  We  shall 
examine  the  latter  ground  first.  Was  there,  in  any  view  of  the 
case,  a  lien? 

It  is  well  settled  that  an  order  to  pay  a  debt  out  of  a  particular 
fund  belonging  to  the  debtor  gives  to  the  creditor  a  specific 
equitable  lien  upon  the  fund,  and  binds  it  in  the  hands  of  the 
drawee.  Yeates  v.  Groves,  1  Vesey,  Jr.  280;  Lett  v.  Morris,  4 
Simons,  607;  Bradley  v.  Root,  5  Paige,  632;  2  Story^s  Equity, 
§  1047.  A  part  of  the  particular  fund  may  be  assigned  by  an 
order,  and  the  payee  may  enforce  payment  of  the  amount  against 
the  drawee.  Field  v.  The  Mayor,  2  Selden,  179.  But  a  mere 
agreement  to  pay  out  of  such  fund  is  not  sufficient.  Something 
more  is  necessary.  There  must  be  an  appropriation  of  the  fund 
pro  tanto,  either  by  giving  an  order  or  by  transferring  it  otherwise 
in  such  a  manner  that  the  holder  is  authorized  to  pay  the  amount 
directly  to  the  creditor  without  the  further  intervention  of  the 
debtor.  Wright  v.  Ellison,  1  Wallace,  16;  Hoyt  v.  Story,  3  Bar- 
bour's Supreme  Court,  264;  Malcolm  v.  Scott,  3  Hare,  39;  Rogers 
v.  Hosack,  18  Wendell,  319. 


842  FORMATION  OF  CONTRACT.  [Part  H 

Viewing  the  subject  in  the  light  of  these  authorities,  we  are 
brought  to  the  conclusion  that  the  appellee  had  no  lien  upon  the 
fund  here  in  question.  The  understanding  between  the  elder 
Child  and  Trist  was  a  personal  agreement.  It  could  in  nowise 
produce  the  effect  insisted  upon.  For  a  breach  of  the  agreement, 
the  remedy  was  at  law,  not  in  equity,  and  the  defendant  had  a 
constitutional  right  to  a  trial  by  jury.  Wright  v,  Ellison,  1 
Wallace,  16.  If  there  was  no  lien,  there  was  no  jurisdiction 
in  equity. 

There  is  another  consideration  fatally  adverse  to  the  claim  of 
a  lien.  The  first  section  of  the  act  of  Congress  of  February  26, 
1853,  declares  that  all  transfers  of  any  part  of  any  claim  against 
the  United  States,  "or  of  any  interest  therein,  whether  absolute 
or  conditional,  shall  be  absolutely  null  and  void,  unless  executed 
in  the  presence  of  at  least  two  attesting  witnesses  after  the  allow- 
ance of  such  claim,  the  ascertainment  of  the  amount  due,  and  the 
issuing  of  a  warrant  therefor. "  That  the  claim  set  up  in  the  bill 
to  a  specific  part  of  the  money  appropriated  is  within  this  statute 
is  too  clear  to  admit  of  doubt.  It  would  be  a  waste  of  time  to 
discuss  the  subject. 

But  there  is  an  objection  of  still  greater  gravity  to  the  appellee's 
case. 

Was  the  contract  a  valid  one?  It  was,  on  the  part  of  Child, 
to  procure  by  lobby  service,  if  possible,  the  passage  of  a  bill  pro- 
viding for  the  payment  of  the  claim.  The  aid  asked  by  the 
younger  Child  of  Trist,  which  indicated  what  he  considered  need- 
ful, and  doubtless  proposed  to  do  and  did  do  himself,  is  thus 
vividly  pictured  in  his  letter  to  Trist  of  the  20th  February,  1871. 
After  giving  the  names  of  several  members  of  Congress,  from 
whom  he  had  received  favorable  assurances,  he  proceeds :  "  Please 
write  to  your  friends  to  write  to  any  member  of  Congress.  Every 
vote  tells,  and  a  simple  request  may  secure  a  vote,  he  not  caring 
anything  about  it.  Set  every  man  you  know  at  work.  Even  if 
he  knows  a  page,  for  a  page  often  gets  a  vote." 

In  the  Koman  law  it  was  declared  that  "a  promise  made  to 
effect  a  base  purpose,  as  to  commit  homicide  or  sacrilege,  is  not 
binding."  Institutes  of  Justinian,  lib.  3,  tit.  19,  par,  24.  In  our 
jurisprudence  a  contract  may  be  illegal  and  void  because  it  is 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  MA 

contrary  to  a  constitution  or  statute,  or  inconsistent  with  sound 
policy  and  good  morals.     Lord  Mansfield  said  (Jones  v.  Randall, 

1  Cowper,  39) :  "  Many  contracts  which  are  not  against  morality, 
are  still  void  as  being  against  the  maxims  of  sound  policy." 

It  is  a  rule  of  the  common  law  of  universal  application,  that 
where  a  contract  express  or  implied  is  tainted  with  either  of  the 
vices  last  named,  as  to  the  consideration  or  the  thing  to  be  done, 
no  alleged  right  founded  upon  it  can  be  enforced  in  a  court  of 
justice. 

Before  considering  the  contract  here  in  question,  it  may  be 
well,  by  way  of  illustration,  to  advert  to  some  of  the  cases  pre- 
senting the  subject  in  other  phases,  in  which  the  principle  has 
been  adversely  applied. 

Within  the  condemned  category  are : 

An  agreement  —  to  pay  for  supporting  for  election  a  candidate 
for  sheriff,  Sivayze  v.  Hull,  3  Halsted,  54;  to  pay  for  resigning  a 
public  position  to  make  room  for  another,  Eddy  v.  Capron,  4 
Ehode  Island,  395;  Parsons  v.  Thompson,  1  H.  Blackstone,  322; 
to  pay  for  not  bidding  at  a  sheriff's  sale  of  real  property,  Jones 
V.  Castvell,  3  Johnson's  Cases,  29;  to  pay  for  not  bidding  for 
articles  to  be  sold  by  the  government  at  auction,  Doolin  v.  Ward, 
6  Johnson,  194;  to  pay  for  not  bidding  for  a  contract  to  carry  the 
mail  on  a  specified  route,  Oulick  v.  Bailey,  5  Halsted,  87 ;  to  pay 
a  person  for  his  aid  and  influence  in  procuring  an  office,  and  for 
not  being  a  candidate  himself,  Gray  v.  Hook,  4  Comstock,  449;  to 
pay  for  procuring  a  contract  from  the  government.  Tool  Com- 
pany V.  Norris,  2  Wallace,  45 ;  to  pay  for  procuring  signatures  to  a 
petition  to  the  governor  for  a  pardon,  Hatzfield  v.  Gulden,  7  Watts, 
152;  to  sell  land  to  a  particular  person  Avhen  the  surrogate's 
order  to  sell  should  have  been  obtained.  Overseers  of  Bridge- 
water  V.  Overseers  of  Brookfield,  3  Cowen,  299;  to  pay  for  sup- 
pressing evidence  and  compounding  a  felony,  Collins  v.  Blantem, 

2  Wilson,  347 ;  to  convey  and  assign  a  part  of  what  should  come 
from  an  ancestor  by  descent,  devise,  or  distribution,  Boynton  v. 
Hubbard,  7  Massachusetts,  112;  to  pay  for  promoting  a  marriage, 
Scribblehill  v.  Brett,  4  Brown's  Parliamentary  Cases,  144;  Arundel 
v.  Trevillian,\  Chancery  Eeports,87;  to  influence  the  disposition  of 
property  by  will  in  a  particular  way,  Debenham  v.  Ox,  1  Vesey,  Sr. 


844  FORMATION  OF  CONTRACT.  [Pabt  U. 

276;  see  also  Addison  on  Contracts,  91;  1  Story's  Equity,  ch.  7; 
Collins  V.  Blantern,  1  Smith's  Leading  Cases,  676,  American 
note. 

The  question  now  before  us  has  been  decided  in  four  American 
cases.  They  were  all  ably  considered,  and  in  all  of  them  the 
contract  was  held  to  be  against  public  policy,  and  void.  Clip- 
pinger  v.  Hepbaugh,  5  Watts  &  Sergeant,  315;  Harris  v.  Roof's 
Executor,  10  Barbour's  Supreme  Court,  489;  Rose  &  Hawley  v. 
Truax,  21  Id.  361 ;  Marshall  v.  Baltimore  and  Ohio  Railroad  Com- 
pany, 16  Howard,  314.  We  entertain  no  doubt  that  in  such 
cases,  as  under  all  other  circumstances,  an  agreement  express  or 
implied  for  purely  professional  services  is  valid.  Within  this 
category  are  included,  drafting  the  petition  to  set  forth  the  claim, 
attending  to  the  taking  of  testimony,  collecting  facts,  preparing 
arguments,  and  submitting  them,  orally  or  in  writing,  to  a  com- 
mittee or  other  proper  authority,  and  other  services  of  like  char- 
acter. All  these  things  are  intended  to  reach  only  the  reason  of 
those  sought  to  be  influenced.  They  rest  on  the  same  principle 
of  ethics  as  professional  services  rendered  in  a  court  of  justice, 
and  are  no  more  exceptionable.  But  such  services  are  separated 
by  a  broad  line  of  demarcation  from  personal  solicitation,  and 
the  other  means  and  appliances  which  the  correspondence  shows 
were  resorted  to  in  this  case.  There  is  no  reason  to  believe  that 
they  involved  anything  corrupt  or  different  from  what  is  usually 
practiced  by  all  paid  lobbyists  in  the  prosecution  of  their  business. 

The  foundation  of  a  republic  is  the  virtue  of  its  citizens. 
They  are  at  once  sovereigns  and  subjects.  As  the  foundation  is 
undermined,  the  structure  is  weakened.  When  it  is  destroyed, 
the  fabric  must  fall.  Such  is  the  voice  of  universal  history. 
1  Montesquieu,  Spirit  of  Laws,  17.  The  theory  of  our  government 
is,  that  all  public  stations  are  trusts,  and  that  those  clothed  with 
them  are  to  be  animated  in  the  discharge  of  their  duties  solely 
by  considerations  of  right,  justice,  and  the  public  good.  They 
are  never  to  descend  to  a  lower  plane.  But  there  is  a  correlative 
duty  resting  upon  the  citizen.  In  his  intercourse  with  those  in 
authority,  whether  executive  or  legislative,  touching  the  per- 
formance of  their  functions,  he  is  bound  to  exhibit  truth,  frank- 
ness, and  integrity.     Any  departure  from  the  line  of  rectitude  in 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  345 

such  cases  is  not  only  bad  in  morals,  but  involves  a  public 
wrong.  No  people  can  have  any  higher  public  interest,  except 
the  preservation  of  their  liberties,  than  integrity  in  the  adminis- 
tration of  their  government  in  all  its  departments. 

The  agreement  in  the  present  case  was  for  the  sale  of  the 
influence  and  exertions  of  the  lobby  agent  to  bring  about  the 
passage  of  a  law  for  the  payment  of  a  private  claim,  without 
reference  to  its  merits,  by  means  which,  if  not  corrupt,  were 
illegitimate,  and  considered  in  connection  with  the  pecuniary 
interest  of  the  agent  at  stake,  contrary  to  the  plainest  principles 
of  public  policy.  No  one  has  a  right,  in  such  circumstances,  to 
put  himself  in  a  position  of  temptation  to  do  what  is  regarded  as 
so  pernicious  in  its  character.  The  law  forbids  the  inchoate 
step,  and  puts  the  seal  of  its  reprobation  upon  the  undertaking. 

If  any  of  the  great  corporations  of  the  country  were  to  hire 
adventurers  who  make  market  of  themselves  in  this  way,  to  pro- 
cure the  passage  of  a  general  law  with  a  view  to  the  promotion 
of  their  private  interests,  the  moral  sense  of  every  right-minded 
man  would  instinctively  denounce  the  employer  and  employed  as 
steeped  in  corruption,  and  the  employment  as  infamous. 

If  the  instances  were  numerous,  open,  and  tolerated,  they 
would  be  regarded  as  measuring  the  decay  of  the  public  morals 
and  the  degeneracy  of  the  times.  No  prophetic  spirit  would  be 
needed  to  foretell  the  consequences  near  at  hand.  The  same 
thing  in  lesser  legislation,  if  not  so  prolific  of  alarming  evils,  is 
not  less  vicious  in  itself,  nor  less  to  be  condemned.  The  vital 
principle  of  both  is  the  same.  The  evils  of  the  latter  are  of 
sufficient  magnitude  to  invite  the  most  serious  consideration. 
The  prohibition  of  the  law  rests  upon  a  solid  foundation.  A 
private  bill  is  apt  to  attract  little  attention.  It  involves  no  great 
public  interest,  and  usually  fails  to  excite  much  discussion.  Not 
unfrequently  the  facts  are  whispered  to  those  whose  duty  it  is  to 
investigate,  vouched  for  by  them,  and  the  passage  of  the  measure 
is  thus  secured.  If  the  agent  is  truthful,  and  conceals  nothing, 
all  is  well.  If  he  uses  nefarious  means  with  success,  the  spring- 
head and  the  stream  of  legislation  are  polluted.  To  legalize  the 
traffic  of  such  service,  would  open  a  door  at  which  fraud  and 
falsehood  would  not  fail  to  enter  and  make  themselves  felt  at 


346  FORMATION  OF  CONTRACT,  [Part  H. 

every  accessible  point.  It  would  invite  their  presence  and  offer 
them  a  premium.  If  the  tempted  agent  be  corrupt  himself,  and 
disposed  to  corrupt  others,  the  transition  requires  but  a  single 
step.  He  has  the  means  in  his  hands,  with  every  facility  and  a 
strong  incentive  to  use  them.  The  widespread  suspicion  which 
prevails,  and  charges  openly  made  and  hardly  denied,  lead  to  the 
conclusion  that  such  events  are  not  of  rare  occurrence.  Where 
the  avarice  of  the  agent  is  inflamed  by  the  hope  of  a  reward  con- 
tingent upon  success,  and  to  be  graduated  by  a  percentage  upon 
the  amount  appropriated,  the  danger  of  tampering  in  its  worst 
form  is  greatly  increased. 

It  is  by  reason  of  these  things  that  the  law  is  as  it  is  upon  the 
subject.  It  will  not  allow  either  party  to  be  led  into  temptation 
where  the  thing  to  be  guarded  against  is  so  deleterious  to  private 
morals  and  so  injurious  to  the  public  welfare.  In  expressing 
these  views,,  we  follow  the  lead  of  reason  and  authority. 

We  are  aware  of  no  case  in  English  or  American  jurisprudence 
like  the  one  here  under  consideration,  where  the  agreement  has 
not  been  adjudged  to  be  illegal  and  void. 

We  have  said  that  for  professional  services  in  this  connection 
a  just  compensation  may  be  recovered.  But  where  they  are 
blended  and  confused  with  those  which  are  forbidden,  the  whole 
is  a  unit  and  indivisible.  That  which  is  bad  destroys  that  which 
is  good,  and  they  perish  together.  Services  of  the  latter  char- 
acter, gratuitously  rendered,  are  not  unlawful.  The  absence  of 
motive  to  wrong  is  the  foundation  of  the  sanction.  The  tendency 
to  mischief,  if  not  wanting,  is  greatly  lessened.  The  taint  lies  in 
the  stipulation  for  pay.  Where  that  exists,  it  affects  fatally,  in 
all  its  parts,  the  entire  body  of  the  contract.  In  all  such  cases, 
potior  conditio  defendentis.  Where  there  is  turpitude,  the  law 
will  help  neither  party. 

The  elder  agent  in  this  case  is  represented  to  have  been  a 
lawyer  of  ability  and  high  character.  The  appellee  is  said  to  be 
equally  worthy.  This  can  make  no  difference  as  to  the  legal 
principles  we  have  considered,  nor  in  their  application  to  the 
case  in  hand.     The  law  is  no  respecter  of  persons. 

Decree  reversed,  and  the  case  remanded,  with  directions  to 

Dismiss  the  bill. 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  347 

SOUTHARD  V.   BOYD. 

51  JfEW  YORK,   177.  — 1872. 

Action  to  recover  commissions  earned  by  plaintiffs  as  ship 
iDrokers  in  chartering  defendant's  vessel  to  the  government. 
Judgment  for  plaintiffs  reversed  at  General  Term.  Plaintiffs 
appeal. 

Earl,  C.  .  .  .  The  further  claim  is  made  that  the  contract 
with  the  plaintiffs  was  for  an  illegal  service,  in  that  they  charged 
a  commission  for  claiming  to  have  influence  with  a  government 
agent  to  accept  a  vessel  already  offered,  but  not  yet  accepted. 

It  is  true  that  one  of  the  plaintiffs  was  a  son,  and  that  another 
was  a  son-in-law  of  one  of  the  government  agents,  whose  business 
it  was  to  select  the  vessels  for  the  government,  and  the  plaintiffs 
probably  had  facilities  for  chartering  vessels  which  others  did  not 
have.  But  the  plaintiffs  did  not  contract  to  do  an  illegal  service. 
"Ihey  did  not  agree  to  use  any  corrupt  means  to  procure  the 
charter.  The  fact  that  the  plaintiffs  had  intimate  relations  with 
the  government  agents,  and  could  probably  therefore  influence 
their  action  much  more  readily  than  others,  did  not  forbid  their 
employment.     Lyon  v.  Mitchell,  36  N.  Y.  235. 

I  am  unable  to  see,  therefore,  upon  what  ground  the  contract 
of  the  defendant  with  the  plaintiffs  can  be  considered  as  illegal. 

The  order  of  the  general  term  should  be  reversed  and  judgment 
upon  the  verdict  affirmed,  with  costs.     All  concur. 

Order  reversed  and  judgment  accordingly.^ 

^  "There  is  no  real  difference  in  principle  between  agreements  to  procure 
favors  from  legislative  bodies,  and  agreements  to  procure  favors  in  the  shap^* 
of  contracts  from  the  heads  of  departments.  The  introduction  of  improp  r 
elements  to  control  the  action  of  both,  is  the  direct  and  inevitable  result  ui 
all  such  arrangements."  — Mr,  Justice  Field,  in  Tool  Co.  v.  Noiris,  2  Wall. 
(U.  S.)  45,  55.  Followed  in  Meguire  v.  Corioine,  101  U.  S.  108  (contract 
for  appointment  to  public  office);  Oscanyan  v.  Arms  Co.,  103  U.  S.  261  (con- 
tract of  resident  consul  to  influence  purchasing  agent  of  home  government). 
See  criticism  on  the  case  in  Lyon  v.  Mitchell,  36  N.  Y.  235. 

As  to  agreements  for  influencing  corporate  or  other  fiduciary  action,  see 
Woodstock  Iron  Co.  v.  Bichmond  &c.  Co.  129  U.  S.  643. 

As  to  the  assignment  of  unearned  salaries  of  public  officers,  see  Bowery 
Nat.  Bank  v.  Wilson,  122  N.  Y.  478. 

As  to  agreements  to  quiet  competition  for  public  contracts,  see  Brooks  v. 
Cooper,  50  N.  J.  Eq.  761 ;  Boyle  v.  Adams,  50  Minn.  255. 


348  FORMATION  OF  CONTRACT.  [Pabt  U. 

(y)    Agreements  which  tend  to  pervert  the  course  of  justice. 
(1.)    Stifling  criminal  proceedings. 

PARTRIDGE  v.    HOOD. 

120  MASSACHUSETTS,  403.— 1876. 

Contract.  The  answer  averred  that  the  consideration  of  th& 
contract  was  an  agreement  on  the  part  of  the  plaintiff  to  stop  a 
criminal  prosecution  against  Edward  K.  Hood,  the  defendant's 
son.  The  court  ruled  that  the  agreement  was  illegal  and  directed 
judgment  for  defendant.     Plaintiff  alleged  exceptions. 

Gray,  C.  J.  The  reason  that  a  private  agreement,  made  in 
consideration  of  the  suppression  of  a  prosecution  for  crime,  is 
illegal,  is  that  it  tends  to  benefit  an  individual  at  the  expense  of 
defeating  the  course  of  public  justice.  The  doctrine  has  never 
been  doubted  as  applied  to  felonies,  and  the  English  authorities- 
before  our  Revolution  extended  it  to  all  crimes.  2  West  Symh^ 
Compromise  &  Arbitrament,  §  33;  Norton  v.  Benson,  1  Freem. 
204;  Bac.  Ab.  Arbitrament  &  Award,  A;  Johnson  v.  Ogilby,  3  P. 
Wms.  277,  and  especially  the  register's  book  cited  by  Mr.  Cox  in 
a  note  to  page  279;  Collins  v.  Blantern,  2  Wils.  341;  4  Bl.  Com. 
363,  364.  An  appeal  of  mayhem  could  be  barred  by  arbitrament, 
or  accord  and  satisfaction,  or  release  of  all  personal  actions, 
because  it  was  the  suit  of  the  appellant  and  not  of  the  Crown, 
and  subjected  the  appellee  to  damages  only,  like  an  action  of 
trespass.  Blake's  Case,  6  Rep.  43  6,  44  c;  2  Hawk.  c.  23,  §§ 
24,  25. 

Some  confusion  was  introduced  into  the  English  law  upon  this 
subject  by  the  rulings  of  Lord  Kenyon:  Kyd  on  Awards  (Am. 
ed.),  64-68;  Drage  v.  Ibberson,  2  Esp.  643;  Fallowes  y.  Taylor, 
Peake  Ad.  Cas.  155;  S.  C.  7  T.  R.  475;  and  by  Mr.  Justice  Le 
Blanc's  suggestion  of  a  distinction  between  a  prosecution  for 
public  misdemeanor  and  one  for  a  private  injury  to  the  prose- 
cutor. Edgcombe  v.  Rodd,  5  East,  294,  303;  S.  C.  1  Smith,  515, 
520.  This  confusion  was  not  wholly  removed  by  the  opinions  of 
Lord  Ellenborough  in  Edgcombe  v.  Rodd,  5  East,  294,  302;  in 
Wallace  v.  Hardacre,  1  Camp.  45,  46;  in  Pool  v.  Bousfield,  1 
Camp.  65,  and  in  Beeley  v.  Wingfield,  11  East,  46,  48;  of  Chief 


Chap.  V.  §1.]  LEGAUTY  OF  OBJECT.  349 

Justice  Gibbs  in  Baker  v.  Townshend,  1  Moore,  120,  124;  S.  C. 
7  Taunt.  422,  426;  or  of  Lord  Denman  in  Keir  v.  Leeman,  6 
Q.  B.  308,  321. 

But  in  the  very  able  judgment  of  the  Exchequer  Chamber  in 
Keir  v.  Leeman  (9  Q.  B.  371,  395),  Chief  Justice  Tindal,  after 
reviewing  the  previous  cases,  summed  up  the  matter  thus : 

"Indeed  it  is  very  remarkable  what  very  little  authority  there  is  to 
be  found,  rather  consisting  of  dicta  than  decisions,  for  the  principle  that 
any  compromise  of  a  misdemeanor,  or  indeed  of  any  public  offense,  can 
be  otherwise  than  illegal,  and  any  promise  founded  on  such  a  considera- 
tion otherwise  than  void.  If  the  matter  were  res  Integra,  we  should  have 
no  doubt  on  this  point.  We  have  no  doubt  that,  in  all  offenses  which 
involve  damages  to  an  injured  party  for  which  he  may  maintain  an 
action,  it  is  competent  for  him,  notwithstanding  they  are  also  of  a  public 
nature,  to  compromise  or  settle  his  private  damage  in  any  way  he  may 
think  fit.  It  is  said,  indeed,  that  in  the  case  of  an  assault  he  may  also 
undertake  not  to  prosecute  on  behalf  of  the  public.  It  may  be  so,  but 
we  are  not  disposed  to  extend  this  any  further." 

In  Fisher  v.  Apollinaris  Co.  (L.  R.  10  Ch.  297)  the  plaintiff, 
pursuant  to  an  agreement  of  the  defendants  to  abandon  a  prose- 
cution against  him  under  St.  25  &  26  Vict.  c.  88,  for  a  violation 
of  their  trade-mark,  gave  them  a  letter  of  apology,  with  authority 
to  make  use  of  it  as  they  might  think  necessary,  and,  after  they 
had  published  it  by  advertisement  for  two  months,  filed  a  bill  in 
equity  to  restrain  them  from  continuing  the  publication,  which 
was  dismissed  by  the  lords  justices.  The  principal  grounds  of 
the  decision  appear  to  have  been  that  the  defendants  had  done 
nothing  that  the  plaintiff  had  not  authorized  them  to  do;  and 
that,  even  if  the  publication  affected  the  plaintiff's  reputation,  a 
court  of  chancery  had  no  jurisdiction  to  restrain  it.  See  Pru- 
dential Assurance  Co.  v.  Knott,  L.  R.  10  Ch.  142 ;  Boston  Diatite 
Co.  V.  Florence  Manufacturing  Co.,  114  Mass.  69.  It  was  indeed 
observed  that  "  it  was  no  more  a  violation  of  the  law  to  accept  an 
apology  in  such  a  case  than  it  would  be  to  compromise  an  indict- 
ment for  a  nuisance  or  for  not  repairing  a  highway  on  the  terms 
of  the  defendants  agreeing  to  remove  the  nuisance  or  repair  the 
highway."  L.  R.  10  Ch.  302.  But  this  observation  was  not 
necessary  to  the  decision;  and  in  The  Queen  v.  Blakemore  (14 
Q.  B.  544)  an  agreement  for  the  compromise  of  an  indictment  for 


350  FORMATION  OF  CONTRACT.  [Pabt  IL 

not  repairing  a  highway  was  held  illegal  and  void.  All  the  other 
recent  English  authorities  support  the  judgment  of  Chief  Justice 
Tindal,  above  quoted.  Tlie  Queen  v.  Hardey,  14  Q.  B.  529,  541; 
Clubh  V.  Hutson,  18  C.  B.  (N.  S.)  414;  Williams  v.  Bayley,  L.  R. 
1  H.  L.  200,  213,  320. 

In  Jones  v.  Rice  (18  Pick.  440,  442),  Mr.  Justice  Putnam  deliver- 
ing the  opinion  of  this  court,  after  alluding  to  the  English  cases 
in  the  time  of  Lord  Kenyon,  relied  on  to  "  sustain  the  distinction 
between  considerations  arising  from  the  compounding  of  felonies, 
which  is  admitted  to  be  illegal,  and  the  compounding  of  mis- 
demeanors, which  is  alleged  to  be  lawful,"  said: 

"  We  do  not  think  that  such  a  power  is  vested  in  individuals.  It 
would  enable  them  to  use  the  claim  of  the  government  for  their  own 
emolument,  and  greatly  to  the  oppression  of  the  people.  It  has  a  direct 
tendency  to  obstruct  the  course  of  the  administration  of  justice ;  and  the 
mischief  extends,  we  think,  as  well  to  misdemeanors  as  to  felonies.  The 
power  to  stop  prosecutions  is  vested  in  the  law  officers  of  the  Common- 
wealth, who  use  it  with  prudence  and  discretion.  If  it  were  given  to 
the  party  injured,  who  might  be  the  only  witness  who  could  prove  the 
offense,  he  might  extort  for  his  own  use  money  which  properly  should 
be  levied  as  a  fine  upon  the  criminal  party  for  the  use  of  the  Common- 
wealth." 

It  is  true  that  the  prosecution  in  Jones  v.  Rice  was  for  a  riot 
as  well  as  for  an  assault.  But  the  language  and  the  reasoning  of 
the  opinion  extend  to  the  compounding  of  any  offense  whatever. 
Any  act  which  is  made  punishable  by  law  as  a  crime  is  an  offense 
against  the  public,  and,  especially  in  this  country,  where  all 
prosecutions  are  subject  to  the  control  of  olB&cial  prosecutors,  and 
not  of  the  individuals  immediately  injured,  cannot  lawfully  be 
made  the  subject  of  private  compromise,  except  so  far  as  expressly 
authorized  by  statute.  And  this  view  is  supported  by  the  great 
weight  of  American  authority.  Hinds  v.  Chamberlin,  6  N.  H. 
225;  SJiaio  v.  Spooner,  9  N.  H.  197;  Shaw  v.  Reed,  30  Maine, 
105;  Bowen  v.  Buck,  28  Vt.  308;  People  v.  Bishop,  5  Wend.  Ill; 
Noble  V.  Peebles,  13  S.  &  R.  319,  322;  Maurer  v.  Mitchell,  9  W. 
&  S.  69,  71;  Cameron  v.  M'Farland,  2  Car.  Law  Rep.  415;  Corley 
V.  Williams,  1  Bailey,  588;  Vincent  v.  Groom,  1  Yerger,  430; 
Met.  Con.  226,  227;  1  Story  Eq.  Jur.  §  294. 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  361 

The  legislature  of  the  commonwealth  has  defined  the  cases  and 
circumstances  in  which  the  compromise  of  a  prosecution  shall  be 
allowed.  By  a  provision  first  introduced  in  the  Revised  Statutes, 
when  a  person  is  committed  or  indicted  for  an  assault  and  battery 
or  other  misdemeanor  for  which  the  party  injured  may  have  a 
remedy  by  civil  action  (except  when  committed  by  or  upon  an 
officer  of  justice,  or  riotously,  or  with  intent  to  commit  a 
felony),  if  the  party  injured  appears  before  the  magistrate  or 
court  and  acknowledges  satisfaction  for  the  injury  sustained,  a 
stay  of  proceedings  may  be  ordered.  Rev.  Sts.  c.  135,  §  25;  c. 
136,  §  27;  Qeyi.  Sts.  c.  170,  §  33;  c.  171,  §  28.  Such  an  acknowl- 
edgment of  satisfaction  does  not  entitle  the  defendant  to  be  dis- 
charged, but  leaves  it  to  the  discretion  of  the  magistrate  or  court 
whether  a  stay  of  proceedings  is  consistent  with  the  interests  of 
public  justice.  Commonwealth  v.  Dowdican's  Bail,  115  Mass.  133. 
See  also  State  v.  Hunter,  14  La.  Ann.  71. 

In  the  case  at  bar,  it  being  found  as  a  fact  that  the  agreement 
sued  on  was  entered  into  by  the  defendant  for  the  purpose  of 
compounding  a  complaint  against  her  son  for  a  misdemeanor,  and 
it  not  appearing  that  satisfaction  has  ever  been  acknowledged  in. 
or  approved  by  the  court  in  which  the  prosecution  was  pending, 
judgment  was  rightly  ordered  for  the  defendant. 

Exceptions  overruled.^ 


(2.)   Agreements  to  arbitrate. 
HAMILTON  V.  LIVERPOOL  &c.   INS.  CO. 

136  UNITED  STATES,  242.  — 1889. 

Action  on  an  insurance  policy  containing  this  stipulation : 

"  It  is  furthermore  hereby  expressly  provided  and  mutually  agreed 
that  no  suit  or  action  against  this  company  for  the  recovery  of  any  claim 
by  virtue  of  this  policy  shall  be  sustainable  in  any  court  of  law  or  chan- 
cery, until  after  an  award  shall  have  been  obtained  fixing  the  amount  of 
such  claim  in  the  manner  above  provided." 

1  See  also  Goodrich  v.  Tenney,  144  111.  422  (agreement  to  procure  testi- 
mony) ;  Bowman  v.  Fhillips,  41  Kaus.  364  (agreement  to  defend  for  future 
violations  of  law). 


352  FORMATIOX  OF  CONTRACT.  [Part  IL 

The  manner  provided  for  fixing  the  amount  of  loss  in  case  of 
dispute  was  by  reference  to  arbitrators  selected  by  the  parties. 
The  court  directed  a  verdict  for  the  defendant.  Plaintiff  brings 
error, 

Mb.  Justice  Gray.  The  conditions  of  the  policy  in  suit 
clearly  and  unequivocally  manifest  the  intention  and  agreement 
of  the  parties  to  the  contract  of  insurance  that  any  difference 
arising  between  them  as  to  the  amount  of  loss  or  damage  of  the 
property  insured  shall  be  submitted,  at  the  request  in  writing  of 
either  party,  to  the  appraisal  of  competent  and  impartial  persons, 
to  be  chosen  as  therein  provided,  whose  award  shall  be  conclusive 
as  to  the  amount  of  such  loss  or  damage  only,  and  shall  not 
determine  the  question  of  the  liability  of  the  company ;  that  the 
company  shall  have  the  right  to  take  the  whole  or  any  part  of 
the  property  at  its  appraised  value  so  ascertained ;  and  that  until 
such  appraisal  shall  have  been  permitted,  and  such  an  award 
obtained,  the  loss  shall  not  be  payable,  and  no  action  shall  lie 
against  the  company.  The  appraisal,  when  requested  in  writing 
by  either  party,  is  distinctly  made  a  condition  precedent  to  the 
payment  of  any  loss,  and  to  the  maintenance  of  any  action. 

Such  a  stipulation,  not  ousting  the  jurisdiction  of  the  courts, 
but  leaving  the  general  question  of  liability  to  be  judicially 
determined,  and  simply  providing  a  reasonable  method  of  esti- 
mating and  ascertaining  the  amount  of  the  loss,  is  unquestionably 
valid,  according  to  the  uniform  current  of  authority  in  England 
and  in  this  country.  Scott  v,  Avery,  5  H.  L.  Cas.  811;  Viney  v. 
Bignold,  20  Q.  B.  D.  172;  Delaware  &  Hudson  Canal  v.  Pennsyl- 
vania Coal  Co.,  50  N.  Y.  250;  Heed  v.  Washington  Ins.  Co.,  138 
Mass.  572,  576;  Wolff  v.  Liverpool  &  London  &  Globe  Ins.  Co.,  21 
Vroom,  453;  Hall  v.  Norwalk  Fire  Ins.  Co.,  57  Conn.  105,  114. 
The  case  comes  within  the  general  rule  long  ago  laid  down  by  this 
court :  "  Where  the  parties,  in  their  contract,  fix  on  a  certain  mode 
by  which  the  amount  to  be  paid  shall  be  ascertained,  as  in  the 
present  case,  the  party  that  seeks  an  enforcement  of  the  agree- 
ment must  show  that  he  has  done  everything  on  his  part  which 
could  be  done  to  carry  it  into  effect.  He  cannot  compel  the  pay- 
ment of  the  amount  claimed,  unless  he  shall  procure  the  kind  of 
evidence  required  by  the   contract,  or   show   that   by  time   or 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  358 

accident  lie  is  unable  to  do  so."  United  States  v.  Robeson,  9  Pet. 
319,  327.  See  also  Martinsburg  &  Potomac  Railroad  v.  March, 
114  U.  S.  549. 

Upon  the  evidence  in  this  case,  the  question  whether  the 
defendant  had  duly  requested,  and  the  plaintiff  had  unreasonably 
refused,  to  submit  to  such  an  appraisal  and  award  as  the  policy 
called  for,  did  not  depend  in  any  degree  (as  in  XJhrig  v.  Williams- 
hurg  Ins.  Co.,  101  N.  Y.  362,  cited  for  the  plaintiff)  on  oral  testi- 
mony or  extrinsic  facts,  but  wholly  upon  the  construction  of  the 
correspondence  in  writing  between  the  parties,  presenting  a  pure 
question  of  law,  to  be  decided  by  the  court.  Turner  v.  Yates, 
16  How.  14,  23;  Bliven  v.  New  England  Screw  Co.,  23  How.  420, 
433;  Smith  v.  Faulkner,  12  Gray,  251. 

That  correspondence  clearly  shows  that  the  defendant  explicitly 
and  repeatedly  in  writing  requested  that  the  amount  of  the  loss 
or  damage  should  be  submitted  to  appraisers  in  accordance  with 
the  terms  of  the  policy ;  and  that  the  plaintiff  as  often  peremp- 
torily refused  to  do  this,  unless  the  defendant  would  consent,  in 
advance,  to  define  the  legal  powers  and  duties  of  the  appraisers 
(which  the  defendant  was  under  no  obligation  to  do),  and  that  the 
plaintiff  throughout,  against  the  constant  protest  of  the  defend- 
ant, asserted,  and  at  last  exercised,  a  right  to  sell  the  property 
before  the  completion  of  an  award  according  to  the  policy, 
thereby  depriving  the  defendant  of  the  right,  reserved  to  it  by 
the  policy,  of  taking  the  property  at  its  appraised  value,  when 
ascertained  in  accordance  with  the  conditions  of  the  policy. 

The  court  therefore  rightly  instructed  the  jury  that  the  de- 
fendant had  requested  in  writing,  and  the  plaintiff  had  declined, 
the  appraisal  provided  for  in  the  policy,  and  that  the  plaintiff, 
therefore,  could  not  maintain  this  action. 

If  the  plaintiff  had  joined  in  the  appointment  of  appraisers, 
and  they  had  acted  unlawfully,  or  had  not  acted  at  all,  a  different 
question  would  have  been  presented. 

Judgment  affirmed.* 

1  In  Hamilton  v.  Home  Ins.  Co.  (137  U.  S.  370),  the  provisions  were 
(1)  for  an  appraisal  by  disinterested  parties,  and  (2)  in  case  of  differences 
as  to  loss  after  proof,  the  submission  of  the  dispute  to  arbitrators  "whose 
award  in  writing  shall  be  binding  on  the  parties  as  to  the  amount  of  such 


354  FOR>LA.TION  OF  CONTRACT.  [Pabt  II. 

(8)  Agreements  tvhich  tend  to  abuse  of  legal  process :  champertjf 
and  maintenance. 

ACKERT  V.    BARKER. 

131  MASSACHUSETTS,  436.— 1881. 

Action  against  an  attorney  for  money  had  and  received,  being 
the  sums  obtained  by  him  on  suits  against  two  insurance  compa- 
nies. The  answer  set  up  "  that  the  plaintiff  agreed,  in  considera- 
tion of  the  defendant  acting  for  him  in  the  premises,  that  said 
defendant  should,  out  of  any  and  all  moneys  received  by  him  from 
said  insurance  companies,  retain  one-half  of  the  amount  received 
after  payment  of  proper  costs  and  charges."  The  trial  court 
charged  that  if  the  jury  found  that  there  was  an  agreement  by 
which  defendant  was  to  retain  one-half  the  sum  collected  as  com- 

loss  or  damage,  but  shall  not  decide  the  liability  of  the  company  under  this 
policy."  In  the  opinion  by  Mr.  Justice  Gray,  it  is  said  :  "A  provision  in  a 
contract  for  the  payment  of  money  upon  a  contingency,  that  the  amoimt 
to  be  paid  shall  be  submitted  to  arbitrators,  whose  award  shall  be  final  as  to 
that  amount,  but  shall  not  determine  the  general  question  of  liability,  is 
undoubtedly  valid.  If  the  contract  further  provides  that  no  action  upon 
it  shall  be  maintained  until  after  such  award,  then,  as  adjudged  in  Hamilton 
v.  Liverpool,  London  &  Globe  Ins.  Co.,  above  cited,  and  in  many  cases 
therein  referred  to,  the  award  is  a  condition  precedent  to  the  right  of  action. 
But  when  no  such  condition  is  expressed  in  the  contract,  or  necessarily  to  be 
implied  from  its  terms,  it  is  equally  well  settled  that  the  agreement  for  sub- 
mitting the  amount  to  arbitration  is  collateral  and  independent,  and  that 
a  breach  of  this  agreement,  while  it  will  support  a  separate  action,  cannot 
be  pleaded  in  bar  to  an  action  on  the  principal  contract.  Roper  v.  Lendon, 
1  El.  &  El.  825 ;  Collins  v.  Locke,  4  App.  Cas.  674 ;  Dawson  v.  Fitzgerald, 
1  Ex.  D.  257  ;  Seed  v.  Washington  Ins.  Co.,  138  Mass.  572  ;  Seicard  v.  Roches- 
ter, 109  N.  Y.  164;  Birmingham  Ins.  Co.  v.  Pulver,  126  lU.  329,  338; 
Crossley  v.  Connecticut  Ins.  Co.,  27  Fed.  Rep.  30.  The  rule  of  law  upon 
the  subject  was  well  stated  in  Dawson  v.  Fitzgerald  by  Sir  Greorge  Jessel, 
Master  of  the  Rolls,  who  said :  '  There  are  two  cases  where  such  a  plea  as 
the  present  is  successful :  first,  where  the  action  can  only  be  brought  for  the 
sum  named  by  the  arbitrators ;  secondly,  where  it  is  agreed  that  no  action 
shall  be  brought  till  there  has  been  an  arbitration,  or  that  arbitration  shall  be 
a  condition  precedent  to  the  right  of  action.  In  all  other  cases  where  there 
is,  first,  a  covenant  to  pay,  and  secondly,  a  covenant  to  refer,  the  covenants 
are  distinct  and  collateral,  and  the  plaintiff  may  sue  on  the  first,  leaving  the 
defendant '  '  to  bring  an  action  for  not  referring,'  or  (under  a  modem 
English  statute)  'to  stay  the  action  till  there  has  been  an  arbitration.' 
1  Ex.  D.  260."  See  post.  Absolute  promises  and  concurrent  conditions,  PL 
v.,  Ch.  UL,  §  2  (v.),  a. 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  356 

pensation  for  his  services,  such  agreement  was  unlawful.  Ver- 
dict for  plaintiff.     Defendant  alleged  exceptions. 

Gkay,  C.  J.  The  defendant's  answer  and-  bill  of  exceptions, 
fairly  construed,  show  that  the  agreement  set  up  by  the  defend- 
ant was  an  agreement  by  which,  in  consideration  that  an  attorney 
should  prosecute  suits  in  behalf  of  his  client  for  certain  sums  of 
money,  in  which  he  had  himself  no  previous  interest,  it  was 
agreed  that  he  should  keep  one-half  of  the  amount  recovered  in 
case  of  success,  and  should  receive  nothing  for  his  services  in 
case  of  failure. 

By  the  law  of  England  from  ancient  times  to  the  present  day, 
such  an  agreement  is  unlawful  and  void,  for  champerty  and  main- 
tenance, as  contrary  to  public  justice  and  professional  duty,  and 
tending  to  speculation  and  fraud,  and  cannot  be  upheld,  either  at 
common  law  or  inequity.  2  Eol.  Ab.  114;  Lord  Coke,  2  Inst. 
208,  564.  Hobart,  C.  J.,  Box  v.  Barnaby,  Hob.  117  a;  Lord 
Nottingham,  Skapholme  v.  Hart,  Finch,  477;  S.  C.  1  Eq.  Cas. 
Ab.  86,  pi.  1;  Sir  William  Grant,  M.  K.,  Stevens  v.  Bagivell,  15 
Ves.  139;  Tindal,  C.  J.,  Stanley  v.  Jones,  7  Bing.  369,  377 j 
;S^.  C.  5  Moore  &  Payne,  193,  206;  Coleridge,  J.,  In  re  Masters, 
1  Har.  &  Wol.  348;  Shadwell,  V.  C,  Strange  v.  Brennan,  15 
Sim.  346;  Lord  Cottenham,  S.  C.  on  appeal,  2  Coop.  Temp.  Cot- 
tenham,  1;  Erie,  C.  J.,  Grell  v.  Levy,  16  C.  B.  (N.  S.)  73; 
Sir  George  Jessel,  M.  R.,  In  re  Attorneys  &  Solicitors  Act,  1  Ch. 
D.  573. 

It  is  equally  illegal  by  the  settled  law  of  this  Commonwealth. 
Thurston  v.  Percival,  1  Pick.  415;  Lathrop  v.  Amherst  Bank,  9 
Met.  489;  Swett  v.  Poor,  11  Mass.  549;  Allen  v.  Hawks,  13  Pick. 
79,  83;  Call  v.  Calef,  13  Met.  362;  Rindge  v.  Coleraine,  11  Gray, 
157,  162;  1  Da7ie  Ab.  296;  6  Dane  Ab.  740,  741.  In  Lathrop 
V.  Amherst  Bank,  the  fact  that  the  agreement  did  not  require  the 
attorney  to  carry  on  the  suit  at  his  own  expense  was  adjudged  to 
be  immaterial.  9  Met.  492.  In  Scott  v.  Harmon  (109  Mass. 
237)  and  in  Tapley  v.  Coffin  (12  Gray,  420),  cited  for  the  defend- 
ant, the  attorney  had  not  agreed  to  look  for  his  compensation  to 
that  alone  which  might  be  recovered,  and  thus  to  make  his  pay 
depend  upon  his  success. 

The  law  of  Massachusetts  being  clear,  there  would  be  no  pro- 


366  FORMATION   OF  CONTRACT.  [Part  II. 

priety  in  referring  to  the  conflicting  decisions  in  other  parts  of 
the  country.  If  it  is  thought  desirable  to  subordinate  the  rules 
of  professional  conduct  to  mercantile  usages,  a  change  of  our  la-w- 
in this  regard  must  be  sought  from  the  legislature  and  not  from 
the  courts. 

The  defendant,  by  virtue  of  his  employment  by  the  plaintiff, 
and  of  his  professional  duty,  -was  bound  to  prosecute  the  claims 
intrusted  to  him  for  collection,  and  holds  the  amount  recovered 
as  money  had  and  received  to  the  plaintiff's  use.  The  agreement 
set  up  by  the  defendant,  that  he  should  keep  one-half  of  that 
amount,  being  illegal  and  void,  he  is  accountable  to  the  plaintiff 
for  the  -whole  amount,  deducting  -what  the  jury  have  allo-wed 
him  for  his  costs.  In  re  Masters,  and  Orell  v.  Levy,  above  cited; 
Pince  V.  Beattie,  32  L.  J.  (N.  S.)  Ch.  734. 

Of  Best  V.  Strong  (2  Wend.  319),  on  -which  the  defendant  relies 
as  sho-wing  that,  assuming  this  agreement  to  be  illegal,  the  plain- 
tiff cannot  maintain  this  action,  it  is  enough  to  say  that  there 
the  money  -was  voluntarily  paid  to  the  defendant,  -with  the  plain- 
tiff's assent,  after  the  settlement  of  the  suit  by  -which  it  -was 
recovered;  and  it  is  unnecessary  to  consider  -whether,  upon  the 
iacts  before  the  court,  the  case  -was  -well  decided. 

Exceptions  overruled.^ 

1  "The  grounds  upon  which  contracts  -were  held  voidable  for  champerty 
or  maintenance,  as  against  the  policy  of  the  law,  were  that  there  might  be 
combinations  of  powerful  individuals  to  oppress  others  which  might  even 
influence  or  overawe  the  court,  and  that  they  tended  to  the  promotion  and 
enforcement  of  unfounded  claims,  to  disturb  the  public  repose,  to  promote 
litigation,  and  to  breed  strife  and  quarrels  among  neighbors.  With  the 
progress  of  society  these  reasons  have  everywhere  lost  much  of  their  force, 
and  the  whole  doctrine  on  this  subject  has  been  rejected  in  several  States  of 
the  Union  as  antiquated  and  incongruous  in  the  existing  state  of  society, 
notably  in  New  Jersey,  Texas,  California,  and  Mississippi.  Without  desir- 
ing to  modify  or  in  any  way  recede  from  the  doctrine  on  this  subject,  as  it 
has  heretofore  been  held  in  Massachusetts,  we  see  no  reason  for  its  further 
extension.  Neither  the  definition  of  champerty  nor  the  reasons  why  it  was 
held  to  be  an  offense  have  any  proper  application  to  a  proceeding  such  as 
that  by  which  the  defendant,  under  his  contract  with  the  plaintiff,  sought 
to  enforce  his  claim  against  the  government  of  the  United  States.  There 
was  no  suit  to  be  brought,  nor  any  defendant  in  the  proposed  proceeding, 
in  the  same  sense  that  there  is  in  a  contested  cause  at  law  or  in  equity." 
—  Devens,  J.,  in  Manning  v.  Sprague,  148  Mass.  18,  20. 

"  The  first  objection  of  the  plaintiffs  in  error  is  that  the  contract  set  up 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  867 

(e)   Agreements  ivhich  are  contrary  to  good  morals. 

BOIGNEEES   v.   BOULON. 

54  CALIFORNIA,  146.  — 1880. 

Appeal  from  judgment  of  nonsuit,  and  order  denying  new 
trial. 

Department  No.  1,  by  the  Court  (from  the  Bench) : 

The  only  evidence  in  respect  to  the  alleged  promise  of  mar- 
riage is  the  testimony  of  the  plaintiff  herself.  She  declares  — 
such  is  the  effect  of  her  language  —  that  the  only  consideration 
for  the  promise  was  that  she  should  continue  the  immoral  and 
illegal  relation  toward  defendant  as  his  mistress,  which  she  had 
held  previous  to  the  promise.  This  is  only  saying  that  he  prom- 
ised to  marry  her  at  some  date  not  mentioned,  if  she  would  con- 
tinue to  surrender  her  person  to  him  as  she  had  done  in  the  past. 

It  has  been  held,  and  we  think  correctly,  that  such  promise  or 
surrender  on  the  part  of  the  woman  is  not  sufficient  consideration 
for  a  promise  of  marriage,  because  immoral,  illegal,  and  against 
public  policy.  On  the  authority  of  Hanks  v.  Naglee,  November 
Term,  1879,  the  judgment  must  be  affirmed.     So  ordered.^ 

in  declaration  is  one  for  a  contingent  compensation.  Such  a  defense  in 
some  jurisdictions  would  be  a  good  one  ;  but  a  settled  rule  of  this  court  is 
the  other  way.  Reported  cases  to  that  effect  show  that  the  proposition 
is  one  beyond  legitimate  controversy.  Wylie  v.  Coxe,  15  How.  415  ;  Wright 
V.  Tebbitts,  91  U.  S.  262."  — Mr.  Justice  Clifford,  in  Stanton  v.  Emhrey,  93 
U.  S.  548,  556. 

"This,  however,  does  not  remove  the  suspicion  which  naturally  attaches 
to  such  contracts,  and  where  it  can  be  shown  that  they  are  obtained  from 
the  suitor  by  any  undue  influence  of  the  attorney  over  the  client,  or  by  any 
fraud  or  imposition,  or  that  the  compensation  is  clearly  excessive,  so  as  to 
amount  to  extortion,  the  court  will  in  a  proper  case  protect  the  party 
aggrieved."  —  Mr.  Justice  Miller,  in  Taylor  v.  Bemiss,  110  U.  S.  42,  45,  46. 

See  also  Fowler  v.  Callan,  102  N.  Y.  395  ;  JSeece  v.  Kyle,  49  Ohio  St.  476, 

1  Accord :  Brown  v.  Tutlle,  80  Me.  162. 


858  FORMATION  OF  CONTRACT.  [Part  II. 

KURTZ  V.  FRANK. 

76  INDIANA,  59i.— 1881. 

Action  by  the  appellee  against  the  appellant  for  a  breach  of 
promise  of  marriage.  Verdict  for  plaintiff.  Defendant  appeals 
from  an  order  denying  motion  for  new  trial. 

Woods,  J.  .  .  .  The  plaintiff  testified  that  the  defendant 
promised  to  marry  her  in  September  or  October  (1878) ;  that  he 
said  he  would  marry  her  in  the  fall  if  they  could  agree  and  get 
along,  and  be  true  to  each  other;  but,  if  she  became  pregnant 
from  their  intercourse,  he  would  marry  her  immediately.  She 
did  become  pregnant,  about  the  middle  of  July,  1878,  and  in- 
formed the  defendant  of  the  fact  as  soon  as  aware  of  it.  Upon 
this  evidence,  it  is  insisted  that  the  agreement  to  marry  immedi- 
ately in  case  of  th5  plaintiff's  pregnancy,  is  void,  because 
immoral,  and  that,  aside  from  this  part  of  the  agreement,  the 
defendant  had  until  the  first  of  December  within  which  to  fulfill 
his  engagement;  and,  consequently,  that  the  suit,  begun  as  it 
was  before  that  date,  was  prematurely  brought. 

It  does  not  appear  that  the  illicit  intercourse  entered  into 
the  consideration  of  the  marriage  contract,  but  the  appellant, 
having  agreed  to  marry  the  appellee  at  a  time  then  in  the 
future,  obtained  the  intercourse  upon  an  assurance  that,  if 
pregnancy  resulted,  the  contract  already  made  should  be  per- 
formed at  once.  This  did  not  supersede  the  original  agreement, 
but  fixed  the  time  for  its  performance.  Clark  v.  Pendleton, 
20  Conn.  495. 

We  are  not  prepared  to  lend  judicial  sanction  and  protection 
to  the  seducer  by  declaring  that  he  may  escape  the  obligation  of 
his  contract,  so  made,  on  the  plea  that  it  is  immoral.  But  if 
this  were  otherwise,  and  if,  by  its  terms,  the  contract  was  not 
to  have  been  performed  until  at  a  time  subsequent  to  the  com- 
mencement of  the  suit,  yet  if,  before  the  suit  was  brought,  the 
appellant  had  renounced  the  contract,  and  declared  his  purpose 
not  to  keep  it,  that  constituted  a  breach,  for  which  the  appellee 
had  an  immediate  right  of  action.  Burtis  v.  Thompson,  42  N.  Y. 
246;  Hollowayv.  Griffith,  32  Iowa,  409;  S.  C.  7  Am.  Rep.  208,  n; 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  359 

Frost  V.  Knight,  L.  K.  7  Exch.  Ill;  S.  C.  1  Moak's  Eng.  Rep. 
218. 

We  cannot  say  that  the  award  of  damages  was  excessive. 

Judgment  affirmed,  with  costs. 


((;)   Agreements  which  affect  the  freedom  or  security  of  marriage. 
STERLING  V.    SINNICKSON. 

2  SOUTHARD  (5  N.  J.  L.),  756.  — 1820. 

Declaration  in  debt  on  a  sealed  bill,  which  was  as  follows : 

"I,  Seneca  Sinnickson,  am  hereby  bound  to  Benjamin  Sterling,  for 
the  sum  of  one  thousand  dollars,  provided  he  is  not  lawfully  married  in 
the  course  of  six  months  from  the  date  hereof.  Witness  my  hand  and 
seal.     Burlington,  May  16,  1816. 

"Seneca  Sinnickson  (5ea^). 

"Witness,  James  S.  Budd." 

Defendant  demurred  generally,  and  plaintiff  joined  in  de- 
murrer. 

KiRKPATRiCK,  C.  J.  .  .  .  The  contract  was  not  only  use- 
less and  nugatory,  but  it  was  contrary  to  the  public  policy. 

Marriage  lies  at  the  foundation,  not  only  of  individual  happi- 
ness, but  also  of  the  prosperity,  if  not  the  very  existence,  of  the 
social  state;  and  the  law,  therefore,  frowns  upon,  and  removes 
out  of  the  way,  every  rash  and  unreasonable  restraint  upon  it, 
•  whether  by  way  of  penalty  or  inducement. 

If  these  parties  had  entered  into  mutual  obligations,  the  plain- 
^  tiff  not  to  marry  within  six  months,  and  the  defendant  to  pay 
him  therefor  this  sum  of  $1000,  there  can  be  no  doubt,  I  think, 
but  that  both  the  obligations  would  have  been  void.  In  the  case 
of  Key  V.  Bradshaw  (2  Vern.  102),  there  was  a  bond  in  the  usual 
form,  but  proved  to  be  upon  an  agreement  to  marry  such  a  man, 
or  to  pay  the  money  mentioned  in  the  bond;  but  the  bond  was 
ordered  to  be  canceled  it  being  contrary  to  the  nature  and  de- 
sign of  marriage,  which  ought  to  proceed  from  free  choice,  and 
not  from  any  restraint  or  compulsion.  In  the  case  of  Baker  v, 
Wdte  (2  Vern.  215),  A  gave  her  bond  to  B  for  £100  if  she 
should  marry  again,  and  B  gave  her  his  bond  for  the  same  sum, 


360  FORMATION  OF  CONTRACT,  [Part  U. 

to  go  towards  the  advancement  of  her  daughter's  portion,  in  case 
she  should  not  marry.  It  was,  as  Lord  Mansfield  says  in  Lowe 
V.  Peers  (Bur.  2231),  a  mere  wager,  and  nothing  unfair  in  it;  and 
yet  A  was  relieved  against  her  bond,  because  it  was  in  restraint 
of  marriage,  which  ought  to  be  free.  A  bond,  therefore,  to 
marry,  if  there  be  no  obligation  on  the  other  side,  no  mutual 
promise,  or  a  bond  not  to  marry,  are  equally  against  law.  They 
are  both  restraints  upon  the  freedom  of  choice  and  of  action,  in 
a  case  where  the  law  wills  that  all  shall  be  free.  If  the  consid- 
eration for  which  this  money  was  to  be  paid,  then,  was  the  under- 
taking of  the  plaintiff  not  to  marry,  that  consideration  was 
unlawful.  He  would  have  been  relieved  against  it,  either  at 
law  or  in  equity;  and  if  so,  the  corresponding  obligation  to  pay, 
according  to  the  principle  above  stated,  is  void. 

It  has  been  spoken  of  by  the  plaintiff,  as  if  it  were  an  obliga- 
tion to  pay  money  upon  a  future  contingency,  which  any  man 
has  a  right  to  make,  either  with  or  without  consideration,  and  as 
if  the  not  marrying  of  the  plaintiff  were  not  the  consideration  of 
the  obligation,  but  the  contingent  event  only,  upon  which  it 
became  payable.  But  I  think  this  is  not  the  correct  view  of  the 
case.  Where  the  event  upon  which  the  obligation  becomes  paya- 
ble is  in  the  power  of  the  obligee,  and  is  to  be  brought  about  by 
his  doing  or  not  doing  a  certain  thing,  it  cannot  be  so  properly 
called  a  contingency ;  it  is  rather  the  condition  mentorious,  upon 
which  the  obligation  is  entered  into,  the  moving  consideration 
for  which  the  money  is  to  be  paid.  It  is  not,  therefore,  to  be 
considered  as  a  mere  contingency,  but  as  a  consideration,  and  it 
must  be  such  consideration  as  the  law  regards. 

Nor  does  it  at  all  vary  the  case  that  the  restraint  was  for  six 
months  only.  It  was  still  a  restraint,  and  the  law  has  made  no 
limitation  as  to  the  time.  Neither  can  the  plaintiff's  perform- 
ance, on  his  part,  help  him.  It  imposed  no  obligation  upon 
the  defendant;  it  was  wholly  useless  to  him;  the  contract  itself 
was  void  from  the  beginning.  Therefore,  in  my  opinion,  let 
there  be  judgment  for  the  defendant. 

Judgment  for  defendant.* 

1  "The  substance  of  the  contract  is,  if  the  applicant  will  pay  the  associa- 
tion a  certain  sum  of  money  down,  and  agree  to  pay  such  dues  and  assess- 


Chap.  V.  §1.]  LEGALITY  OF  OBJECT.  361 

DUVAL  V.   WELLMAN. 

124  NEW  YORK,  156.  —  1891. 
[Reported  herein  at  p.  402.] 


CKOSS  V.  CROSS. 

58  NEW  HAMPSfflRE,  373.  — 1878. 

Writ  of  entry  on  a  mortgage  given  by  defendant  to  M.  for 
plaintiff,  in  consideration  that  she  should  re-convey  to  him  cer- 
tain lands,  and  should  then  file  a  bill  for  divorce  which  he  agreed 
not  to  defend.  This  agreement  was  executed,  the  divorce  was 
granted,  and  M.  assigned  the  notes  and  mortgage  to  plaintiff. 

CiiARK,  J.  When  the  notes  and  mortgage  were  given,  the 
plaintiff  was  the  wife  of  the  defendant;  and  the  principal 
object  of  the  agreement,  in  pursuance  of  which  the  notes  and 
mortgage  were  executed,  was  to  obtain  a  collusive  divorce. 
Such  an  agreement  is  contrary  to  sound  public  policy,  and  con- 
sequently illegal  and  void.  The  marriage  contract  is  not  to  be 
dissolved  or  determined  at  the  will  or  caprice  of  the  parties.  If 
annulled,  it  must  be  in  accordance  with  the  requirements  of  the 
law,  and  in  due  course  of  legal  proceedings.  The  whole  agree- 
ment and  proceedings  of  the  parties  in  this  case  were  a  fraud  upon 
the  law,  and  if  the  facts  had  come  to  the  knowledge  of  the  court, 
a  divorce  would  not  have  been  granted.  The  law  will  not  aid 
either  party  in  enforcing  their  illegal  contract.  The  considera- 
tion of  the  notes  secured  by  the  mortgage  being  illegal  and  void, 
the  action  cannot  be  maintained.  The  principles  of  law  gov- 
erning this  case  were  considered  and  settled  in  Sayles  v.  Sayles, 
21  N.  H.  312,  and  Weeks  v.  Hill,  38  N.  H.  199. 

Judgment  for  the  defendant. 

ments  as  it  may  demand  upon  expressed  terms  from  time  to  time,  it  will 
pay  the  applicant  at  the  end  of  two  years  the  sum  of  $3960,  upon  condition 
that  the  applicant  should  not  get  married  within  that  time,  but  if  he  should 
marry  within  that  time,  then  the  association  was  to  pay  him  $6.50  for  each 
day  that  he  remained  single,  after  the  execution  of  the  contract.  The 
amount  to  be  paid  by  the  association  is  dependent  upon  the  time  the 
member  refrains  from  marriage.  We  think  this  contract  is  contrary  to 
public  policy  and  void.  ...  A  promise  to  pay  money  in  consideration  of 
not  marrying  cannot  be  enforced.  2  Parsons  Con.  73,  note  (A)."  —  Frank- 
lin, C,  in  Chalfant  v.  Payton,  91  Ind.  202,  206,  207. 


V 


II 


FORMATION  OF  CONTRACT,  [Part  n. 

(rj)  Agreements  in  restraint  of  trade. 
^  <^      /  DIAMOND   MATCH   CO.  v.  ROEBER. 

106  NEW  YORK,  473.  — 1887. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court  in  the  first  judicial  department,  made  March  20,  1885, 
which  modified  as  to  an  additional  allowance  of  costs  and  affirmed, 
as  modified,  a  judgment  in  favor  of  plaintiff,  entered  upon  a 
decision  of  the  court  on  trial  at  Special  Term. 

This  action  was  brought  to  restrain  the  defendant  from  engag- 
ing in  the  manufacture  or  sale  of  friction  matches  in  viola- 
tion of  a  covenant  in  a  bill  of  sale  executed  by  defendant,  which 
r  is  set  forth  in  the  opinion,  wherein  also  the  material  facts  are 
'  stated. 

Andrews,  J.  Two  questions  are  presented:  First.  Whether 
the  covenant  of  the  defendant  contained  in  the  bill  of  sale  exe- 
cuted by  him  to  the  Swift  &  Courtney  &  Beecher  Company  on 
the  27th  day  of  August,  1880,  "  that  he  shall  and  will  not,  at  any 
time  or  times  within  ninety-nine  years,  directly  or  indirectly, 
engage  in  the  manufacture  or  sale  of  friction  matches  (excepting 
in  the  capacity  of  agent  or  employe  of  said  The  Swift  &  Court- 
ney &  Beecher  Company),  within  any  of  the  several  States  of  the 
United  States  of  America,  or  in  the  Territories  thereof,  or  within 
the  District  of  Columbia,  excepting  and  reserving,  however,  the 
right  to  manufacture  and  sell  friction  matches  in  the  State  of 
Nevada  and  in  the  Territory  of  Montana,"  is  void  as  being  a  cove- 
nant in  restraint  of  trade;  and,  second,  as  to  the  right  of  the 
plaintiff,  under  the  special  circumstances,  to  the  equitable  remedy 
by  injunction  to  enforce  the  performance  of  the  covenant. 

There  is  no  real  controversy  as  to  the  essential  facts.  The 
consideration  of  the  covenant  was  the  purchase  by  the  Swift 
&  Courtney  &  Beecher  Company,  a  Connecticut  corporation,  of 
the  manufactory  No.  528  West  Fiftieth  Street,  in  the  city  of  New 
York,  belonging  to  the  defendant,  in  which  he  had,  for  several 
years  prior  to  entering  into  the  covenant,  carried  on  the  business 
of  manufacturing  friction  matches,  and  of  the  stock  and  materials 
on  hand,  together  with  the  trade,  trade-marks,  and  good  will  of 


Chap.  V.  §1.]  LEGALITY  OF  OBJECT.  363 

Hhe  business,  for  the  aggregate  sum  (excluding  a  mortgage  of 
$5000  on  the  property,  assumed  by  the  company)  of  $46,724.05, 
of  which  $13,000  was  the  price  of  the  real  estate.  By  the  pre- 
liminary agreement  of  July  27,  1880,  $28,000  of  the  purchase 
pri(je  was  to  be  paid  in  the  stock  of  the  Swift  &  Courtney  & 
Beecher  Company.  This  was  modified  when  the  property  was 
transferred  August  27,  1880,  by  giving  to  the  defendant  the 
option  to  receive  the  $28,000  in  the  notes  of  the  company  or  in 
its  stock,  the  option  to  be  exercised  on  or  before  January  1, 
1881.  The  remainder  of  the  purchase  price,  $18,724.05,  was 
paid  down  in  cash,  and  subsequently,  March  1,  1881,  the  defend- 
ant accepted  from  the  plaintiff,  the  Diamond  Match  Company, 
in  full  payment  of  the  $28,000,  the  sum  of  $8000  in  cash  and 
notes,  and  $20,000  in  the  stock  of  the  plaintiff,  the  plaintiff 
company  having,  prior  to  said  payment,  purchased  the  property 
of  the  Swift  &  Courtney  &  Beecher  Company  and  become  the 
assignee  of  the  defendant's  covenant.  It  is  admitted  by  the 
pleadings  that  in  August,  1880  (when  the  covenant  in  question 
was  made),  the  Swift  &  Courtney  &  Beecher  Company  carried  on 
the  business  of  manufacturing  friction  matches  in  the  States  of 
Connecticut,  Delaware,  and  Illinois,  and  of  selling  the  same  "  in 
the  several  States  and  Territories  of  the  United  States  and  in  the 
District  of  Columbia; "  and  the  complaint  alleges,  and  the  de- 
fendant in  his  answer  admits,  that  he  was  at  the  same  time  also 
engaged  in  the  manufacture  of  friction  matches  in  the  city  of 
New  York,  and  in  selling  them  in  the  same  territory.  The 
proof  tends  to  support  the  admission  in  the  pleadings.  It  was 
shown  that  the  defendant  employed  traveling  salesmen,  and  that 
his  matches  were  found  in  the  hands  of  dealers  in  ten  States. 
The  Swift  &  Courtney  &  Beecher  Company  also  sent  their 
matches  throughout  the  country  wherever  they  could  find  a 
market.  When  the  bargain  was  consummated,  on  the  27th  of 
August,  1880,  the  defendant  entered  into  the  employment  of  the 
Swift  &  Courtney  &  Beecher  Company,  and  remained  in  its 
employment  until  January,  1881,  at  a  salary  of  $1500  a  year. 
He  then  entered  into  the  employment  of  the  plaintiff  and  re- 
mained with  it  during  the  year  1881,  at  a  salary  of  $2500  a  year, 
and  from  January  1, 1882,  at  a  salary  of  $3600  a  year,  when  a  dis- 


364  FORMATION  OF  CONTRACT.  [Pabt  IL 

agreement  arising  as  to  the  salary  he  should  thereafter  receive^ 
the  plaintiff  declining  to  pay  a  salary  of  more  than  $2500  a  year, 
the  defendant  voluntarily  left  its  service.  Subsequently  he 
became  superintendent  of  a  rival  match  manufacturing  company 
in  New  Jersey,  at  a  salary  of  $5000,  and  he  also  opened  a  store 
in  New  York  for  the  sale  of  matches  other  than  those  manufact- 
ured by  the  plaintiff.  The  contention  by  the  defendant  that  the 
plaintiff  has  no  equitable  remedy  to  enforce  the  covenant,  rests 
mainly  on  the  fact  that  contemporaneously  with  the  execution  of 
the  covenant  of  August  27,  1880,  the  defendant  also  executed  to 
the  Swift  &  Courtney  &  Beecher  Company  a  bond  in  the  penalty 
of  $15,000,  conditioned  to  pay  that  sum  to  the  company  as 
liquidated  damages  in  case  of  a  breach  of  his  covenant. 

The  defendant  for  his  main  defense  relies  upon  the  ancient 
doctrine  of  the  common  law  first  definitely  declared,  so  far  as  I 
can  discover,  by  Chief  Justice  Parker  (Lord  Macclesfield)  in  the 
leading  case  of  Mitcliel  v.  Reynolds  (1  P.  Williams,  181),  and 
which  has  been  repeated  many  times  by  judges  in  England  and 
America,  that  a  bond  in  general  restraint  of  trade  is  void. 
There  are  several  decisions  in  the  English  courts  of  an  earlier 
date  in  which  the  question  of  the  validity  of  contracts  restrain- 
ing the  obligor  from  pursuing  his  occupation  within  a  particular 
locality  was  considered.  The  cases  are  chronologically  arranged 
and  stated  by  Mr.  Parsons  in  his  work  on  Contracts,  Vol.  2,  p.. 
748,  note.  The  earliest  reported  case,  decided  in  the  time  of 
Henry  V.,  was  a  suit  on  a  bond  given  by  the  defendant,  a  dyer, 
not  to  use  his  craft  within  a  certain  city  for  the  space  of  half  a 
year.  The  judge  before  whom  the  case  came  indignantly  de- 
nounced the  plaintiff  for  procuring  such  a  contract,  and  turned 
him  out  of  court.  This  was  followed  by  cases  arising  on  con- 
tracts of  a  similar  character,  restraining  the  obligors  from  pursu- 
ing their  trade  within  a  certain  place  for  a  certain  time,  which 
apparently  presented  the  same  question  which  had  been  decided 
in  the  dyer's  case,  but  the  courts  sustained  the  contracts  and 
gave  judgment  for  the  plaintiffs;  and,  before  the  case  of  Mitchel 
v.  Reynolds,  it  had  become  settled  that  an  obligation  of  this 
character,  limited  as  to  time  and  space,  if  reasonable  under  the 
circumstances  and  supported  by  a  good  consideration,  was  valid. 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  365 

The  case  in  the  Year  Books  went  against  all  contracts  in  restraint 
of  trade,  whether  limited  or  general.  The  other  cases,  prior  to 
Mitchel  V.  Reynolds,  sustained  contracts  for  a  particular  re- 
straint, upon  special  grounds,  and  by  inference  decided  against 
the  validity  of  general  restraints.  The  case  of  Mitchel  v.  Rey- 
nolds was  a  case  of  partial  restraint  and  the  contract  was  sus- 
tained. It  is  worthy  of  notice  that  most,  if  not  all,  the  English 
cases  which  assert  the  doctrine  that  all  contracts  in  general  re- 
straint of  trade  are  void,  were  cases  where  the  contract  before 
the  court  was  limited  or  partial.  The  same  is  generally  true  of 
the  American  cases.  The  principal  cases  in  this  State  are  of 
that  character,  and  in  all  of  them  the  particular  contract  before 
the  court  was  sustained  (Nobles  v.  Bates,  7  Cow.  307;  Chappel 
V.  Brockioay,  21  Wend.  157;  Dunlop  v.  Gregory,  10  N.  Y.  241). 
In  Alger  v.  Thacher  (19  Pick.  51),  the  case  was  one  of  general 
restraint,  and  the  court,  construing  the  rule  as  inflexible  that  all 
contracts  in  general  restraint  of  trade  are  void,  gave  judgment  for 
the  defendant.  In  Mitchel  v.  Reynolds,  the  court,  in  assigning 
the  reasons  for  the  distinction  between  a  contract  in  general 
restraint  of  trade,  and  one  limited  to  a  particular  place,  says, 
"for  the  former  of  these  must  be  void,  being  of  no  benefit  to 
either  party  and  only  oppressive ; "  and  later  on,  "  because  in  a 
great  many  instances  they  can  be  of  no  use  to  the  obligee,  which 
holds  in  all  cases  of  general  restraint  throughout  England,  for 
what  does  it  signify  to  a  tradesman  in  London  what  another  does 
in  Newcastle,  and  surely  it  would  be  unreasonable  to  fix  a  cer- 
tain loss  on  one  side  without  any  benefit  to  the  other."  He 
refers  to  other  reasons,  viz. :  The  mischief  which  may  a»rise  (1) 
to  the  party  by  the  loss,  by  the  obligor,  of  his  livelihood  and 
the  subsistence  of  his  family;  and  (2)  to  the  public,  by  depriv- 
ing it  of  a  useful  member  and  by  enabling  corporations  to  gain 
control  of  the  trade  of  the  kingdom. 

It  is  quite  obvious  that  some  of  these  reasons  are  much  less 
forcible  now  than  when  Mitchel  v.  Reynolds  was  decided.  Steam 
and  electricity  have,  for  the  purposes  of  trade  and  commerce, 
almost  annihilated  distance,  and  the  whole  world  is  now  a  mart 
for  the  distribution  of  the  products  of  industry.  The  great 
diffusion  of  wealth  and  the  restless  activity  of  mankind  striving 


366  FORMATION  OF  CONTRACT.  [Part  II. 

to  better  their  condition,  has  greatly  enlarged  the  field  of  human 
enterprise  and  created  a  vast  number  of  new  industries,  which 
give  scope  to  ingenuity,  and  employment  for  capital  and  labor. 
The  laws  no  longer  favor  the  granting  of  exclusive  privileges, 
and,  to  a  great  extent,  business  corporations  are  practically  part- 
nerships, and  may  be  organized  by  any  persons  who  desire  to 
unite  their  capital  or  skill  in  business,  leaving  a  free  field  to  all 
others  who  desire  for  the  same  or  similar  purposes  to  clothe 
themselves  with  a  corporate  character. 

The  tendency  of  recent  adjudications  is  marked  in  the  direc- 
tion of  relaxing  the  rigor  of  the  doctrine  that  all  contracts  in 
general  restraint  of  trade  are  void  irrespective  of  special  circum- 
stances. Indeed,  it  has  of  late  been  denied  that  a  hard  and  fast 
rule  of  that  kind  has  ever  been  the  law  of  England  {Rousillon  v. 
Roasillon,  L.  R.  14  Ch.  Div.  351).     The  law  has,  for  centuries, 

^.^ermitted  contracts  in  partial  restraint  of  trade,  when  reasona- 
/  ble;  and  in  Horner  v.  Graves  (7  Bing.  735),  Chief  Justice  Tindal 

/  considered  a  true  test  to  be  "  whether  the  restraint  is  such  only 
/  as  to  afford  a  fair  protection  to  the  interests  of  the  party  in  favor 
'  of  whom  it  is  given,  and  not  so  large  as  to  interfere  with  the 
interests  of  the  public."  When  the  restraint  is  general,  but  at 
the  same  time  is  coextensive  only  with  the  interest  to  be  pro- 
tected, and  with  the  benefit  meant  to  be  conferred,  there  seems 
to  be  no  good  reason  why,  as  between  the  parties,  the  contract  is 
not  as  reasonable  as  when  the  interest  is  partial  and  there  is  a 
corresponding  partial  restraint.  And  is  there  any  real  public 
interest  which  necessarily  condemns  the  one  and  not  the  other? 
It  is  an  encouragement  to  industry  and  to  enterprise  in  building 
up  a  trade,  that  a  man  shall  be  allowed  to  sell  the  good  will  of 
the  business  and  the  fruits  of  his  industry  upon  the  best  terms 
he  can  obtain.  If  his  business  extends  over  a  continent,  does 
public  policy  forbid  his  accompanying  the  sale  with  a  stipulation 
for  restraint  coextensive  with  the  business  which  he  sells?  If 
such  a  contract  is  permitted,  is  the  seller  any  more  likely  to 
become  a  burden  on  the  public  than  a  man  who,  having  built  up 
a  local  trade  only,  sells  it,  binding  himself  not  to  carry  it  on  in 
the  locality?  Are  the  opportunities  for  employment  and  for 
the  exercise  of  useful  talents  so  shut  up  and  hemmed  in  that  the 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  '  3u7 

public  is  likely  to  lose  a  useful  member  of  society  in  the  one 
case  and  not  in  the  other?  Indeed,  what  public  policy  requires  is 
often  a  vague  and  difficult  inquiry.  It  is  clear  that  public  policy 
and  the  interests  of  society  favor  the  utmost  freedom  of  con- 
tract, within  the  law,  and  require  that  business  transactions 
should  not  be  trammeled  by  unnecessary  restrictions.  "If," 
said  Sir  George  Jessel,  in  Printing  Company  v.  Sampson,  L.  R. 
19  Eq.  Cas.  462,  "there  is  one  thing  more  than  any  other  which 
public  policy  requires,  it  is  that  men  of  full  age  and  competent 
understanding  shall  have  the  utmost  liberty  of  contracting,  and 
that  contracts  when  entered  into  freely  and  voluntarily,  shall  be 
held  good,  and  shall  be  enforced  by  courts  of  justice." 

It  has  sometimes  been  suggested  that  the  doctrine  that  con- 
tracts in  general  restraint  of  trade  are  void,  is  founded  in  part 
upon  the  policy  of  preventing  monopolies,  which  are  opposed  to 
the  liberty  of  the  subject,  and  the  granting  of  which  by  the  king 
under  claim  of  royal  prerogative  led  to  conflicts  memorable  in 
English  history.  But  covenants  of  the  character  of  the  one  now 
in  question  operate  simply  to  prevent  the  covenantor  from  engag- 
ing in  the  business  which  he  sells,  so  as  to  protect  the  purchaser 
in  the  enjoyment  of  what  he  has  purchased.  To  the  extent  that 
the  contract  prevents  the  vendor  from  carrying  on  the  particular 
trade,  it  deprives  the  community  of  any  benefit  it  might  derive 
from  his  entering  into  competition.  But  the  business  is  open  to 
all  others,  and  there  is  little  danger  that  the  public  will  suffer 
harm  from  lack  of  persons  to  engage  in  a  profitable  industry. 
Such  contracts  do  not  create  monopolies.  They  confer  no  special 
or  exclusive  privilege.  If  contracts  in  general  restraint  of  trade, 
where  the  trade  is  general,  are  void  as  tending  to  monopolies, 
contracts  in  partial  restraint,  where  the  trade  is  local,  are  subject 
to  the  same  objection,  because  they  deprive  the  local  community 
of  the  services  of  the  covenantor  in  the  particular  trade  or  call- 
ing, and  prevent  his  becoming  a  competitor  with  the  covenantee. 
We  are  not  aware  of  any  rule  of  law  which  makes  the  motive  of 
the  covenantee  the  test  of  the  validity  of  such  a  contract.  On 
the  contrary,  we  suppose  a  party  may  legally  purchase  the  trade 
and  business  of  another  for  the  very  purpose  of  preventing  com- 
petition, and  the  validity  of  the  contract,  if  supported  by  a  con- 


368  FORMATION  OF  CONTRACT,  [Part  IL 

sideration,  will  depend  upon  its  reasonableness  as  between  the 
parties.  Combinations  between  producers  to  limit  production 
and  to  enhance  prices,  are  or  may  be  unlawful,  but  they  stand  on 
a  different  footing.  We  cite  some  of  the  cases  showing  the  ten- 
dency of  recent  judicial  opinion  on  the  general  subject.  Whitta- 
ker  V.  Howe,  3  Beav.  383;  Jones  v.  Lees,  1  Hurl.  &  N.  189; 
Moussillon  v.  Roussillon,  supra;  Leather  Co.  v.  Lorsont,  L.  R. 
9  Eq.  Cas.  345;  Collins  v.  Locke,  L.  R.  4  App.  Cas.  674;  Oregon 
Steam  Co.  v.  Winsor,  20  Wall.  64;  Morse  v.  Morse,  103  Mass. 
73.  In  Whittaker  v.  Howe,  a  contract  made  by  a  solicitor  not 
to  practice  as  a  solicitor  "  in  any  part  of  Great  Britain,"  was  held 
valid.  In  Roussillon  v.  Roussillon,  a  general  contract  not  to 
engage  in  the  sale  of  champagne,  without  limit  as  to  space,  was 
enforced  as  being  under  the  circumstances  a  reasonable  contract. 
In  Jones  v.  Lees,  a  covenant  by  the  defendant,  a  licensee  under  a 
patent  that  he  would  not  during  the  license  make  or  sell  any  slub- 
bing  machines  without  the  invention  of  the  plaintiff  applied  to 
them,  was  held  valid.  Bramwell,  J.,  said:  "It  is  objected  that 
the  restraint  extends  to  all  England,  but  so  does  the  privilege." 
In  Oregon  Steam  Co.  v.  Winsor,  the  court  enforced  a  covenant 
by  the  defendant,  made  on  the  purchase  of  a  steamship,  that  it 
should  not  be  run  or  employed  in  the  freight  or  passenger  busi- 
ness upon  any  waters  in  the  State  of  California  for  the  period  of 
ten  years. 

In  the  present  state  of  the  authorities  we  think  it  cannot  be 
said  that  the  early  doctrine  that  contracts  in  general  restraint  of 
trade  are  void,  without  regard  to  circumstances,  has  been  abro- 
gated. But  it  is  manifest  that  it  has  been  much  weakened,  and 
that  the  foundation  upon  which  it  was  originally  placed  has,  to 
a  considerable  extent  at  least,  by  the  change  of  circumstances, 
been  removed. 

The  covenant  in  the  present  case  is  partial  and  not  general. 
It  is  practically  unlimited  as  to  time,  but  this,  under  the  authori- 
ties, is  not  an  objection,  if  the  contract  is  otherwise  good.  Ward 
V.  Byrne,  5  M.  &  W.  548;  Mumford  v.  Oething,  7  C.  B.  (N.  S.), 
305,  317.  It  is  limited  as  to  space  since  it  excepts  the  State  of 
Nevada  and  the  Territory  of  Montana  from  its  operation,  and 
therefore  is  a  partial  and  not  a  general  restraint,   unless,    as 


Chap.  V.  §  1.]  LEGALITY.  OF  OBJECT.  369 

claimed  by  the  defendant,  the  fact  that  the  covenant  applies  to 
the  whole  of  the  State  of  ISTew  York  constitutes  a  general  restraint 
within  the  authorities.  In  Chappel  v.  Brockway,  supra,  Bronson, 
J.,  in  stating  the  general  doctrine  as  to  contracts  in  restraint  of 
trade,  remarked  that  "  contracts  which  go  to  the  total  restraint 
of  trade,  as  that  a  man  will  not  pursue  his  occupation  anywhere 
in  the  State,  are  void."  The  contract  under  consideration  in 
that  case  was  one  by  which  the  defendant  agreed  not  to  run  or 
be  interested  in  a  line  of  packet  boats  on  the  canal  between  Eoch- 
ester  and  Buffalo.  The  attention  of  the  court  was  not  called  to 
the  point  whether  a  contract  was  partial,  which  related  to  a 
business  extending  over  the  whole  country,  and  which  restrained 
the  carrying  on  of  business  in  the  State  of  New  York,  but  ex- 
cepted other  States  from  its  operation.  The  remark  relied  upon 
was  obiter,  and  in  reason  cannot  be  considered  a  decision  upon 
the  point  suggested.  We  are  of  the  opinion  that  the  contention 
of  the  defendant  is  not  sound  in  principle,  and  should  not  be 
sustained.  The  boundaries  of  the  States  are  not  those  of  trade 
and  commerce,  and  business  is  restrained  within  no  such  limit. 
The  country,  as  a  whole,  is  that  of  which  we  are  citizens,  and 
our  duty  and  allegiance  are  due  both  to  the  State  and  nation. 
Nor  is  it  true,  as  a  general  rule,  that  a  business  established  here 
cannot  extend  beyond  the  State,  or  that  it  may  not  be  success- 
fully established  outside  of  the  State.  There  are  trades  and 
employments  which,  from' their  nature,  are  localized;  but  this  is 
not  true  of  manufacturing  industries  in  general.  We  are  unwill- 
ing to  say  that  the  doctrine  as  to  what  is  a  general  restraint  of 
trade  depends  upon  State  lines,  and  we  cannot  say  that  the  ex- 
ception of  Nevada  and  Montana  was  colorable  merely.  The  rule 
itself  is  arbitrary,  and  we  are  not  disposed  to  put  such  a  con- 
struction upon  this  contract  as  will  make  it  a  contract  in  general 
restraint  of  trade,  when  upon  its  face  it  is  only  partial.  The 
case  of  Oregon  Steam  Co.  v.  Winsor  {supra)  supports  the  view 
that  a  restraint  is  not  necessarily  general  which  embraces  an 
entire  State.  The  defendant  entered  into  the  covenant  as  a  con- 
sideration in  part  of  the  purchase  of  his  property  by  the  Swift  & 
Courtney  &  Beecher  Company,  presumably  because  he  considered 
it  for  his  advantage  to  make  the  sale.     He  realized  a  large  sum 


870  FORMATION  OF  CONTRACT.  [Part  II. 

in  money,  and  on  the  completion  of  the  transaction  became 
interested  as  a  stockholder  in  the  very  business  which  he  had 
sold.  We  are  of  opinion  that  the  covenant,  being  supported  by 
a  good  consideration,  and  constituting  a  partial  and  not  a  general 
restraint,  and  being,  in  view  of  the  circumstances  disclosed, 
reasonable,  is  valid  and  not  void. 

In  respect  to  the  second  general  question  raised,  we  are  of 
opinion  that  the  equitable  jurisdiction  of  the  court  to  enforce 
the  covenant  by  injunction,  „:ffias-4iot  excluded  by  the  fact  that 
the  defendant,  in  connecton  with  the  covenant,  executed  a  bond 
for  its  performance,  with  a  stipulation  for  liquidated  damages. 
It  is,  of  course,  competent  for  parties  to  a  covenant  to  agree  that 
a  fixed  sum  shall  be  paid  in  case  of  a  breach  by  the  party  in  de- 
fault, and  that  this  should  be  the  exclusive  remedy.  The  inten- 
tion in  that  case  would  be  manifest  that  the  payment  of  the 
penalty  should  be  the  price  of  non-performance,  and  to  be  accepted 
by  the  covenantee  in  lieu  of  performance.  Phoenix  Ins.  Co.  v. 
Continental  Ins.  Co.,  87  N.  Y.  400,  405.  But  the  taking  of  a 
bond  in  connection  with  a  covenant  does  not  exclude  the  jurisdic- 
tion of  equity  in  a  case  otherwise  cognizable  therein,  and  the 
fact  that  the  damages  in  the  bond  are  liquidated,  does  not  change 
the  rule.  It  is  a  question  of  intention,  to  be  deduced  from  the 
whole  instrument  and  the  circumstances;  and  if  it  appear  that 
the  performance  of  the  covenant  was  intended,  and  not  merely 
the  payment  of  damages  in  case  of  a  breach,  the  covenant  will 
be  enforced.  It  was  said  in  Long  v.  Bowring  (33  Beav.  585), 
which  was  an  action  in  equity  for  the  specific  performance  of  a 
covenant,  there  being  also  a  clause  for  liquidated  damages,  "  all 
that  is  settled  by  this  clause  is  that  if  they  bring  an  action  for 
damages  the  amount  to  be  recovered  is  £1000,  neither  more 
nor  less."  There  can  be  no  doubt  upon  the  circumstances  in 
this  case  that  the  parties  intended  that  the  covenant  should  be 
performed,  and  not  that  the  defendant  might  at  his  option  repur- 
chase his  right  to  manufacture  and  sell  matches  on  payment  of 
the  liquidated  damages.  The  right  to  relief  by  injunction  in 
similar  contracts  is  established  by  numerous  cases.  Phoenix  Ins. 
Co.  V.  Continental  Ins.  Co.,  supra;  Long  v.  Bowring,  svpra; 
Howard  v.   Woodward,  10  Jur.  JST.  S.  1123;   Coles  v.  Sims,  5  De 


Chap.  V.  §  1.]  LEGALITY  OF  OBJECT.  871 

G.,  McN.  &  G.  1;  Avery  v.  Langford,  Kay's  Ch.  663;    Whittaker 
V.  Howe,  supra;  Hubbard  v.  Miller,  27  Mich.  15. 

There  are  some  subordinate  questions  which  will  be  briefly 
noticed. 

First.  The  plaintiff,  as  successor  of  the  Swift  &  Courtney  & 
Beecher  Company,  and  as  assignee  of  the  covenant,  can  maintain 
the  action.  The  obligation  runs  to  the  Swift  &  Courtney  & 
Beecher  Company,  "its  successors  and  assigns."  The  covenant 
was  in  the  nature  of  a  property-right  and  was  assignable,  at  least 
it  was  assignable  in  connection  with  a  sale  of  the  property  and 
business  of  the  assignors.  Hedge  v.  Loioe,  47  Iowa,  137,  and 
cases  cited.  Second.  The  defendant  is  not  in  a  position  which 
entitles  him  to  raise  the  question  that  the  contract  with  the 
Swift  &  Courtnfey  &  Beecher  Company  was  ultra  vires  the  powers 
of  that  corporation.  He  has  retained  the  benefit  of  the  contract 
and  must  abide  by  its  terms.  Whitney  Arms  Co.  v.  Barlow,  68 
N.  Y.  34.  Third.  The  fact  that  the  plaintiff  is  a  foreign  corpo- 
ration is  no  objection  to  its  maintaining  the  action.  It  would 
be  repugnant  to  the  policy  of  our  legislation,  and  a  violation  of 
the  rules  of  comity,  to  grant  or  withhold  relief  in  our  courts 
upon  such  a  discrimination.  Merrick  v.  Van  Santvoord,  34  N.  Y. 
208;  Hibernia  Nat.  Bunk  v.  Lacombe,  84  Id.  367;  Code  Civ. 
Pro.  §  1779.  Fourth.  The  consent  of  the  Swift  &  Courtney  & 
Beecher  Company  to  the  purchase  by  the  defendant  of  the  busi- 
ness of  Brueggemann  did  not  relieve  the  defendant  from  his 
covenant.  That  transaction  was  in  no  way  inconsistent  there- 
with. Brueggemann  Avas  selling  matches  manufactured  by  the 
company,  under  an  agreement  to  deal  in  them  exclusively. 

There  are  some  questions  on  exceptions  to  the  admission  and 
exclusion  of  evidence.  None  of  them  present  any  question  re- 
quiring a  reversal  of  the  judgment. 

There  is  no  error  disclosed  by  the  record  and  the  judgment 
should,  therefore,  be  affirmed. 

All  concur,  except  Peckham,  J.,  dissenting. 

Judgment  affirmed.* 

1  "The  latest  decisions  of  courts  in  this  country  and  in  England  show  a 
strong  tendency  to  very  greatly  circumscribe  and  narrow  the  doctrine  of 
avoiding  contracts  in  restraint  of  trade.     The  courts  do  not  go  to  the  length 


K 


372  FORMATION  OF  CONTRACT.  [Pabt  U. 

BISHOP  V.  PALMER.i 

146  MASSACHUSETTS,  469.  — 1888. 

[Reported  herein  at  p.  380.] 


SANTA   CLARA  &c.   CO.  v.  HAYES. 

76  CALIFORNIA,  387.  — 1888. 
[Beported  herein  at  p.  3T6.] 


of  saying  that  contracts  which  they  now  would  say  are  in  restraint  of  trade 
are,  nevertheless,  valid  contracts,  and  to  be  enforced ;  they  do,  however, 
now  hold  many  contracts  not  open  to  the  objection  that  they  are  in  restraint, 
of  trade  which  a  few  years  back  would  have  been  avoided  on  that  sole  ground 
both  here  and  in  England.  The  cases  in  this  court,  which  are  the  latest 
manifestations  of  the  turn  in  the  tide,  are  cited  in  the  opinion  of  this  case 
at  General  Term,  and  are  Diamond  Match  Co.  v.  Boeder,  106  N.  Y.  473 ; 
Hodge  v.  Sloan,  107  N.  Y.  244  ;  Leslie  v.  Lorillard,  110  N.  Y.  519."  — Peck- 
ham,  J.,  in  Matthews  v.  Associated  Press,  136  N.  Y.  333,  340. 

"  While  the  law,  to  a  certain  extent,  tolerates  contracts  in  restraint  of 
trade  or  business  when  made  between  vendor  and  purchaser  and  will  uphold 
them,  they  are  not  treated  with  special  indulgence.  They  are  intended  to 
secure  to  the  purchaser  of  the  good  will  of  a  trade  or  business  a  guaranty 
against  the  competition  of  the  former  proprietor.  When  this  object  is  accom- 
plished it  will  not  be  presumed  that  more  was  intended."  —  Maynard,  J.,  in 
<h-eenfield  v.  Gihnan,  140  N.  Y.  168,  173. 

"  In  the  instance  of  business  of  such  character  that  it  presumably  cannot 
be  restrained  to  any  extent  whatever  without  prejudice  to  the  public  interest, 
courts  decline  to  enforce  or  sustain  contracts  imposing  such  restraint,  how- 
ever partial,  because  in  contravention  of  public  policy.  This  subject  is  much 
considered,  and  the  authorities  cited  in  West  Virginia  Transportation  Co.  v. 
Ohio  River  Pipe  Line  Co.,  22  West  Va.  600  ;  Chicago  Gas  &c.  Co.  v.  PeopWs 
Gas  Co.,  121  Illinois,  530;  Western  Union  Telegraph  Co.  v.  American  Union 
Telegraph  Co. ,  65  Georgia,  160."  —  Mr.  Chief  Justice  Fuller,  in  Gibbs  v.  Con- 
solidated Gas  Co.,  130  U.  S.  396,  408,  409. 

See  also  Richards  v.  American  Desk  &c.  Co.  (Wis.) ,  58  N.  W.  Rep.  787 ; 
Santa  Clara  &c.  Co.  v.  Hayes,  76  Cal.  Z?n,post,  p.  376. 

1  See  also  Gamewell  Fire  Alarm  Tel.  Co.  v.  Crane,  160  Mass.  50. 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  373 

§  2.    Effect  of  illegality  upon  contracts  in  which  it  exists. 

(i.)    When  the  contract  is  divisible. 

ERIE  RAILWAY  CO.  v.   UNI0:N^  LOCOMOTIVE  AKD^ 
EXPRESS   CO. 

35  NEW  JERSEY  LAW,  240.  — 1871. 

This  suit  was  in  case  on  promises.  Defendants  demurred  gen- 
erally to  the  whole  declaration,  and  there  was  a  joinder. 

Beasley,  C.  J.  Upon  the  argument  before  this  court,  the 
counsel  for  the  defendants  relied  chiefly,  in  support  of  the 
demurrer,  upon  the  proposition  that  the  stipulation  contained  in 
the  article  of  agreement,  which  gave  to  the  plaintiffs  the  exclusive 
right  to  carry  locomotives  and  tenders  on  trucks  over  the  Erie 
road,  was  illegal.  The  principle  that,  as  common  carriers,  the 
defendants  were  bound  to  exercise  their  office  with  perfect  impar- 
tiality, in  behalf  of  all  persons  who  apply  to  them,  and  that, 
practicing  this  public  employment,  they  cannot  discharge  them- 
selves, by  contract,  from  the  obligation,  was  appealed  to  in 
support  of  this  position. 

The  agreement  betAveen  these  parties  was,  in  short,  this :  The 
firm  of  Kasson  &  Company,  who  were  the  assignors  of  the  plain- 
tiffs, the  Union  Locomotive  and  Express  Company,  agreed  to  pro- 
vide "cars  and  trucks  sufficient  in  size,  strength,  weight,  and 
capacity  whereon  to  carry  all  locomotive  engines  and  tenders," 
and  that  they  would  be  at  the  expense  of  loading  and  unloading 
the  same;  and  for  the  motive  power,  which  was  to  be  supplied 
by  the  Erie  Railway  Company,  the  defendants,  and  for  the  unusual 
wear  and  strain  of  their  railway,  a  certain  compensation,  which 
was  stated  in  said  articles  of  agreement,  was  promised  to  be  paid. 
On  their  side,  the  Erie  Railway  Company  agreed,  in  addition  to 
the  stipulations  for  providing  motive  power  and  giving  the  use 
of  the  road,  that  the  cars  of  the  assignors  of  plaintiifs  should  be 
the  only  cars  employed  in  the  transportation  of  locomotive 
engines  and  tenders.  It  is  this  last  provision  which  gives  rise  to 
the  objection  already  stated.  It  is  insisted  this  stipulation  gives 
the  plaintiffs  the  exclusive  control,  on  their  own  terms,  of  this 
branch  of  business;  that  it  precludes  all  competition,  and  being 
the  grant  of  a  monopoly,  is  inconsistent  with  the  purpose  and 


374  FORMATION  OF  CONTRACT.  [Part  II. 

objects  of  the  charter  of  the  defendants,  and  with  their  character 
as  common  carriers.  The  question  thus  presented  is  one  of  much 
importance,  and  it  should  not,  consequently,  be  decided  except 
"when  it  shall  be  an  element  essential  to  the  judgment  of  the  court 
in  the  particular  case.  That  it  is  not  such  an  element,  on  the 
present  occasion,  is  obvious,  for,  let  it  be  granted  that  the  pro- 
vision in  question  is  illegal,  and  therefore  void,  still  such  con- 
cession cannot,  in  the  least  degree,  impair  the  plaintiffs'  right  of 
action.  The  suit  is  not  for  a  breach  of  this  promise  of  the 
defendants,  that  no  other  cars  but  those  of  the  plaintiffs  shall 
be  employed  in  this  branch  of  the  carrying  business,  but  it  is  fdl* 
the  refusal  of  the  defendants  to  permit  the  plaintiffs  to  transport 
locomotives  and  tenders,  according  to  their  contract,  over  the 
railway  of  the  Erie  Company.  This  latter  stipulation,  the  viola- 
tion of  which  forms  the  ground  of  action,  is  distinct  and  entirely 
separable  from  the  former  one,  in  which  it  is  alleged  the  illegality 
before  mentioned  exists. 

Admitting,  then,  for  the  purpose  of  the  argument,  the  ille- 
gality insisted  on,  the  legal  problem  plainly  is  this:  whether, 
when  a  defendant  has  agreed  to  do  two  things,  which  are 
entirely  distinct,  and  one  of  them  is  prohibited  by  law,  and 
the  other  is  legal  and  unobjectionable,  such  illegality  of  the 
one  stipulation  can  be  set  up  as  a  bar  to  a  suit  for  a  breach  of  the 
latter  and  valid  one.  This  point  was  but  slightly  noticed  on 
the  argument;  nevertheless,  an  examination  of  the  authorities 
will  show  that  the  rule  of  law  upon  the  subject  has,  from  the 
earliest  times,  been  at  rest.  It  was  unanimously  agreed,  in  a 
case  reported  in  the  Year  Books,  14  Hent-y  VIII.  25,  26,  that  if 
some  of  the  covenants  of  an  indenture,  or  of  the  conditions 
indorsed  upon  a  bond,  are  against  law,  and  some  good  and  lawful, 
that  in  such  case,  the  covenants  or  conditions  which  are  against 
law  are  void  ah  initio,  and  the  others  stand  good.  And  from  that 
day  to  this,  I  do  not  know  that  this  doctrine,  to  the  extent  of  its 
applicability  to  this  case,  has  anywhere  been  disallowed.  It  was 
the  ground  of  the  judgment  in  Cliesman  v.  Nainby  (2  Lord  Ray- 
mond, 1456),  that  being  a  suit  on  an  apprentice's  bond.  The 
stipulation  alleged  to  have  been  broken  was,  that  the  apprentice 
would  not  carry  on  the  business  in  which  she  was  to  be  instructed. 


Chap.  V.  §  2.]  LEGALITY   OF  OBJECT.  375 

within  **  the  space  of  half  a  mile  "  of  the  then  dwelling-house  of 
the  plaintiff.  There  was  also  a  further  stipulation  that  she 
should  not  carry  on  this  business  within  half  a  mile  of  any  house 
into  which  the  plaintiff  might  remove.  The  suit  was  for  a 
breach  of  the  former  stipulation,  and  it  was  admitted  that  the 
latter  one  was  void,  as  imposing  an  unreasonable  restraint  on 
trade,  and  it  was  urged  that,  by  force  of  this  illegal  feature,  the 
whole  contract  was  void.  But  the  court  were  unanimously  of 
opinion  that  as  the  breach  was  assigned  upon  that  part  of  the 
condition  which  was  good  in  law,  therefore  if  the  other  part,  to 
which  exception  was  taken,  was  against  law,  yet  that  would  not 
hinder  the  recovery  upon,  part  ,of  the  condition  which  was  legal. 
The  judgment  was  afterwards  affirmed  by  the  twelve  judges,  on 
an  appeal  to  Parliament.     3  Bro.  Pari.  c.  349. 

This  rule  of  law  was  treated  as  settled,  and  was  similarly 
applied  in  the  modern  cases  of  Mallan  v.  May,  11  M.  &  W.  653, 
and  Price  v.  Green,  16  M.  &  W.  346.  This  same  legal  principle 
will  be  found  to  be  discussed  and  illustrated  by  different  applica- 
tions in  the  following  decisions :  Gaskelly.  King,  11  East,  165; 
15  lb.  440;  Nicholls  v.  Stretton,  10  Adol.  &  El.  N.  S.  346;  Chester 
V.  Freeland,  Ley  R.  79;  Sheerman  v.  Thompson,  11  Adol.  & 
El.  1027. 

These  and  other  authorities  which  might  be  referred  to,  settle 
the  rule,  that  the  fact  that  one  promise  is  illegal  will  not  render 
another  disconnected  promise  void.  The  doctrine  will  not 
embrace  cases  where  the  objectionable  stipulation  is  for  the 
performance  of  an  immoral  or  criminal  act,  for  such  an  ingredient 
will  taint  the  entire  contract,  and  render  it  unenforceable  in  all 
its  parts,  by  reason  of  the  maxim  ex  turpi  causa  nan  oritur  actio. 
Nor  will  it,  in  general,  apply  where  any  part  of  the  consideration 
is  illegal,  so  that  in  the  present  case,  if,  upon  the  trial,  it  should 
appear  that  the  plaintiffs  have  agreed  to  pay  to  the  defendants 
more  than  the  charter  of  the  latter  allows,  it  may  become  a  ques- 
tion whether  this  suit  will  lie.  There  are  many  decisions  to  the 
effect  that  where  there  are  a  number  of  considerations,  and  any 
one  of  them  is  illegal,  the  whole  agreement  is  avoided,  this  doc- 
trine being  put  upon  the  ground  of  the  impossibility  of  saying 
how  much  or  how  little  weight  the  void  portion  may  have  had  as 


376  FORMATION  OF  CONTRACT.  [Part  LL 

an  inducement  to  the  contract.  But,  at  the  present  stage  of  the 
cause,  the  entire  consideration  of  the  promise  sued  on  must  be 
regarded  by  the  court  as  unobjectionable,  as  there  is  nothing  on 
the  record  to  show  any  overcharge. 

On  the  ground,  then,  that  both  the  consideration  and  the 
promise,  which  is  the  foundation  of  the  action,  appear  to  be  valid, 
the  plaintiffs  must  have  judgment  on  this  demurrer. 

It  is  proper  to  remark  that  as  the  demurrer  is  a  general  one  to 

the  whole  declaration,  I  have  considered  only  the  cause  of  action 

set  out  in  the  first  count. 

Judgment  for  plaintiffs.* 


SANTA  CLAEA  VALLEY   MILL   AND   LUMBER   CO.   v. 
HAYES  et  al. 

76  CALIFORNIA,  387.  — 1888. 

Action  for  damages  for  breach  of  contract.  Judgment  for 
defendants.     Plaintiff  appeals. 

Defendants  agreed  to  make  and  deliver  to  plaintiff  during  the 
year  1881  two  million  feet  of  lumber  at  eleven  dollars  per  thou- 
sand, and  not  to  manufacture  any  lumber  to  be  sold,  during  that 
period  in  the  counties  of  Monterey,  San  Benito,  Santa  Cruz,  or 
Santa  Clara,  except  under  the  contract,  and  to  pay  plaintiff 
twenty  dollars  per  thousand  feet  for  any  lumber  so  sold  to  others 
than  plaintiff.  This  contract  was  a  part  of  a  scheme  by  which 
plaintiff  got  possession  by  ownership  or  lease  of  all  the  saw -mills 
in  the  vicinity  of  Felton,  and  shut  down  several  of  them  to  limit 
the  supply  of  lumber,  and  to  give  plaintiff  the  control  of  that 
business. 

Searles,  C.  J.  .  .  .  The  contract  was  void  as  being  against 
public  policy,  and  the  defendants,  as  they  had  a  right  to  do, 
repudiated  the  contract.     Plaintiff,  who  has  parted  with  nothing 

1  Accord :  United  States  v.  Bradley,  10  Pet.  343,  360-364  ;  Gelpcke  v.  Dip- 
buque,  1  Wall.  (U.  S.)  221 ;  Oregon  Steam  Nav.  Co.  v.  Winsor,  20  Wall.  (U.  S.) 
64  ;  Dean  v.  Emerson,  102  Mass.  480  ;  Peltz  v.  Eichele,  62  Mo.  171 ;  Smith's 
Appeal,  113  Pa.  St.  579.     Contra :  Lindsay  v.  Smith,  78  N.  C.  328. 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  37T 

of  value,  now  seeks  to  recover  damages  for  non-delivery  of  lumber 
under  this  contract.  Plaintiff  had  an  undoubted  right  to  purchase 
any  or  all  the  lumber  it  chose,  and  to  sell  at  such  prices  and 
places  as  it  saw  fit,  but  when  as  a  condition  of  purchase  it  bound 
its  vendor  not  to  sell  to  others  under  a  penalty,  it  transcended  a 
rule  the  adoption  of  which  has  been  dictated  by  the  experience 
and  wisdom  of  ages  as  essential  to  the  best  interests  of  the  com- 
munity, and  as  necessary  to  the  protection  alike  of  individuals 
and  legitimate  trade. 

With  results  naturally  flowing  from  the  laws  of  demand  and 
supply,  the  courts  have  nothing  to  do,  but  when  agreements  are 
resorted  to  for  the  purpose  of  taking  trade  out  of  the  realm  of 
competition,  and  thereby  enhancing  or  depressing  prices  of  com- 
modities, the  courts  cannot  be  successfully  invoked,  and  their 
execution  will  be  left  to  the  volition  of  the  parties  thereto.^ 

It  is  claimed  by  appellant  that  the  contract  is  divisible,  and 
the  first  part  can  stand  though  the  latter  be  illegal. 

If  the  whole  vice  of  the  contract  was  embodied  in  the  promise 
of  the  defendants  not  to  sell  lumber  to  other  persons,  the  illegality 
would  lie  in  the  promise  alone,  and  it  might  be  contended  with 
great  force  that  this  promise  was  divisible  from  the  agreement  to 
sell.  Under  the  findings  of  the  court,  however,  the  illegality 
inheres  in  the  consideration. 

The  very  essence  and  mainspring  of  the  agreement  —  the  illegal 
object  —  "  was  to  form  a  combination  among  all  the  manufacturers 
of  lumber  at  or  near  Felton  for  the  sole  purpose  of  increasing  the 
price  of  lumber,  limiting  the  amount  thereof  to  be  manufactured, 
and  give  plaintiff  control  of  all  lumber  manufactured,"  etc. 

This  being  the  inducement  to  the  agreement,  and  the  sole  object 
in  view,  it  cannot  be  separated  and  leave  any  subject  matter 
capable  of  enforcement,  as  was  done  in  Granger  v.  Empire  Co., 
59  Cal.  678;  Treadwell  v.  Davis,  34  Cal.  601;  and  Jackson  v. 
Shawl,  29  Cal.  267. 

The  case  falls  within  the  rule  of  Valentiyie  v.  Stewart,  15  Cal. 
404;  Prost  V.  il/ore,"  40  Cal.  348;  More  v.  Bonnet,  40  Cal.  251? 
Forbes  v.  McDonald,  54  Cal.  98;  Arnot  v.  Pittston  and  Elmira 
Coal  Co.,  68  N.  Y.  559.     ' 

1  See  also  Oliver  v.  Oilmore,  52  Fed.  Rep.  562. 


378  FORMATION   OF  CONTRACT.  [Past  U. 

The  good  cannot  be  separated  from  the  bad,  or  rather  the  bad 

enters  into  and  permeates  the  whole  contract,  so  that  none  of  it 

can  be  said  to  be  good,  and  therefore  the  subject  of  an  action.  .  .  . 

The  judgment  of  the  court  below  is  affirmed.^ 


/ 


(it.)  When  the  contract  is  indivisible. 
BIXBY  V.   MOOR. 

51  NEW  HAMPSHIRE,  402.  — 1871. 

Assumpsit,  by  Joseph  C.  Bixby  against  Moor  &  Gage,  to 
recover  pay  for  services  rendered  by  the  plaintiff  for  the  defend- 
ants from  October  1, 1861,  to  December  20, 1863.  The  defendants 
kept  a  billiard  saloon  and  bar.  The  sale  of  liquor  was  illegal. 
The  plaintiff  was  employed  by  the  defendants  to  work  generally 
in  and  about  the  saloon,  but  there  was  no  special  agreement  that 
he  should  or  should  not  sell  liquors.  He  opened  the  saloon,  built 
fires,  took  care  of  billiard  tables,  waited  on  customers  at  the  bar, 
and  in  the  absence  of  defendants  had  the  whole  charge  of  the 
business. 

Smith,  J.  The  plaintiff  would  have  been  entitled  to  the 
reasonable  worth  of  his  entire  services,  if  no  part  of  them  had 
been  rendered  in  an  illegal  business.  It  must  be  conceded  that 
he  cannot  recover  for  his  services  in  the  sale  of  liquor;  but  he 
claims  that  a  portion  of  his  services  was  rendered  in  a  legal 
employment,  and  that  he  can  recover  the  value  of  that  portion. 
The  defendants  contend  that  no  part  of  the  services  was  rendered 
in  a  legal  business,  arguing  that  the  keeping  of  the  billiard  tables 
was  so  far  connected  with  and  in  furtherance  of  the  liquor  traffic, 
that  it  must  be  regarded  as  part  and  parcel  of  the  same,  falling 
under  the  same  legal  condemnation.  Whether  the  latter  position 
is  well  founded  would  seem  to  be  a  question  of  fact;  but  it  need 
not  be  considered  here,  for  we  are  of  opinion  that,  even  if  part  of 
the  business  was  lawful,   still  the  plaintiff  cannot  recover. 

If  the  consideration  for  the  defendants'  promise  to  pay  the 
plaintiff  a  reasonable  compensation  was  the  plaintiff's  promise  to 
^  Accord :  Lindsay  v.  Smith,  78  N.  C.  328. 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  379 

perform  both  classes  of  services,  the  illegal  as  well  as  the  legal, 
it  is  clear  that  the  defendants'  promise  could  not  be  enforced.* 
A  contract  is  invalid  if  any  part  of  the  consideration  on  either 
side  is  unlawful.  See  Meicalf  on  Contracts,  216-219.  What  the 
mutual  promises  were  is  a  question  of  fact.  The  parties  do  not 
appear  to  have  fully  expressed  in  language  the  precise  nature  of 
the  various  services  to  be  performed  by  the  plaintiff,  nor  to  have 
made  any  verbal  bargain  as  to  the  mode  of  payment.  In  such 
cases  it  is  sometimes  said  that  "  the  law  implies  an  agreement " 
as  to  the  matters  omitted  to  be  explicitly  stated  in  the  verbal 
bargain.  Strictly  speaking,  this  is  inaccurate.  The  agreement, 
though  not  fully  expressed  in  words,  is,  nevertheless,  a  genuine 
agreement  of  the  parties ;  it  is  "  implied  "  only  in  this,  that  it  is 
to  be  inferred  from  the  acts  or  conduct  of  the  parties  instead  of 
from  their  spoken  words;  "the  engagement  is  signified  by  con- 
duct instead  of  words."  But  acts  intended  to  lead  to  a  certain 
inference  may  ''express  a  promise  as  well  as  words  would  have 
done."  The  term  "tacit  contract,"  suggested  by  Mr.  Austin, 
describes  a  genuine  agreement  of  this  nature  better  than  the 
phrase  "an  implied  contract";  for  the  latter  expression  is  some- 
times used  to  designate  legal  obligations,  which,  in  fact,  are  not 
contracts  at  all,  but  are  considered  so  only  by  a  legal  fiction  for 
the  sake  of  the  remedy.  See  Austin  on  Jwisprudence  (3d  ed.), 
1018,  946 ;  Am.  Laio  Review,  Vol.  5,  pp.  11,  12 ;  Metcalf  on  Con- 
tracts, 5,  6,  9, 10,  163,  164;  Edinburgh  Review,  American  reprint. 
Vol.  118,  p.  239. 

The  questions  arising  in  this  case  —  What  services  did  the 
plaintiff  agree  to  perform?  was  it  an  entire  contract?  were  there 
separate  contracts,  upon  separate  considerations,  as  to  the  legal 
and  the  illegal  services?  —  are  all  questions  of  fact  depending 
upon  the  mutual  understanding  of  the  parties ;  and  if  the  nature 
of  tlie  agreed  facts  is  such  as  to  allow  of  a  finding  either  way,  it 
would  be  proper  to  submit  the  questions  to  a  jury.  In  the  pres- 
ent case,  however,  there  is  room  for  but  one  conclusion,  namely, 
that  the  agreement  was  that  the  plaintiff,  at  the  defendants' 
request,  should  perform  all  the  services  which  he  did  in  fact 
perform,  and  that  the  defendants,  in  consideration  of  the  promise 
to  perform  (and  the  performance  of)  all  those  services,  the  illegal 


380  FORMATION  OF  CONTRACT.  [Part  II. 

as  well  as  the  legal,  should  pay  the  plaintiff  the  reasonable  worth 
6i  the  entire  services.  In  other  words,  the  plaintiff  made  an 
entire  promise  to  perform  both  classes  of  services;  this  entire 
promise  (and  the  performance  thereof)  formed  an  entire  consid- 
eration for  the  defendants'  promise  to  pay;  and  a  part  of  this 
indivisible  consideration  was  illegal.  Walker  v.  Lovell  (28  N.  H. 
138)  and  Carleton  v.  Woods  (28  N".  H..290),  cited  by  the  plaintiff, 
are  not  in  point.  In  those  cases  the  different  articles  sold  were 
valued  separately  in  the  sale.  If  the  plaintiff  had  performed  a 
class  of  services  for  each  of  which  it  is  customary  to  pay  a  sepa- 
rate price  (see,  for  instance,  Robinson  v.  Green.,  3  Metcalf,  159), 
the  nature  of  the  various  services  so  performed  might  afford 
ground  for  the  conclusion  that  the  parties  contemplated  a  separate 
payment  for  each  service  rendered.  But  it  is  not  contended  that 
it  is  customary  to  pay  saloon-tenders  separate  prices  for  sweep- 
ing, for  building  fires,  for  acting  as  billiard  markers,  and  for 
selling  liquor. 

In  accordance  with  the  provisions  of  the  agreed  case,  unless  the 
plaintiff  elects  trial  by  jury,  there  must  be 

Judgment  for  the  defendants.^ 


BISHOP  V.   PALMER  et  al 

146  MASSACHUSETTS,  469.  — 1888. 

Contract.  Demurrer  sustained.  Plaintiff  appeals.  Defend- 
ants purchased  plaintiff's  business  for  $5000,  the  plaintiff  agree- 
ing to  transfer  to  defendants  his  busiaess  at  A  and  his  business 
at  B,  and  covenanting  not  to  engage  in  the  first  business  again 
anywhere  for  five  years,  or  in  the  second,  at  B  for  five  years, 
or  to  purchase  any  material  from  the  rival  concerns  at  B. 

C.  Allen,  J.  The  defendants'  promise  which  is  declared  on 
was  made  in  consideration  of  the  sale  and  delivery  of  the  busi- 
ness, plant,  property,  and  contracts  of  the  plaintiff,  and  of  his 
faithful  performance  of  the  covenants  and  agreements  contained 

1  See  also  Handy  v.  St.  Paul  Globe  Co.,  41  Minn.  188,  ante,  p.  318  ;  Foley 
V,  Speir,  100  N.Y.  552.     Cf.  Shaw  v.  Carpenter,  54  Vt.  155. 


Chap.  V.  §2.]  LEGALITY  OF  OBJECT.  381 

in  the  written  instrument  signed  by  the  parties.  The  parties 
made  no  apportionment  or  separate  valuation  of  the  different 
elements  of  the  consideration.  The  business,  plant,  property, 
contracts,  and  covenants  were  all  combined  as  forming  one  entire 
consideration.  There  is  no  way  of  ascertaining  what  valuation 
was  put  by  the  parties  upon  either  portion  of  it.  There  is  no 
suggestion  that  there  was  any  such  separate  valuation,  and  any 
estimate  which  might  now  be  put  upon  any  item  would  not  be 
the  estimate  of  the  parties. 

It  is  contended  by  the  defendants  that  each  one  of  the  three 
particular  covenants  and  agreements  into  which  the  plaintiff 
entered  is  illegal  and  void,  as  being  in  restraint  of  trade.  It  is 
sufficient  for  us  to  say  that  the  first  of  them  is  clearly  so;  it 
being  a  general  agreement,  without  any  limitation  of  space,  that 
for  and  during  the  period  of  five  years  he  will  not,  either  directly 
or  indirectly,  continue  in,  carry  on,  or  engage  in  the  business  of 
manufacturing  or  dealing  in  bed-quilts  or  comfortables,  or  of 
any  business  of  which  that  may  form  any  part.  This  much  is 
virtually  conceded  by  the  plaintiff,  and  so  are  the  authorities. 
Taylor  v.  Blanchard,  13  Allen,  370;  Dean  v.  Emerson,  102  Mass. 
480;  Morse  Twist  Drill  Co.  v.  Morse,  103.  Mass.  73;  Alger  v. 
Thacher,  19  Pick.  51;  Oregon  Steam  Navigation  Co.  v.  Winsor, 
20  Wall.  64;  Davies  v.  Davies,  36  Ch.  D.  359;  2  Kent  Com.  466, 
note  e;  Met.  Con.  232. 

Two  principal  grounds  on  which  such  contracts  are  held  to  be 
void  are,  that  they  tend  to  deprive  the  public  of  the  services  of 
men  in  the  employments  and  capacities  in  which  they  may  be 
most  useful,  and  that  they  expose  the  public  to  the  evils  of 
monopoly.     Alger  v.  Thacher,  ubi  supra. 

The  question  then  arises,  whether  an  action  can  be  supported  * 
upon  the  promise  of  the  defendants,  founded  upon  such  a  consid- 
eration as  that  which  has  been  described.  As  a  general  rule, 
where  a  promise  is  made  for  one  entire  consideration,  a  part  of 
which  is  fraudulent,  immoral,  or  unlawful,  and  there  has  been 
no  apportionment  made  or  means  of  apportionment  furnished  by 
the  parties  themselves,  it  is  well  settled  that  no  action  will  lie 
upon  the  promise.  If  the  bad  part  of  the  consideration  is  not 
Severable  from  the  good,  the  whole  promise  fails.     Robinson  v. 


382  FORMATION  OF  CONTRACT.  [Part  II. 

Oreen,  3  Met.  159,  161;  Rand  v.  Mather,  11  Cush.  1;  Woodruff 
V.  Wentworth,  133  Mass.  309,  314;  Bliss  v.  Negus,  8  Mass.  46,  51; 
Clark  V.  Kicker,  14  N.  H.  44;  Woodruff  v.  Hinman,  11  Vt.  592; 
Pickering  v.  Ilfracomhe  Railioay,  L.  R.  3  C.  P.  235,  250;  Har- 
rington V.  Victoria  Graving  Dock  Co.,  3  Q.  B.  D.  549;  2  CAif. 
Con.  (11th  Am.  ed.),972;  Leake,  Con.  779,  780;  Pollock,  Con.  321; 
Met.  Con.  247. 

It  is  urged  that  this  rule  does  not  apply  to  a  stipulation  of 
this  character,  which  violates  no  penal  statute,  which  contains 
nothing  malum  in  se,  and  which  is  simply  a  promise  not  en- 
forceable at  law.  But  a  contract  in  restraint  of  trade  is  held  to 
be  void  because  it  tends  to  the  prejudice  of  the  public.  It  is 
therefore  deemed  by  the  law  to  be  not  merely  an  insufficient  or 
invalid  consideration,  but  a  vicious  one.  Being  so,  it  rests  on 
the  same  ground  as  if  such  contracts  were  forbidden  by  positive 
statute.  They  are  forbidden  by  the  common  law,  and  are  held 
to  be  illegal.  2  Kent  Com.  466;  Met.  Con.  221;  2  Chit.  Con. 
974;  White  v.  Buss,  3  Cush.  448,  450;  Hyndsy.  Hays,  25  Ind. 
31,  36. 

It  is  contended  that  the  defendants,  by  being  unable  to  enforce 
the  stipulation  in  question,  only  lose  what  they  knew  or  were 
bound  to  know  was  legally  null;  that  they  have  all  that  they 
supposed  they  were  getting,  namely,  a  promise  which  might  be 
kept,  though  incapable  of  legal  enforcement;  and  that  if  they 
were  content  to  accept  such  promise,  and  if  there  is  another  good 
and  sufficient  consideration,  they  may  be  held  upon  their  prom- 
ise. But  this  argument  cannot  properly  extend  to  a  case  where 
a  part  of  an  entire  and  inseparable  consideration  is  positively 
vicious,  however  it  might  be  where  it  was  simply  invalid,  as  in 
Parish  v.  Stone,  14  Pick.  198.  The  law  visits  a  contract  founded 
on  such  a  consideration  with  a  positive  condemnation,  which  it 
makes  effectual  by  refusing  to  support  it,  in  whole  or  in  part, 
where  the  consideration  cannot  be  severed. 

The  fact  that  the  plaintiff  had  not  failed  to  perform  his  part 
of  the  contract  does  not  enable  him  to  maintain  his  action.  An 
illegal  consideration  may  be  actual  and  substantial  and  valuable ; 
but  it  is  not  in  law  sufficient. 

The  plaintiff  further  suggests  that,  if  the  defendants  were  to 


Chap.  V.§2.]  LEGALITY  OF  OBJECT.  383 

sue  him  on  this  contract,  they  could  clearly,  so  far  as  the  ques- 
tion of  legality  is  concerned,  maintain  an  action  upon  all  its 
parts,  except  possibly  the  single  covenant  in  question.  Mallan 
V.  May,  11  M.  &  W.  653;  Green  v.  Price,  13  M.  &.  W.  695;  S.  C 
16  M.  &  W.  346.  This  may  be  so.  If  they  pay  to  the  plaintiff 
the  whole  sum  called  for  by  the  terms  of  the  contract,  it  may  well 
be  that  they  can  call  on  him  to  perform  all  of  his  agreements 
except  such  as  are  unlawful.  In  such  case,  they  would  merely 
waive  or  forego  a  part  of  what  they  were  to  receive,  and  recover 
or  enforce  the  rest.  It  does  not,  however,  follow  from  this  that 
they  can  be  compelled  to  pay  the  sum  promised  by  them,  when 
a  part  of  the  consideration  of  such  promise  was  illegal.  They 
are  at  liberty  to  repudiate  the  contract  on  this  ground;  and, 
having  done  so,  the  present  action  founded  on  the  contract  can- 
not be  maintained ;  and  it  is  not  now  to  be  determined  what  other 
liability  the  defendants  may  be  under  to  the  plaintiff,  by  reason 
of  what  they  may  have  received  under  the  contract. 

Judgment  affirmed. 


(in.)    Comparative  effect  of  avoidance  and  illegality. 

HARVEY  V.    MERRILL. 
VO  MASSACHUSETTS,  1.  — 1889. 

Contract  to  recuv^i  lor  losses  incurred  by  the  plaintiffs,  in  the 
purchase  and  sale  of  pork  on  the  Chicago  Board  of  Trade  for  the 
defendants,  and  for  their  commissions  as  brokers.  The  case  was 
referred  to  an  auditor.  The  auditor  found  for  the  defendants, 
on  the  ground  that,  under  the  guise  of  contracts,  the  real  intent 
was  to  speculate  on  the  rise  and  fall  of  prices,  and  not  to  receive 
or  deliver  the  actual  commodities,  and  therefore  that  the  con- 
tracts were  wagers.  At  the  trial,  the  auditor's  report  was  the 
only  evidence  introduced,  and  the  court  directed  a  verdict  for 
the  plaintiffs.     Defendants  alleged  exceptions. 

Field,  J.  The  rights  of  the  parties  are  to  be  determined  by 
the  law  of  Illinois,  but  there  is  no  evidence  that  the  common 
law  of  Illinois  differs  from  that  of  Massachusetts.     We  cannot 


S84  FORMATION  OF  CONTRACT.  [Part  U. 

take  notice  of  the  statutes  of  Illinois,  except  so  far  as  they  are 
set  out  in  the  auditor's  report;  and  the  auditor  has  set  out  but 
one  statutory  provision  of  that  State,  and  has  found  that  the 
parties  have  not  acted  in  violation  of  that.  We  are  therefore  to 
determine  whether  the  contract  between  the  parties,  as  the  audi- 
tor has  found  it  to  be,  is  illegal  and  void  by  the  common  law  of 
Massachusetts. 

It  is  not  denied  that,  if,  in  a  formal  contract  for  the  purchase 
and  sale  of  merchandise  to  be  delivered  in  the  future  at  a  fixed 
price,  it  is  actually  the  agreement  of  the  parties  that  the  mer- 
chandise shall  not  be  delivered  and  the  price  paid,  but  that,  when 
the  stipulated  time  for  performance  arrives,  a  settlement  shall 
be  made  by  a  payment  in  money  of  the  difference  between  the 
contract  price  and  the  market  price  of  the  merchandise  at  that 
time,  this  agreement  makes  the  contract  a  wagering  contract.  If, 
however,  it  is  agreed  by  the  parties  that  the  contract  shall  be 
performed  according  to  its  terms,  if  either  party  requires  it,  and 
that  either  party  shall  have  a  right  to  require  it,  the  contract 
does  not  become  a  wagering  contract,  because  one  or  both  of  the 
parties  intend,  when  the  time  for  performance  arrives,  not  to 
require  performance,  but  to  substitute  therefor  a  settlement  by 
the  payment  of  the  difference  between  the  contract  price  and  the 
market  price  at  that  time.  Such  an  intention  is  immaterial,  ex- 
cept so  far  as  it  is  made  a  part  of  the  contract,  although  it  need 
not  be  made  expressly  a  part  of  the  contract.  To  constitute  a 
wagering  contract,  it  is  suflBcient,  whatever  may  be  the  form  of 
the  contract,  that  both  parties  understand  and  intend  that  one 
party  shall  not  be  bound  to  deliver  the  merchandise  and  the  other 
to  receive  it  and  to  pay  the  price,  but  that  a  settlement  shall  be 
made  by  the  payment  of  the  difference  in  prices. 

The  construction  which  we  think  should  be  given  to  the  audi- 
tor's report  is,  that  he  finds  that  the  contracts  which  the  plain- 
tiffs made  on  the  board  of  trade  with  other  members  of  that 
board,  were  not  shown  to  be  wagering  contracts,  and  that  the 
contract  which  the  defendants  made  with  the  plaintiffs  was,  that 
the  defendants  should  give  orders,  from  time  to  time,  to  the 
plaintiffs  for  the  purchase  and  the  sale  on  account  of  the  defend- 
ants of  equal  amounts  of  pork  to  be  delivered  in  the  future;  that 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  386 

the  plaintiffs  should,  in  their  own  names,  make  these  purchases 
and  these  sales  on  the  board  of  trade ;  that  the  plaintiffs  should, 
at  or  before  the  time  of  delivery,  procure  these  contracts  to  be 
set  off  against  each  other,  according  to  the  usages  of  that  board; 
that  the  defendants  should  not  be  required  to  receive  any  pork 
and  pay  for  it,  or  to  deliver  any  pork  and  receive  the  pay  for  it, 
but  should  only  be  required  to  pay  to  the  plaintiffs,  and  should 
only  be  entitled  to  receive  from  them,  the  differences  between  the 
amounts  of  money  which  the  pork  was  bought  for  and  was  sold 
for;  and  that  the  defendants  should  furnish  a  certain  margin, 
and  should  pay  the  plaintiffs  their  commissions. 

The  defendants  gave  orders  in  pursuance  of  this  contract,  the 
plaintiffs  made  the  purchases  and  sales  on  the  board  of  trade, 
set  them  off  against  each  other,  and  now  sue  the  defendants  for 
the  differences  which  they  have  paid,  and  for  their  commissions. 

The  auditor  has  found  that  "  in  a  vast  majority  of  the  transac- 
tions of  the  board  of  trade,  settlement  was  made  by  the  set-off 
of  opposite  contracts."  In  his  supplemental  report  he  says: 
"  My  conclusion  is  unchanged,  that  the  parties  to  this  suit  entered 
into  the  dealings  with  each  other  which  are  the  subject  thereof 
with  a  clear  understanding  that  actual  deliveries  were  not  con- 
templated and  were  not  to  be  enforced ;  and  it  appears  to  me  that 
the  question  whether  the  members  of  this  board  with  whom  the 
defendants  dealt  had  such  an  understanding  with  each  other,  is 
not  material  to  the  issue  of  this  case." 

The  peculiarity  of  this  case,  according  to  the  findings  of  the 
auditor  is,  that  while  the  contracts  which  the  plaintiffs  made  on 
the  board  of  trade  must  be  taken  to  be  legal,  the  plaintiffs  have 
undertaken  to  agree  with  the  defendants  that  these  contracts 
should  not  be  enforced  by  or  against  them,  except  by  settlements 
according  to  differences  in  prices.  If  such  an  agreement  seems 
improbable,  it  is  enough  to  say  that  the  auditor  has  found  that 
it  was  made.  The  usages  of  the  board  of  trade  were  such  that 
the  plaintiffs  might  well  think  that  they  risked  little  or  nothing 
in  making  such  an  agreement.  Indeed,  the  distinction  in  prac- 
tice between  the  majority  of  contracts  which  by  the  auditor's 
report  appear  to  be  made  and  settled  on  the  board  of  trade,  and 
wagering  contracts,  is  not  very  plain,  and  brokers,  for  the  pur- 


S86  FORMATION  OF  CONTRACT.  [Pakt  IL 

pose  of  encouraging  speculation  and  of  earning  commissions^ 
might  be  willing  to  guarantee  to  their  customers  that  the  con- 
tracts made  by  them  on  the  board  of  trade  should  not  be  enforced, 
except  by  a  settlement,  according  to  differences  in  prices. 

We  do  not  see  why  the  agreement  between  the  plaintiffs  and 
the  defendants,  that  the  defendants  should  not  be  required  to 
receive  or  deliver  merchandise,  or  to  pay  for  or  receive  pay  for 
merchandise,  but  should  be  required  to  pay  to  and  to  receive 
from  the  plaintiffs  only  the  differences  in  prices  is  not,  as  be- 
tween the  parties,  open  to  all  the  objections  which  lie  against 
wagering  contracts.  On  the  construction  we  have  given  to  the 
auditor's  report,  the  plaintiffs,  in  their  dealings  with  the  defend- 
ants, in  some  respects  acted  as  principals.  In  making  the  con- 
tracts on  the  board  of  trade  with  other  brokers,  they  may  have 
been  agents  of  the  defendants.  In  agreeing  with  the  defendants 
that  they  should  not  be  compelled  to  perform  or  accept  perform- 
ance of  the  contracts  so  made,  the  plaintiffs  acted  for  them- 
selves as  principals.  If  the  defendants  had  made  a  contract 
with  the  plaintiffs  to  pay  and  receive  the  differences  in  the 
prices  of  pork  ordered  to  be  bought  and  sold  for  future  delivery, 
with  the  understanding  that  no  pork  was  to  be  bought  or  sold, 
this  would  be  a  wagering  contract.  On  such  a  contract,  the 
defendants  would  win  what  the  plaintiffs  lose,  and  the  plaintiffs 
would  win  what  the  defendants  lose.  But  so  far  as  the  defend- 
ants are  concerned,  the  contracts  which  the  auditor  has  found 
they  made  with  the  plaintiffs,  are  contracts  on  which  they  win 
or  lose  according  to  the  rise  or  fall  in  prices,  in  the  same  manner 
as  on  wagering  contracts.  If  the  plaintiffs,  by  virtue  of  the 
contracts  they  made  with  other  members  of  the  board  of  trade, 
were  bound  to  receive  or  deliver  merchandise  and  to  pay  or  receive 
the  price  therefor,  on  the  auditor's  finding  they  must  be  held  as 
against  the  defendants  to  have  agreed  to  do  these  things  on  their 
own  account,  and  that  the  defendants  should  only  be  bound  to 
pay  to  them,  and  to  receive  from  them,  the  differences  in 
prices.  If  the  defendants,  as  undisclosed  principals,  should  be 
held  bound  to  other  members  of  the  board  of  trade  on  the  con- 
tracts made  by  the  plaintiffs,  the  plaintiffs,  by  the  terms  of  their 
employment,  would  be  bound  to  indemnify  the  defendants,  ex- 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  887 

cept  so  far  as  the  contracts  were  settled,  by  a  payment  of  differ- 
ences in  prices.  The  agreement  of  the  parties,  as  the  auditor 
has  found  it,  excludes  any  implied  liability  on  the  part  of  the 
defendants  to  indemnify  the  plaintiffs,  except  for  money  paid  in 
the  settlement  of  differences  in  prices.  The  position  of  the 
plaintiffs  towards  the  defendants  is  no  better  than  it  would  have 
been  if  the  plaintiffs  had  been  employed  to  make  wagering  con- 
tracts for  pork  on  account  of  the  defendants,  and  had  made  such 
contracts,  because  the  plaintiffs,  relying  upon  the  usages  of  the 
board  of  trade,  have  undertaken  to  agree  with  the  defendants 
that  whatever  contracts  they  make  shall  bind  the  defendants  only 
as  wagering  contracts,  and  shall  be  settled  as  such. 

The  plaintiffs  contend  that,  even  if  the  contracts  which  the 
defendants  authorized  them  to  make,  and  which  they  made  on 
the  board  of  trade,  had  been  wagering  contracts,  yet  they  could 
recover  whatever  money  they  had  paid  in  settlement  of  these 
contracts  in  the  manner  authorized  by  the  defendants. 

In  Thacker  v.  Hardy  (4  Q.  B.  D.  685)  the  court  found  that 
the  plaintiff  was  employed  to  make  lawful  contracts,  and  ruled 
that  the  understanding  between  the  plaintiff  and  his  customer,, 
that  the  contract  should  be  so  managed  that  only  differences  in 
prices  should  be  paid,  did  not  violate  the  provisions  of  8  &  9 
Vict.  c.  109,  §  18.  Lindley,  J.,  in  giving  the  opinion  at  the 
trial,  said,  p.  687:  / 


"  What  the  plaintiff  was  employed  to  do  was  to  buy  and  sell  on  the 
Stock  Exchange,  and  this  he  did ;  and  everything  he  did  was  perfectly 
legal,  unless  it  was  rendered  illegal  as  between  the  defendant  and  him- 
self by  reason  of  the  illegality  of  the  object  they  had  in  view,  or  of  the 
transactions  in  which  they  were  engaged.  Xow  if  gaming  and  wagering 
were  illegal,  I  should  be  of  opinion  that  the  illegality  of  the  transactions 
in  which  the  plaintiff  and  the  defendant  were  engaged  would  have 
tainted,  as  between  themselves,  whatever  the  plaintiff  had  done  in  fur- 
therance of  their  illegal  designs,  and  would  have  precluded  him  from 
claiming  in  a  court  of  law  any  indemnity  from  the  defendant  in  respect 
of  the  liabilities  he  had  incurred.  Cannan  v.  Bryce,  3  B.  &  Aid.  179 ; 
M'Kinnell  v.  Robinson,  3  M.  &  W.  434;  Lyne  v.  Siesfield,  1  H.  &  N.  278. 
But  it  has  been  held  that  although  gaming  and  wagering  contracts  can- 
not be  enforced,  they  are  not  illegal.  Fitch  v.  Jones  (5  E.  &  B.),  238  is 
plain  to  that  effect." 


388  FORMATION  OF  CONTRACT.  [Part  H. 

On  appeal,  Brett,  L.  J.,  said,  at  p.  694: 

"It  was  further  suggested  in  Cooper  v.  Neil  (W.  N.  1  June,  1878),  that 
the  agreement  was,  that  although  the  plaintiff  being  broker  to  the  defend- 
ant, but  contracting  in  his  own  person  as  principal,  should  enter  into 
real  bargains,  yet  the  defendant  should  be  called  upon  only  to  pay  the 
loss  if  the  market  should  be  unfavorable,  and  should  receive  only  the 
profit  if  it  proved  favorable;  and  that  no  further  liability  should  accrue 
to  the  principal,  whatever  might  become  of  the  broker  upon  the  Stock 
Exchange ;  so  that,  as  regarded  the  real  principal,  the  defendant  in  the 
action,  it  should  be  a  mere  gambling  transaction.  I  then  considered  that 
a  transaction  of  that  kind  might  fall  within  the  provisions  of  8  and  9 
Vict.  c.  109,  §  18,  but  I  thought  that  there  was  no  evidence  of  it.  And 
with  respect  to  the  present  action,  I  say  that  thpre  is  no  evidence  that 
the  bargain  between  the  parties  amounted  to  a  transaction  of  that  nature. 
I  retract  nothing  from  what  I  said  in  that  case." 

In  England,  wagering  contracts  concerning  stocks  or  mer- 
chandise are  not  illegal  at  common  law,  and  all  the  judges  in 
Thaclcer  v.  Hardy  were  of  opinion  that  the  facts  in  that  case  did 
not  show  that  the  transactions  between  the  parties  were  in  viola- 
tion of  the  statute. 

In  Irwin  v.  Williar  (110  U.  S.  499,  510)  the  Supreme  Court  of 
the  United  States  says  of  wagering  contracts : 

"In  England  it  is  held  that  the  contracts,  although  wagers,  were 
"not  void  at  common  law,  and  that  the  statute  has  not  made  them  illegal, 
but  only  non-enforceable  (Thacker  v.  Hardy,  ubi  supra) ;  while  generally, 
in  this  country,  all  wagering  contracts  are  held  to  be  illegal  and  void  as 
against  public  policy.  Dickson's  Executor  v.  Thomas,  97  Penn.  St.  278 ; 
Gregory  v.  Wendell,  40  Mich.  432 ;  Lyon  v.  Culbertson,  83  111.  33 ;  Melchert 
v.  American  Union  Telegraph  Co.,  3  McCrary,  521 ;  S.  C.ll  Fed.  Rep.  193 
and  note ;  Barnard  v.  Backhaus,  52  Wis.  593 ;  Kingsbury  v.  Kirwan,  77 
K  Y.  612 ;  Story  v.  Salomon,  71  N.  Y.  420;  Love  v.  Harvey,  114  Mass.  80." 

In  considering  how  far  brokers  would  be  affected  by  the 
illegality  of  contracts  made  by  them,  that  court  says : 

"It  is  certainly  true  that  a  broker  might  negotiate  such  a  contract 
without  being  privy  to  the  illegal  intent  of  the  principal  parties  to  it 
which  renders  it  void,  and  in  such  a  case,  being  innocent  of  any  violation 
of  law,  and  not  suing  to  enforce  an  unlawful  contract,  has  a  meritorious 
ground  for  the  recovery  of  compensation  for  services  and  advances.  But 
we  are  also  of  the  opinion  that  when  the  broker  is  privy  to  the  unlawful 
designs  of  the  parties,  and  brings  them  together  for  the  very  purpose  of 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  389 

entering  into  an  illegal  agreement,  he  is  particeps  criminis,  and  cannot 
recover  for  services  rendered  or  losses  incurred  by  himself  on  the  behalf 
of  either  in  forwarding  the  transaction." 

This  was  decided  in  Emhrey  v.  Jemisoii,  131  U.  S.  336.  See 
also  Kahn  v.  Walton  (Ohio,  1888),  20  N.  E.  Rep.  203;  Cothran  v. 
Ellis,  125  111.  496;  Fareira  v.  Oabell,  89  Penn.  St.  89;  Crawford 
V.  Spencer,  92  Mo.  498;  Loicry  v.  Dillman,  59  Wis.  197;  White- 
sides  V.  Hunt,  97  Ind.  191;  First  National  Bank  v.  Oskaloosa 
Packing  Co.,  66  Iowa,  41;  Rumsey  v.  Berry,  65  Maine,  570. 

It  is  not  denied  that  wagering  contracts  are  void  by  the  com- 
mon law  of  Massachusetts;  but  it  is  argued  that  they  are  not 
illegal,  and  that,  if  one  pays  money  in  settlement  of  them  at  the 
request  of  another,  he  can  recover  it  of  the  person  at  whose 
request  he  pays  it.  It  is  now  settled  here,  that  contracts  which 
are  void  at  common  law,  because  they  are  against  public  policy, 
like  contracts  which  are  prohibited  by  statute,  are  illegal  as  well 
as  void.  They  are  prohibited  by  law  because  they  are  considered 
vicious,  and  it  is  not  necessary  to  impose  a  penalty  in  order  to 
render  them  illegal.  Bishop  v.  Palmer,  146  Mass.  469;  Gibbs\. 
Consolidated  Gas  Co.,  130  U.  S.  396.  The  weight  of  authority  in 
this  country  is,  we  think,  that  brokers  who  knowingly  make  con- 
tracts that  are  void  and  illegal  as  against  public  policy,  and 
advance  money  on  account  of  them  at  the  request  of  their  princi- 
pals, cannot  recover  either  the  money  advanced  or  their  commis- 
sions, and  we  are  inclined  to  adopt  this  view  of  the  law.  Emhrey 
v.  Jemison,  131  U.  S.  336,  ubi  supra,  and  the  other  cases  there 
cited. 

We  are  of  opinion  that  the  instruction  of  the  presiding  justice, 
that  on  the  auditor's  report  the  plaintiffs  were  entitled  to  a  ver- 
dict, cannot  be  sustained.  Whether  on  the  auditor's  report  the 
defendants  were  entitled  to  a  ruling  directing  the  jury  to  render 
a  verdict  in  their  favor,  or  whether  the  case  should  have  been 
submitted  to  the  jury  for  the  reasons  stated  in  Peaslee  v.  Ross 
(143  Mass.  275),  is  a  question  which  has  not  been  carefully  argued, 

and  upon  which  we  express  no  opinion. 

Exceptions  sustained.^ 

1  See  the  cases  following.  Also  Shaffner  v.  Pinchback,  133  111.  410 ; 
Deaver  v.  Bennett,  29  Neb.  812. 


FORMATION  OF  CONTRACT.  [Pabt  II 

(iv.)    TTie  intention  of  the  parties. 

TYLER  V.   CARLISLE. 

79  MAINE,  210.-1887. 

Assumpsit.     Verdict  for  defendant. 

Peters,  C.  J.  The  plaintiff  claims  to  recover  a  sum  of  money 
loaned  by  him  while  the  defendant  was  engaged  in  playing  at 
cards.  The  ruling,  at  the  trial,  was  that,  if  the  plaintiff  let  the 
money  with  an  express  understanding,  intention,  and  purpose  that 
it  was  to  be  used  to  gamble  with,  and  it  was  so  used,  the  debt  so 
created  cannot  be  recovered;  but  otherwise,  if  the  plaintiff  had 
merely  knowledge  that  the  money  was  to  be  so  used.  Upon 
authority  and  principle  the  ruling  was  correct. 

Any  different  doctrine  would,  in  most  instances,  be  imprac- 
ticable and  unjust.  It  does  not  follow  that  a  lender  has  a  guilty 
purpose  merely  because  he  knows  or  believes  that  the  borrower 
has.  There  may  be  a  visible  line  between  the  motives  of  the 
two.  If  it  were  not  so,  men  would  have  great  responsibilities  for 
the  motives  and  acts  of  others.  \  A  person  may  loan  money  to  his 
friend, — to  the  man,  and  not  to  his  purpose.  He  may  at  the 
same  time  disapprove  his  purpose.  He  may  not  be  willing  to 
deny  his  friend,  however  much  disapproving  his  acts.      I 

In  order  to  find  the  lender  in  fault,  he  must  himself  have  an 
intention  that  the  money  shall  be  illegally  used.  There  must  be 
a  combination  of  intention  between  lender  and  borrower  —  a 
union  of  purposes.  The  lender  must  in  some  manner  be  a  con- 
federate or  participator  in  the  borrower's  act,  be  himself  impli- 
cated in  it.  He  must  loan  his  money  for  the  express  purpose  of 
promoting  the  illegal  design  of  the  borrower;  not  intend  merely 
to  serve  or  accommodate  the  man.  In  support  of  this  view  many 
cases  might  be  adduced.  A  few  prominent  ones  will  suffice. 
Green  v.  Collins,  3  Cliff.  494;  Qaylord  v.  Soragen,  32  Vt.  110; 
Hill  V.  Spear,  50  N.  H.  252;  Peck  v.  Briggs,  3  Denio,  107; 
jrintyre  v.  Parks,  3  Met.  207;  Banchor  v.  Mansel,  47  Maine,  58. 
(See  68  Maine,  p.  47.) 

Nor  was  the  branch  of  the  ruling  wrong,  that  plaintiff,  even 
though  a  participator,  could  recover  his  money  back,  if  it  had  not 


€hap.  V.  §2.]  LEGALITY  OF  OBJECT.  391 

been  actually  used  for  illegal  purposes.     In  the  minor  offenses, 

the  locus  poenitentice  continues  until  the  money  has  been  actually 

converted  to  the  illegal  use.     The  law  encourages  a  repudiation 

of  the  illegal  contract,  even  by  a  guilty  participator,  as  long  as 

it  remains  an  executory  contract  or  the  illegal  purpose  has  not 

been  put  in  operation.     The  lender  can  cease  his  own  criminal 

design  and  reclaim  his  money.     "The  reason  is,"  says  Wharton, 

"the  plaintiff's  claim  is  not  to   enforce,  but  to  repudiate,  an 

illegal  contract."     TF^ar.  Con.  §  354,  and  cases  there  cited.     The 

object  of  the  law  is  to  protect  the  public  —  not  the  parties.     "  It 

best  comports  with  public  policy,  to  arrest  the  illegal  transactictti 

before  it  is  consummated,"  says  the  court  in  Stacy  v.  Foss,  19 

Maine,  335.     See  White  v.  Banic,  22  Pick.  181. 

The  rule  allowing  a  recovery  back  does  not  apply  where  the 

lender  knows  that  some  infamous  crime  is  to  be  committed  with 

the  means  which  he  furnishes.     It  applies  only  where  the  minor 

offenses  are  involved. 

Exceptions  overruled.^ 

GRAVES  et  al.  v.   JOHNSON. 

156  MASSACHUSETTS,  211.— 1892. 

Holmes,  J.  This  is  an  action  for  the  price  of  intoxicating 
liquors.  It  is  found  that  they  were  sold  and  delivered  in  Massa- 
chusetts by  the  plaintiffs  to  the  defendant,  a  Maine  hotel  "keeper, 
with  a  view  to  their  being  resold  by  the  defendant  in  Maine, 
against  the  laws  of  that  State.  These  are  all  the  material  facts 
reported;  and  these  findings  we  must  assume  to  have  been  war- 
ranted, as  the  evidence  is  not  reported,  so  that  no  question  of  the 
power  of  Maine  to  prohibit  the  sales  is  open.  The  only  question 
is,  whether  the  facts  as  stated  show  a  bar  to  this  action. 

The  question  is  to  be  decided  on  principles  which  we  presume 
would  prevail  generally  in  the  administration  of  the  common  law 
in  this  country.  Not  only  should  it  be  decided  in  the  same  way 
in  which  we  should  expect  a  Maine  court  to  decide  upon  a  Maine 
contract  presenting  a  similar  question,  but  it  should  be  decided 
as  we  think  that  a  Maine  court  ought  to  decide  this  very  case  if 

1  See  also  Hull  v.  Buggies,  56  N.  Y.  424. 


392  FORMATION  OF  CONTRACT.  [Part  IL 

the  action  were  brought  there.  It  is  noticeable,  and  it  has  been 
observed  by  Sir  F.  Pollock,  that  some  of  the  English  cases  which 
have  gone  farthest  in  asserting  the  right  to  disregard  the  revenue 
laws  of  a  country  other  than  that  where  the  contract  is  made  and 
is  to  be  performed,  have  had  reference  to  the  English  revenue 
laws.  Holman  v.  Johnson,  1  Cowp.  341;  Pollock,  Con.  (5th  ed.) 
308.     See  also  M'Intyre  v.  Parks,  3  Met.  207. 

The  assertion  of  that  right,  however,  no  doubt  was  in  the 
interest  of  English  commerce  (Pellecat  v.  Angell,  2  Cr.,  M.  &  R. 
311,  313),  and  has  not  escaped  criticism  (Story,  Confl.  Laws,  §§ 
257,  254,  note;  3  Kent  Com.  265,  266;  and  Wharton,  Conjl.  Laws, 
§  484),  although  there  may  be  a  question  how  far  the  actual 
decisions  go  beyond  what  would  have  been  held  in  the  case  of  an 
English  contract  affecting  only  English  laws.  See  Hodgson  v. 
Temple,  5  Taunt.  181;  Brown  v.  Duncan,  10  B.  &  C.  93,  98,  99; 
Harris  v.  Runnels,  12  How.  79,  83,  84. 

Of  course  it  Avould  be  possible  for  an  independent  State  to 
enforce  all  contracts  made  and  to  be  performed  within  its  terri- 
tory, without  regard  to  how  much  they  might  contravene  the 
policy  of  its  neighbor's  laws.  But  in  fact  no  State  pursues  su'^.h 
a  course,  of  barbarous  isolation.  As  a  general  proposition,  it  is 
admitted  that  an  agreement  to  break  the  law?  of  a  foreign  coun- 
try would  be  invalid.  Pollock,  Con.  (5th  ed.)  308.  The  courts 
are  agreed  on  the  invalidity  of  a  sale  when  the  contract  contem- 
plates a  design  on  the  part  of  the  purchaser  to  resell  contrary  to 
the  laws  of  a  neighboring  State,  and  requires  an  act  on  the  part 
of  the  seller  in  furtherance  of  the  scheme.  Waymell  v.  Reed,  5 
T.  R.  599;  Gaylord  v.  Soragen,  32  Vt.  110;  Fisher  v.  Lord,  63 
N.  H.  514;  Hull  V.  Ruggles,  56  N.  Y.  424,  429. 

On  the  other  hand,  plainly,  it  would  not  be  enough  to  prevent 
a  recovery  of  the  price  that  the  seller  had  reason  to  believe  that 
the  buyer  intended  to  resell  the  goods  in  violation  of  law;  he 
must  have  known  the  intention  in  fact.  Finch  v.  Mansfield,  97 
Mass.  89,  92;  Adams  v.  Coulliard,  102  Mass.  167,  173.  As  in 
the  case  of  torts,  a  man  has  a  right  to  expect  lawful  conduct 
from  others.  In  order  to  charge  him  with  the  consequences  of 
the  act  of  an  intervening  wrongdoer,  you  must  show  that  he 
actually  contemplated  the  act.  Hayes  v.  Hyde  Park,  153  Mass. 
614,  515,  516. 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  39^ 

Between  these  two  extremes  a  line  is  to  be  drawn.  But  as  the 
point  where  it  should  fall  is  to  be  determined  by  the  intimacy  of 
the  connection  between  the  bargain  and  the  breach  of  the  law  in 
the  particular  case,  the  bargain  having  no  general  and  necessary 
tendency  to  induce  such  a  breach,  it  is  not  surprising  that  courts 
should  have  drawn  the  line  in  slightly  different  places.  It  has 
been  thought  not  enough  to  invalidate  a  sale,  that  the  seller 
merely  knows  that  the  buyer  intends  to  resell,  in  violation  even 
of  the  domestic  law.  Tracy  v.  Talmage,  4  Kernan,  162 ;  Hodgson 
V.  Temple,  5  Taunt.  181.  So,  of  the  law  of  another  State. 
Wlntyre  v.  Paries,  3  Met.  207;  Sortwell  v.  Hughes,  1  Curt.  C.  C. 
244;  Green  v.  Collins,  3  Cliff.  494;  Hill  v.  Spear,  50  N.  H.253; 
Dater  v.  Earl,  3  Gray,  482,  in  a  decision  on  New  York  law. 

But  there  are  strong  intimations  in  the  later  Massachusetts 
cases  that  the  law  on  the  last  point  is  the  other  way.  Finch  v. 
Mansfield,  97  Mass.  89,  92;  Suit  v.  Woodhall,  113  Mass.  391,  395. 
And  the  English  decisions  have  gone  great  lengths  in  the  case 
of  knowledge  of  intent  to  break  the  domestic  law.  Pearce  v. 
Brooks,  L.  R.  1  Ex.  213;  Taylor  v.  Chester,  L.  R.  4  Q.  B.  309,  311. 

However  this  may  be,  it  is  decided  that  when  a  sale  of  intoxi- 
cating liquor  in  another  State  has  just  so  much  greater  proximity 
to  a  breach  of  the  Massachusetts  law  as  is  implied  in  the  state-^ 
ment  that  it  was  made  with  a  view  to  such  a  breach,  it  is  void. 
Webster  v.  Hunger,  8  Gray,  584;  Orcutt  v.  Nelson,  1  Gray,  536, 
541;  Hubbell  v.  Flint,  13  Gray,  277,  279;  Adams  v.  Coulliard,. 
102  Mass.  167,  172,  173.  Even  in  Green  v.  Collins  and  Hill  v. 
Spear,  the  decision  in  Webster  v.  Hunger  seems  to  be  approved. 
See  also  Langton  v.  Hughes,  1  M.  &  S.  593;  HKinnell  v.  Robin- 
son, 3  M.  &  W.  434,  441 ;  White  v.  Buss,  3  Gush.  448.  If  the  sale 
would  not  have  been  made  but  for  the  seller's  desire  to  induce  an 
unlawful  sale  in  Maine,  it  would  be  an  unlawful  sale  on  the  prin- 
ciples explained  in  Hayes  v.  Hyde  Park,  153  Mass.  514,  and  Tasker 
v.  Stanley,  153  Mass.  148.  The  overt  act  of  selling  which  otherwise 
would  be  too  remote  from  the  apprehended  result,  an  unlawful  sale 
by  some  one  else,  would  be  connected  with  it,  and  taken  out  of 
the  protection  of  the  law  by  the  fact  that  the  result  was  actually 
intended.  We  do  not  understand  the  judge  to  have  gone  so  far  as 
we  have  just  supposed.    We  assume  that  the  sale  would  have  taken 


394  FORMATION  OF  CONTRACT.  [Part  II. 

place,  whatever  the  buyer  had  been  expected  to  do  with  the  goods. 
But  we  understand  the  judge  to  have  found  that  the  seller  expected 
and  desired  the  buyer  to  sell  unlawfully  in  Maine,  and  intended 
to  facilitate  his  doing  so,  and  that  he  was  known  by  the  buyer  to 
have  that  intent.  The  question  is  whether  the  sale  is  saved  by 
the  fact  that  the  intent  mentioned  was  not  the  controlling  induce- 
ment to  it.  As  the  connection  between  the  act  in  question,  the 
sale  here,  and  the  illegal  result,  the  sale  in  Maine  —  the  tendency 
of  the  act  to  produce  the  result  —  is  only  through  the  later 
action  of  another  man,  the  degree  of  connection  or  tendency  may 
vary  by  delicate  shades.  If  the  buyer  knows  that  the  sale  is 
made  only  for  the  purpose  of  facilitating  his  illegal  conduct,  the 
connection  is  at  the  strongest.  If  the  sale  is  made  with  the 
desire  to  help  him  to  his  end,  although  primarily  made  for  money, 
the  seller  cannot  complain  if  the  illegal  consequence  is  attributed 
to  him.  If  the  buyer  knows  that  the  seller,  while  aware  of  his 
intent,  is  indifferent  to  it,  or  disapproves  of  it,  it  may  be  doubt- 
ful whether  the  connection  is  sufficient.  Compare  Commonwealth 
V.  CJiurchill,  136  Mass.  148,  150.  It  appears  to  us  not  unreason- 
able to  draw  the  line  as  it  was  drawn  in  Webster  v.  Munger,  and 
to  say  that,  when  the  illegal  intent  of  the  buyer  is  not  only 
known  to  the  seller,  but  encouraged  by  the  sale  as  just  explained, 
the  sale  is  void.  The  accomplice  is  none  the  less  an  accomplice 
because  he  is  paid  for  his  act.  See  Commonwealth  v.  Harrington, 
3  Pick.  26. 

The  ground  of  the  decision  in  Webster  v.  Munger  is,  that  con- 
tracts like  the  present  are  void.  If  the  contract  had  been  valid, 
it  would  have  been  enforced.  Dater  v.  Earl,  3  Gray,  482; 
M'Intyre  v.  Parks,  3  Met.  207.  As  we  have  said  or  implied 
already,  no  distinction  can  be  admitted  based  on  the  fact  that  the 
law  to  be  violated  in  that  case  was  the  lex  fori.  For  if  such  a 
distinction  is  ever  sound,  and  again,  if  the  same  principles  are  not 
always  to  be  applied,  whether  the  law  to  be  violated  is  that  of 
the  State  of  the  contract  or  of  another  State  (see  Tracy  v.  Tal- 
m,age,  4  Kernan,  162,  213),  at  least  the  right  to  contract  with  a 
view  to  a  breach  of  the  laws  of  another  State  of  this  Union  ought 
not  to  be  recognized  as  against  a  statute  passed  to  carry  out 
fundamental  beliefs  about  right  and  wrong,  shared  by  a  large  part 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  395 

of  our  own  citizens.  Territt  v.  Bartlett,  21  Vt.  184,  188,  189.  In 
the  opinion  of  a  majority  of  the  court,  this  case  is  governed  by 
Webster  v.  Munger,  and  we  believe  that  it  would  have  been 
decided  as  we  decide  it,  if  the  action  had  been  brought  in  Maine 
instead  of  here.     Banchor  v.  Mansel,  47  Maine,  58. 

Exceptions  sustained. 


(v.)   Securities  for  money  due  on  an  illegal  transaction. 
BROWN  V.   KINSEY. 

81  NORTH  CAROLINA,  245.— 1879. 

DiLLARD,  J.  The  case  in  the  court  below  was  four  appeals 
from  a  justice's  court,  founded  on  four  bonds  executed  by  the 
testator  of  the  defendant  on  the  13th  of  September,  1872,  to 
Winefred  Hill,  and  assigned  to  her  after  due  to  the  plaintiff. 
By  order  of  the  court,  the  actions  were  consolidated,  and  the 
trial  was  had  by  a  jury  on  the  issue  joined  on  the  plea  of  im- 
moral consideration,  and  the  evidence  relied  on  by  the  defendant 
being  all  in.  His  Honor  being  of  opinion  that  the  same  was  not 
such  as  reasonably  to  warrant  a  finding  of  the  matter  of  avoid- 
ance pleaded,  so  held.  Thereupon  the  verdict  was  for  the  plain- 
tiff, and  the  defendant  appealed. 

The  question  on  the  appeal  is  whether  the  evidence  adduced 
was  or  was  not  such  as  in  law  to  authorize  and  require  the  judge 
to  submit  it  to  the  jury  upon  which  to  find  the  fact  of  immoral 
consideration  alleged  by  the  defendant. 

The  evidence  was  that  the  testator  of  defendant  died  in  Octo- 
ber, 1872,  and  that  about  five  years  before  his  death  Winefred 
Hill,  the  assignor  of  the  plaintiff,  gave  birth  to  a  bastard  child 
begotten  by  him  (said  testator),  and  afterwards,  in  the  course 
of  the  same  illicit  intercourse,  he  executed  to  her  a  bond  under 
seal  for  three  hundred  dollars.  Winefred,  on  her  death,  said  he 
owed  her  nothing,  and  that  when  the  bond  was  delivered  to  her, 
testator  made  no  declaration  as  to  his  reason,  or  to  the  consider- 
ation moving  him  thereto.  Upon  the  death  of  testator's  wife, 
the  said  Winefred  went  to  live  in  the  house  of  testator,  and  took 


396  FORMATION  OF  CONTRACT.  [Part  II. 

charge  of  his  domestic  business  about  a  month  before  the  testator 
died.  And  whilst  there,  on  the  13th  of  September,  1872,  during 
the  continuance  of  the  immoral  connection,  the  testator  took  up 
the  bond  for  $300  and  destroyed  it,  and  then  and  there  executed 
to  said  "Winefred  the  four  bonds  now  in  suit,  one  of  them  falling 
due  on  each  first  day  of  January  in  the  next  four  succeeding 
years,  stating  at  the  time  that  they  were  executed  in  place  of  the 
bond  for  $300,  and  he  made  no  declaration  to  the  motive  for  the 
substitution  or  the  consideration  on  which  they  were  founded. 

Upon  the  issue  joined,  the  bonds  under  which  the  plaintiff 
claims,  being  under  seal,  the  execution  and  delivery  made  them 
effectual  at  law,  made  them  deeds,  things  done;  and  by  the  com- 
mon law  they  had  the  force  and  effect  to  authorize  plaintiff  to 
recover  without  any  consideration,  with  power,  however,  in  the 
defendant  to  have  the  same  held  null  upon  proof  of  illegal  or 
immoral  consideration,  not  from  any  motive  of  advantage  to 
him  or  his  testator,  but  from  consideration  of  the  public  interest 
and  of  morality.  Harrell  v.  Watson,  63  N.  C.  454;  2  Chitty  on 
Contracts,  971 ;  Collins  v.  Blantem,  1  Smith's  Lead.  Cases,  153. 

On  the  trial,  then,  we  are  to  take  it  that  plaintiff  was  abso- 
lutely entitled  to  recover,  unless  the  defendant  showed  the  im- 
moral consideration  alleged,  by  evidence  full  and  complete,  or 
by  proof  of  such  facts  and  circumstances  as  would  reasonably 
warrant  a  jury  to  find  it  as  a  fact.  In  other  words,  the  onus  was 
on  the  defendant,  and  in  order  to  defeat  the  recovery  it  was  incum- 
bent on  him  to  show  that  the  bonds  were  not  voluntary,  that  is, 
not  executed  as  a  mere  gift,  and  not  on  the  consideration  of  past 
cohabitation,  which  is  legal,  but  on  the  consideration  in  whole 
or  part  for  future  criminal  intercourse,  or  to  show  that  the 
nature  of  the  securities  was  such  as  to  hold  out  inducement  or 
constitute  a  temptation  to  Winefred  Hill  to  continue  the  connec- 
tion. 

It  is  indisputable  that  the  bonds,  if  executed  as  a  gift  by  the 
testator  of  the  defendant  to  Winefred  Hill,  the  mother  of  his 
bastard  child,  would  be  legal  and  enforceable,  it  not  being  immoral 
to  assist  her  by  gift  to  raise  his  progeny;  and  it  is  equally 
settled  that  if  they  were  given  for  past  cohabitation,  they  would 
be  binding  on  the  ground  that  the  illicit  connection  was  an  evil 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  397 

already  past  and  done,  and  the  public  had  no  interest  to  defeat 
them.  The  only  restriction  put  on  the  contracts  of  the  parties 
is  that  they  shall  not  stipulate  for  future  fornication,  or  in  such 
manner  as  that  the  security  given  shall  operate  as  an  inducement 
or  motive  to  go  on  in  the  vicious  course.  2  Chitty  on  Contracts, 
979;  Trovinger  v.  McBurney,  5  Cowen,  253;  Gray  v.  Mathias, 
5  Vesey's  Ch.  Rep.  286. 

In  these  cases  it  is  held  that  the  continuation  of  the  criminal 
intercourse  after  the  execution  of  the  bond  or  contract  impeached 
for  immorality,  does  not  invalidate  the  same ;  but  that  it  is  to 
be  avoided  and  held  null  only  on  proof  that  it  was  executed  in 
whole  or  part  on  the  understanding  that  the  connection  was  to 
continue.  This  will  be  apparent  from  the  following  extracts 
taken  therefrom :  In  the  case  of  Trovinger  v.  McBurney,  supra, 
the  court  say :  "  A  bond  executed  for  the  cause  of  past  cohabita- 
tion, although  the  connection  is  continued,  is  not  invalidated 
thereby."  The  test  always  is,  does  it  appear  by  the  contract 
itself,  or  was  there  any  understanding  of  the  parties,  though  not 
expressed,  that  the  connection  was  to  continue.  In  the  case  of 
Gray  v.  Mathias,  supra,  a  bond  was  given  during  the  cohabita- 
tion, and  in  the  course  of  the  cohabitation,  a  second  bond  was 
given,  which,  upon  its  face,  recited  the  existing  illegal  connec- 
tion, and  stipulated  for  its  continuance  with  an  annuity  for  the 
woman  in  case  of  discontinuance,  and  it  was  held  that  the  last 
bond  was  void,  but  the  former  one  was  good,  although  the  coha^n- 
tation  continued  after  its  execution. 

In  the  case  of  Hall  v.  Palmer  (3  Hare,  532)  the  bond  was 
executed  to  the  woman  conditioned  to  pay  an  annuity  from  and 
after  the  death  of  the  obligor,  and  the  parties  lived  together  at 
the  time  and  continued  so  to  live  afterwards,  upon  a  declaration 
of  the  obligor  that  he  did  not  intend  to  break  off  the  connection ; 
and  upon  a  reference  to  the  master,  it  being  found  as  a  fact  that 
it  was  given  for  past  cohabitation,  it  was  held  that  the  continuance 
of  the  connection  after  the  execution  of  the  obligation  had  no 
effect  to  invalidate  it. 

From  the  principles  decided  in  these  cases,  it  may  be  taken  as 
settled,  that  the  cohabitation  of  the  testator  of  defendant  with 
Winefred  Hill,  after  the  execution  of  the  bonds  to  her,  did  not  by 


398  FORMATION  OF  C0NTRAC5T.  [Pakt  IL 

any  legal  presumption  invalidate  the  same;  and  that  the  same 
could  only  be  held  void  on  proof  that  there  was  an  understand- 
ing, express  or  implied,  that  the  criminal  intercourse  was  to  be 
continued.  Applying  these  principles  to  our  case  we  have  this 
state  of  things :  At  the  time  the  first  bond  for  $300  was  given, 
Winefred  testified  that  testator  of  defendant  owed  her  nothing, 
and  therefore  the  bond  was  voluntary ;  or  if  not  that,  then  it  may 
have  been  on  consideration  of  past  cohabitation,  and  if  so,  it  was 
valid;  or  it  may  have  been  partly  for  past  and  partly  for  future, 
or  altogether  for  future  intercourse,  and  if  the  latter,  then  the 
onus  was  on  the  defendant  to  prove  it  otherwise  than  by  mere 
evidence  of  a  continued  connection  after  the  bonds  were  exe- 
cuted. 

The  defendant,  on  the  trial  of  the  issue,  had  no  proof,  except 
of  the  execution  of  the  bonds  in  the  course  of  an  illegal  intimacy 
between  the  parties,  and  a  continuation  thereof  afterwards  up  to 
the  death  of  the  testator,  together  with  an  admission  by  Wine- 
fred, that  they  were  not  executed  for  any  debt  due  to  her ;  and 
obviously,  in  such  state  of  the  proof,  the  jury  could  not  have 
done  more  than  have  a  suspicion  and  conjecture,  whether  the 
bonds  were  executed  as  a  gift,  or  for  past  cohabitation,  or  wholly 
or  in  part  for  future  cohabitation. 

The  rule  is  well  settled  that  if  there  be  no  evidence,  or  if  the 
evidence  be  so  slight  as  not  reasonably  to  warrant  the  inference 
of  the  fact  in  issue,  or  furnish  more  than  materials  for  a  mere 
conjecture,  the  court  will  not  leave  the  issue  to  be  passed  on  by 
the  jury,  but  rule  that  there  is  no  evidence  to  be  submitted  to 
their  consideration,  and  direct  a  verdict  against  that  party  on 
whom  the  burden  of  proof  is.  State  v.  Wallei;  80  N.  C.  401; 
State  V.  Patterson,  78  N.  C.  470;  Sutton  v.  Madre,  2  Jones,  320; 
Cohh  V.  Fogalman,  1  Ire.  440. 

In  our  opinion,  therefore,  the  judge  properly  held  that  there 
was  no  evidence  of  the  illegal  or  immoral  consideration  alleged, 
and  in  so  doing  he  committed  no  error. 

No  error.  Affirmed.* 

1  See  also  Singleton  v.  Bremar,  Harp.  (So.  Car.)  201  ;  Given  v.  Driggs,  1 
Caines  Rep.  (N.  Y.)  450;  Edwards  v.  Skirving,  1  Brevard  (So.  Car.)  648; 
Swan  V.  ScoU,  11  Sergeant  &  Rawle  (Pa.)  IW. 


\^       Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  39^ 


NEW  V.  WALKER. 

108  INDIANA,  365.  — 1886. 

Action  on  a  promissory  note.  Defense,  illegality  of  considera- 
tion. Reply,  purchase  before  maturity,  for  value,  and  without 
knowledge  of  illegality.  Demurrer  to  reply.  Demurrer  sus- 
tained.    Plaintiff  appeals. 

Defendant  gave  the  note  in  question  for  the  purchase  price  of 
a  patent  right.  By  the  statute,  all  sales  of  patent  rights  are 
unlawful  when  the  seller  has  not  filed  with  the  clerk  of  the  court 
of  the  county  where  the  sale  is  made  copies  of  the  letters  patent, 
and  an  affidavit  that  the  letters  are  genuine,  etc.,  and  all  obliga- 
tions given  for  the  purchase  price  of  such  patent  rights  are 
required  to  contain  the  words  "given  for  a  patent  right."  Non- 
compliance with  the  statute  is  made  a  misdemeanor.  The  payee 
of  the  note  in  question  had  not  complied  with  this  statute. 

Elliott,  C.  J.  .  .  .  In  our  opinion,  a  promissory  note  exe- 
cuted in  direct  violation  of  a  mandatory  statute,  is  inoperative 
as  between  the  parties  and  those  who  buy  with  notice.  Where 
a  statute,  in  imperative  terms,  forbids  the  performance  of  an 
act,  no  rights  can  be  acquired  by  persons  who  violate  the  statute, 
nor  by  those  who  know  that  the  act  on  which  they  ground  their 
claim  was  done  in  violation  of  law.  A  promissory  note,  executed 
in  a  transaction  forbidden  by  statute,  is  at  least  illegal  as  be- 
tween the  parties  and  those  who  have  knowledge  that  the  law 
was  violated.  It  is  an  elementary  rule  that  what  the  law  pro- 
hibits, under  a  penalty,  is  illegal,  and  it  cannot,  therefore,  be 
the  foundation  of  a  right  as  between  the  immediate  parties. 
Wilson  V.  Joseph,  107  Ind.  490;  ffedderichv.  State,  101  Ind.  571, 
61  Am.  R.  768;  Case  v.  Johnson,  91  Ind.  477. 

This  rule  also  applies  to  those  who  assume  to  purchase  from 
one  of  the  parties  to  the  transaction,  but  purchase  with  full 
knowledge  that  the  law  has  been  transgressed. 

«  «  «  *  « 

Having  determined  that  the  promissory  note,  on  which  the 
action  is  founded,  is  negotiable  as  commercial  paper,  the  next 
question  is,  what  are  the  rights  of  the  appellant  as  the  bona  Jide 


400  FORMATION  OF  CONTRACT.  [Part  IL 

holder  of  tlie  paper?  For  there  can  be  no  doubt  under  the  con- 
fessed allegations  of  the  reply  that  she  is  such  a  holder.  She  is 
such  in  the  strongest  light,  for  she  purchased  from  a  good-faith 
owner,  and  is  herself  free  from  fault  and  innocent  of  wrong. 
Hereth  v.  Merchants^  Nat.  Bank,  34  Ind.  380;  Newcome  v.  Dun- 
ham, 27  Ind.  285. 

The  decisions  agree  that,  where  the  statute  in  direct  terms 
declares  that  a  note  given  in  violation  of  its  provisions  shall  be 
void,  it  is  so  no  matter  into  whose  hands  it  may  pass.  The  rule 
is  thus  stated  by  the  court  in  Vallett  v.  Parker  (6  Wend.  615) : 
*'  Wherever  the  statute  declares  notes  void,  they  are  and  must  be 
so,  in  the  hands  of  every  holder;  but  where  they  are  adjudged 
by  the  court  to  be  so,  for  failure  or  the  illegality  of  the  consid- 
eration, they  are  void  only  in  the  hands  of  the  original  parties, 
or  those  who  are  chargeable  with,  or  have  had  notice  of  the 
consideration." 

It  is  said  by  a  late  writer,  in  stating  the  same  general  rule, 
that,  "when  a  statute,  expressly  or  by  necessary  implication, 
declares  the  instrument  absolutely  void,  it  gathers  no  vitality  by 
its  circulation  in  respect  to  the  parties  executing  it."  1  Daniel 
Negotiable  Int.  §  197.  We  regard  this  author's  statement  as  sub- 
stantially expressing  the  general  rule,  and,  accepting  it  as  cor- 
rect, the  pivotal  question  is  whether  our  statute  does  expressly, 
or  by  necessary  implication,  declare  that  notes  given  to  vendors 
of  patent  rights  who  have  disobeyed  the  law  shall  be  void? 
There  is  certainly  no  express  declaration  in  the  statute  that  such 
notes  shall  be  void,  nor  do  we  think  that  there  is  any  necessary 
implication  that  they  shall  be  void.  A  man  may  be  guilty  of 
a  misdemeanor,  and  yet  notes  taken  by  him  in  the  transaction 
which  creates  his  guilt  may  not  be  void  in  the  hands  of  an  inno- 
cent holder.  A  familiar  illustration  of  this  principle  is  afforded 
by  those  cases  which  declare  that  a  note  given  in  consideration 
of  the  suppression  of  a  criminal  prosecution  is  inoperative  as 
between  the  immediate  parties,  but  valid  in  the  hands  of  a  bona 
Jide  purchaser.  This  is  the  settled  law,  although  the  compound- 
ing of  a  felony  is  made  a  crime  by  statute.  Our  opinion  is,  that 
a  statute  making  it  a  crime  to  take  promissory  notes  in  a  pro- 
hibited transaction  does  not  make  the  notes  void  in  the  hands  of 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  401 

innocent  purchasers,  although  the  person  who  violates  the  statute 
commits  a  crime.  This  conclusion  is  well  sustained  by  authority. 
Anderson  v.  Etter,  102  Ind.  115;  Vallett  v.  Parker,  supra;  Tay- 
lor V.  Beck,  3  Rand.  (Va.)  316;  Glenn  v.  Farmers'  Bank,  70  N. 
C  191;  Smith  v.  Columbus  State  Bank,  9  Neb.  31;  Haskell  v. 
Jones,  86  Pa.  St.  173;  Palmer  v.  Minar,  8  Hun,  342;  Cook  v. 
Weirman,  51  Iowa,  561. 

A  party  who  executes  a  promissory  note,  negotiable  as  commer- 
cial paper,  fair  on  its  face  and  complete  in  all  its  parts,  puts  in 
circulation  an  instrument  which  he  knows  is  the  subject  of  barter 
and  sale  in  the  commercial  world,  and  it  is  his  own  fault  if  he 
does  not  put  into  it  the  words  which  will  warn  others  not  to  buy 
it  in  the  belief  that  it  will  be  free  from  all  defenses.  The  ex- 
perience of  the  business  world  has  shown  the  necessity  of  affixing 
to  promissory  notes  the  quality  of  negotiability,  and  commercial 
transactions  would  be  seriously  disturbed  if  notes,  fair  on  their 
face,  and  containing  the  required  words  of  negotiability,  were 
not  protected  in  the  hands  of  innocent  purchasers.  It  is,  there- 
fore, not  the  policy  of  the  law  to  multiply  exceptions  to  the 
general  rules  governing  notes  negotiable  by  the  law  merchant, 
so  that  in  such  a  case  as  this  it  cannot,  without  an  indefensible 
departure  from  that  policy,  be  held  that  the  promissory  note  is 
not  protected  in  the  hands  of  a  good- faith  holder. 

Nor  can  such  a  step  be  taken  without  wandering  from  the  course 
marked  and  defined  by  the  long-established  principle  that,  where 
one  of  two  innocent  persons  must  suffer  from  the  act  of  a  third 
person,  he  who  puts  it  in  the  power  of  the  third  to  do  the  act  must 
bear  the  loss.  To  our  minds  it  seems  clear  that  this  principle 
rules  here,  for  the  man  who  executes  to  a  vendor  of  patent  rights 
a  promissory  note,  in  full  and  perfect  form,  puts  it  in  his  power 
to  wrong  others  by  selling  the  note  as  an  article  of  commerce. 

We  regard  the  reply  as  unquestionably  good,  and  adjudge  that 
the  trial  court  erred  in  sustaining  the  demurrer  to  it. 
«  *  «  «  * 

Judgment  reversed.* 

1  See  also  Glenn  v.  Farmers^  Bank,  70  N.  C.  191 ;  Singleton  v.  Bremar, 
Harper  (So.  Car.),  201  ;  Coulter  v.  Eobertson,  14  Smedes  &  Marshall  (Miss.), 
18  ;  Traders^  Bank  v.  Alsop,  64  la.  97.  See  on  usury  contracts,  Kendall  v. 
Robertson,  12  Cush.  (Mass.)  156  ;  Wortendyke  v.  Meehan,  9  Neb.  221. 

DD 


402  FORMATION   OF  CONTRACT.  [Part  H. 

{vi. )  Can  a  man  be  relieved  from  a  contract  which  he  knew  to 
be  unlawful  f 

DUVAL  V.   WELLMAN. 

124  NEW  YORK,  156.— 1891, 

Appeal  from  order  of  the  General  Term  of  the  Court  of  Common 
Pleas  for  the  city  of  New  York,  made  May  4,  1888,  which  reversed 
an  order  of  the  G-eneral  Term  of  the  City  Court,  which  reversed  an. 
order  of  the  Special  Term  of  said  court  denying  a  motion  for  a 
new  trial. 

This  action  was  brought  to  recover  back  moneys  paid  by  plain- 
tiff's assignor  to  defendant  upon  contracts  set  forth  in  the  opin- 
ion, in  which  the  material  facts  are  also  stated. 

Bbown,  J.  The  record  before  us  does  not  contain  the  plead- 
ings, and  we  are  not  informed  of  the  grounds  upon  which  the 
plaintiff  therein  based  his  right  to  recover.  The  case  has,  how- 
ever, been  disposed  of  in  defendant's  favor  in  the  court  below 
on  the  ground  that  the  contract  between  the  parties,  upon  which 
the  money  was  paid,  was  illegal,  and  that  the  plaintiff's  assignor 
was  particeps  criminis,  and  equal  in  guilt  with  the  defendant. 
But  whether  the  cause  of  action  was  based  upon  the  contract,  or 
upon  the  illegality  of  the  contract,  and  in  disaffirmance  thereof, 
does  not  appear.  The  questions  discussed  in  the  lower  courts 
have,  however,  been  regarded  as  of  sufficient  importance  to 
receive  the  consideration  of  this  court,  and  as  they  were  the  only 
ones  discussed  at  our  bar,  we  may  confine  our  observations  to 
them  without  regard  to  the  particular  issue  made  by  the  pleadings. 

It  appears  from  the  evidence  that  the  plaintiff  is  the  assignee 
of  Mrs.  E.  Guion,  a  widow  lady,  who,  in  her  search  for  a  husband, 
sought  the  advice  and  aid  of  the  defendant,  who  was  the  owner 
and  publisher  of  a  matrimonial  journal  called  "  The  New  York 
Cupid,"  and  the  proprietor  of  a  matrimonial  bureau  in  New  York 
City.  Mrs.  Guion's  testimony  was  to  the  effect  that  in  June, 
1886,  she  became  a  patron  of  the  defendant's  establishment,  and 
paid  the  usual  registration  fee  of  five  dollars;  that  she  was 
introduced  to  thirty  or  forty  gentlemen,  but  found  none  whom  she 
was  willing  to  accept  as  a  husband ;  and  that  in  June,  1887,  for 
the  purpose  of  stimulating  the  defendant's  efforts  in  her  behalf, 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  408 

she  paid  him  fifty  dollars,  whereupon  there  was  executed  the 
following  instrument: 

"June  2d,  1887. 
"Due  Mrs.  Guion  from  Mr.  Wellraan  fifty  dollars  (150.00),  Aug. 
15th,  if.  at  that  time  she  is  willing  to  give  up  all  acquaintance  with 
gentlemen  who  were  introduced  in  any  manner  by  H.  B.  Wellman.  If 
Mrs.  Guion  marry  the  gentleman  whom  we  introduce  her  to,  an  addi- 
tional fifty  dollars  ($50.00)  is  due  Mr.  Wellman  from  Mrs.  Guion. 

"(Signed)  H.  B.  Wellman. 

"E»  Guion." 

In  August,  1887,  Mrs.  Guion,  not  finding  a  congenial  compan- 
ion among  any  of  the  men  to  whom  she  had  been  introduced,  and 
claiming  to  be  willing  to  give  up  all  acquaintance  with  them, 
demanded  from  defendant  the  return  of  the  money  paid,  which, 
being  refused,  the  claim  was  assigned  to  plaintiff  and  this  action 
was  commenced. 

The  five  learned  judges  who  have  delivered  opinions  in  the 
case  have  agreed  that  the  contract  between  the  parties  was  void, 
and  this  conclusion  appears  to  be  amply  supported  by  authority.. 
1  Story's  Eq.  Jurisprudence,  §§  260-264;  2  Pomeroy's  Eq.  Juris- 
prudence, §  931 ;  Willard's  Eq.  Jurisprudence,  211 ;  Bacon's  Abridg- 
ment, title  Marriage  &  Divorce,  D. ;  Fohhlanque' s  Eq.  ch.  1,  §  10; 
Boyntonv.  Hubbard,  7  Mass.  112;  Crawford  y.  Russell,  62  Barb.  92, 

Judge  Story,  after  discussing  the  grounds  upon  which  courts 
of  equity  interfere  in  cases  of  this  kind,  says :  "  It  is  now  firmly 
established  that  all  such  contracts  are  utterly  void  as  against 
public  policy  .  .  .  ,"  and  Chief  Justice  Parsons  said,  in  J5oyjiton 
V.  Hubbard,  supra,  that  "these  contracts  are  void  .  .  .  because 
they  have  a  tendency  to  cause  matrimony  to  be  contracted  on 
mistaken  principles  and  without  the  advice  of  friends,  and  they 
are  relieved  against  as  a  general  mischief  for  the  sake  of  the 
public." 

The  doctrine  that  marriage  brokerage  contracts  are  void  is  the 
outgrowth  of  the  views  and  opinions  of  the  English  people  upon 
the  subject  of  the  marriage  relation,  and  the  courts  of  England, 
for  upwards  of  a  century,  have  universally  declared  that  the 
natural  consequences  of  such  agreements  would  be  to  bring  about 
ill-advised,  and,  in  many  instances,  fraudulent  marriages,  result- 


404  FORMATION  OF  CONTRACT.  [Part  11. 

ing  inevitably  in  the  destruction  of  the  hopes  and  fortunes  of  the 
weaker  party,  and  especially  of  women,  and  that  every  tempta- 
tion in  the  exercise  of  undue  influence  in  procuring  a  marriage 
should,  therefore,  be  suppressed. 

The  defendant  has,  however,  succeeded  in  the  lower  couxt  upon 
the  application  of  the  rule  that  a  court  will  not  lend  its  aid  to 
either  of  the  parties  to  an  illegal  or  fraudulent  contract,  either 
by  enforcing  its  execution  if  it  be  executory,  or  by  rescinding 
it  if  it  be  executed.  Public  policy  has  dictated  the  adoption  of 
this  rule,  but  it  has  its  limitations,  and  when  the  parties  are  not 
equally  guilty,  or  when  the  public  interest  is  advanced  by  allow- 
ing the  more  excusable  of  the  two  to  sue  for  relief,  the  courts 
will  aid  the  injured  party  by  setting  aside  the  contract  and 
restoring  him,  so  far  as  possible,  to  his  original  position.  1 
Pomeroy's  Equity,  §  403;  1  Story's  Equity,  §  300. 

It  is  not  sufficient  for  the  defendant  to  show  merely  that  the 
other  contracting  party  is  particeps  criminis,  but  it  must  appear 
that  both  are  equal  in  guilt  unless  the  contract  be  malum  in  ae, 
in  which  case  the  maxim  ex  dolo  malo  non  oritur  actio  is  of 
universal  application. 

This  subject  received  very  full  consideration  in  the  case  of 
Tra^  v.  Talmage  (14  N.  Y.  162),  and  it  was  there  said  that 
"unless  the  parties  are  in  pari  delicto  as  well  as  particeps  criminis, 
the  courts,  although  the  contract  is  illegal,  will  afford  relief  to 
the  more  innocent  party. 

Upon  the  application  of  this  doctrine,  in  Mount  v.  Waite 
(7  Johns.  Rep.  433),  premiums  paid  for  the  insurance  of  lottery 
tickets  were  recovered,  the  plaintiff  being  held  not  to  be  equal 
in  guilt  with  the  defendants. 

In  Wheaton  v.  Hibbard  (20  Johns.  Rep.  290)  it  was  held  that 
usurious  interest  paid  by  a  borrower  could  be  recovered  inde- 
pendent of  the  statute,  and  that  the  maxim  inter  partes  in  pari 
delicto,  potior  est  conditio  defendentis  did  not  apply,  as  the  law 
considered  the  borrower  the  victim  of  the  usurer,  and  Lord 
Mansfield  laid  down  the  rule  that  in  transactions  prohibited  by 
statute  for  the  protection  of  one  set  of  men  from  another  set  of 
men  the  parties  are  not  in  pari  delicto.  Broioning  v.  Morris,  2 
Cowp.  790.     See  also  Schroeppel  v.  Corning,  6  N.  Y.  107, 115,  116. 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  406 

It  will  appear  from  an  examination  of  the  authorities  upon  this 
subject,  a  very  few  only  of  which  are  cited,  that  courts,  both  of 
law  and  equity,  have  held  that  two  parties  may  concur  in  an 
illegal  act  without  being  deemed  in  all  respects  in  pari  delicto. 
In  many  such  cases  relief  from  the  contract  will  be  afforded  to 
the  least  guilty  party  when  he  appears  to  have  acted  under  cir- 
cumstances of  imposition,  hardship,  or  undue  influence,  and 
especially  where  there  is  a  necessity  of  supporting  public  interests, 
or  a  well-settled  policy  of  the  law,  whether  that  policy  be 
declared  in  the  statutes  of  the  State  or  be  the  outgrowth  of  the 
decisions  of  the  courts.  Accordingly,  many  cases  may  be  cited 
where  relief  has  been  granted  from  contracts  which  partook  of 
the  character  of  marriage  brokerage  agreements.  The  cases  are 
collected  in  Pomeroy's  Equity  Jurisprudence,  in  a  note  to  section 
931;  in  Fonblanque's  Eq.  (B.  I.,  ch.  4,  §§  10,  11),  and  Bacon's 
Abridgment,  title  Marg.  &  Divrs.  (541  et  seq.),  and  need  not  be 
cited  here.  In  two  of  the  cases  referred  to,  money  paid  under 
the  contract  was  recovered  back.  Smith  v.  Bruning,  2  Vern.  392; 
Goldsmith  v.  Bruning,  1  Eq.  Cases  Abr.  89. 

The  question  in  this  and  kindred  cases,  therefore,  must  always 
be  whether  the  parties  are  equal  in  guilt.  Obviously  cases  might 
arise  where  this  would  clearly  appear  and  where  the  court  would 
be  justified  in  so  holding  as  a  matter  of  law,  as  where  there  was 
an  agreement  between  two,  having  for  its  purpose  the  marriage 
of  one  to  a  third  party,  the  parties  would  be  so  clearly  in  pari 
delicto  that  the  courts  would  not  aid  the  one  who  had  paid  money 
to  the  other  in  the  promotion  of  the  common  purpose,  to  recover 
it  back.  Such  a  case  would  partake  of  the  character  of  a  con- 
spiracy to  defraud.  So  if  two  parties  entered  into  a  partnership 
to  carry  on  such  a  business  as  defendant  conducted,  the  courts 
would  not  lend  their  aid  to  either  to  enforce  the  agreement 
between  them. 

But  where  a  party  carries  on  a  business  of  promoting  marriage 
as  the  defendant  appears  to  have  done,  it  is  plain  to  be  seen  that 
the  natural  tendency  of  such  a  business  is  immoral,  and  it  would 
be  so  clearly  the  policy  of  the  law  to  suppress  it,  and  public 
interest  would  be  so  greatly  promoted  by  its  suppression,  that 
there  would  be  no  hesitation  upon  the  part  of  the  courts  to  aid 


406  FORMATION  OF  CONTRACT.  [Part  n. 

the  party  who  had  patronized  such  a  business  by  relieving  him  or 
her  from  all  contracts  made,  and  grant  restitution  of  any  money 
paid  or  property  transferred.  In  that  way  only  could  the  policy 
of  the  law  be  enforced  and  public  interests  promoted. 

Contracts  of  this  sort  are  considered  as  fraudulent  in  their 
character,  and  parties  who  pay  money  for  the  purpose  of  procur- 
ing a  husband  or  wife  will  be  regarded  as  under  a  species  of 
imposition  or  undue  influence.  The  subject  is  classed  by  all  text 
writers  under  the  head  of  constructive  or  implied  fraud,  and 
it  is  upon  the  application  of  rules  which  belong  to  that  branch 
of  the  law  that  the  cases  have  been  decided  to  which  I  have 
referred. 

We  are  of  the  opinion,  therefore,  that  it  was  error  to  hold  as  a 
legal  conclusion  that  the  parties  to  the  contract  in  question  were 
equal  in  guilt. 

The  learned  General  Term  of  the  Common  Pleas  appeared  to 
have  considered  that  the  voluntary  character  of  Mrs.  Guion's  acts 
was  decisive  of  this  question  and  deprived  her  of  the  right  of 
recovery.  It  is  true  there  is  no  evidence  of  actual  over- 
persuasion  or  undue  influence.  But  at  most  the  inferences  to 
be  drawn  from  these  facts  were  for  the  jury.  The  prominent 
fact  in  the  case  is  that  such  a  place  as  the  defendant  maintained 
existed  in  the  community,  with  its  evil  surroundings  and  immoral 
tendencies.  What  influence  was  exerted  upon  the  mind  of  the 
widow  by  the  mere  fact  of  the  existence  of  such  a  place  to  which 
resort  could  be  had,  cannot  of  course  appear  except  by  inference. 
But  if  the  evidence  was  not  sufliciently  strong  to  authorize  the 
court  to  hold  as  a  question  of  law  that  the  parties  were  not  in 
pari  delicto,  it  at  least  presented  a  question  of  mixed  fact  and  law 
for  the  jury. 

Our  opinion  is  that  the  same  reasons  that  have  induced  courts 
to  declare  contracts  for  the  promotion  of  marriage  void,  dictate 
with  equal  force  that  they  should  be  set  aside  and  the  parties 
restored  to  their  original  position.  To  decide  that  money  could 
not  be  recovered  back  would  be  to  establish  the  rules  by  which 
the  defendant  and  others  of  the  same  ilk  could  ply  their  trade 
and  secure  themselves  in  the  fruits  of  their  illegal  transactions. 

We  are  of  the  opinion,  therefore,  that  the  Common  Pleas  erred 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  407 

in  reversing  the  order  of  the  City  Court,  and  that  a  new  trial 
should  have  been  granted. 

The  order  appealed  from  should  be  reversed,  and  the  order  of 
the  General  Term  of  the  City  Court  affirmed,  with  costs. 

All  concur.     Order  reversed. 


BERNAED  v.  TAYLOR. 

23  OREGON,  416.  — 1893. 

Lord,  C.  J.  This  was  an  action  to  recover  the  sum  of  five 
hundred  and  sixty  dollars  deposited  with  the  defendant  as  a 
wager  on  the  result  of  a  foot  race.  The  case  was  tried  without 
the  intervention  of  a  jury,  and  the  material  facts  as  found  by  the 
court  are:  That  the  plaintiff  deposited  with  the  defendant  the 
sum  of  five  hundred  and  sixty  dollars  in  gold  for  the  benefit  of 
one  George  Grant,  and  as  a  wager  upon  a  foot  race  which  said 
Grant  and  one  Anderson  were  to  run  the  next  day  at  a  place 
agreed  upon ;  that  at  the  time  the  said  money  was  so  deposited, 
it  was  understood  by  Grant  and  the  defendant  Taylor  and  the 
plaintiff  that  the  money  should  be  paid  back  to  the  plaintiff  on 
his  demand  for  the  same  at  any  time  before  the  race  should  be 
run,  which  the  defendant  agreed  to  do;  that  before  such  race  was 
run  the  plaintiff  on  two  occasions  demanded  said  money  of  the 
defendant,  who  refused  to  pay  it  back,  but  pretends  that  said 
race  was  run,  and  that  Anderson  was  the  winner,  to  whom  he 
paid  the  money  before  the  commencement  of  this  action ;  that  the 
race  agreed  to  be  run  was  not  run,  but  that  Grant,  at  the 
appointed  time,  refused  to  run,  and  Anderson  ran  over  the  course 
alone  and  was  declared  by  the  defendant  to  be  the  winner;  that 
said  pretended  race  was  never  intended  to  be  a  fair  and  honest 
race,  and  that  plaintiff  knew  at  the  time  he  deposited  his  money 
with  the  defendant  that  the  race  was  to  be  a  "  bogus  race  " ;  that 
the  parties  engaged  in  getting  it  up,  namely.  Grant,  Anderson, 
and  the  defendant,  wanted  to  "  rope  in  "  somebody ;  that  it  was 
understood  that  Grant  was  to  win  the  race;  that  the  plaintiff 
furnished  the  money  and  deposited  it  with  the  defendant  as  stake- 


408  FORMATION   OF  CONTRACT.  [Pakt  H. 

holder  for  the  benefit  of  Grant,  in  whom  he  had  confidence  at  the 
time,  but  of  whom,  before  the  time  appointed  for  the  race  to  come 
off,  he  became  suspicious ;  that  he  feared  that  he  would  lose  the 
money,  and  thereupon,  by  reason  of  such  suspicion,  and  by  virtue 
of  the  agreement  with  the  defendant,  demanded  of  the  defendant 
the  return  of  said  money,  and  that  said  Grant  then  and  there, 
before  the  time  of  running  the  race  had  arrived,  demanded  of  the 
defendant  the  repayment  of  the  money  to  the  plaintiff,  etc. 
Substantially  upon  such  findings,  the  court  found  as  a  conclusion 
of  law  that  the  plaintiff  was  entitled  to  judgment  for  the  sum  of 
five  hundred  and  sixty  dollars  and  interest,  and  for  costs,  etc. 
From  this  judgment  the  appeal  has  been  brought  to  this  court. 
1.  The  first  contention  for  the  defendant  is,  that  wagers  or 
wagering  contracts  upon  indifferent  subjects  are  valid  in  this 
State  by  force  of  the  common  law,  except  when  prohibited  by 
statute.  There  can  be  no  doubt  that  wager  contracts  upon 
indifferent  matters  were  valid  at  common  law.  Good  v.  Elliott, 
3  T.  R.  693;  Jones  v.  Randall,  1  Cowp.  37;  Da  Costa  v.  Jones, 
2  Cowp.  734;  Bunn  v.  Biker,  4  Johns.  427  (4  Am.  Dec.  292). 
But  all  wagers  which  tended  to  a  breach  of  the  peace,  or  to 
injure  the  feelings,  character,  or  interests  of  third  persons,  or 
which  were  against  the  principles  of  morality,  or  of  sound  policy, 
were  void  at  common  law.  4  Kent's  Com.  466;  Greenhood,  Pub. 
Pol.  226.  And  all  wagers  in  contravention  of  the  positive  pro- 
visions of  any  statute  are  also  void.  Of  late  years,  by  legislation 
and  judicial  decision,  the  hostility  to  wagers  of  every  nature  has 
been  marked.  This  is  doubtless  due  to  the  increase  of  betting 
and  the  evil  consequences  resulting  therefrom.  As  O'Neal,  J., 
said:  "Evety  bet  tends  directly  to  beget  a  desire  of  possessing 
another's  money  or  property  without  an  equivalent.  Men  acted 
upon  by  such  influences  easily  become  gamblers,  and  then  the 
road  to  every  other  vice  is  broad  and  plain."  Rice  v.  Gist,  1 
Strob.  (S.  C.)  84.  And  the  tendency  of  judicial  opinion  in 
repudiating  all  kinds  of  wagers  is  well  illustrated  in  Love  v. 
Harvey  (114  Mass.  82),  wherein  Gray,  C.  J.,  says:  "It  is  inconsist- 
ent with  the  policy  of  our  laws  and  with  the  performance  of 
duties  for  which  courts  of  justice  are  established,  that  judges  and 
juries  should  be   occupied  with  every  frivolous  question  upon 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  40^ 

which  idle  and  foolish  persons  may  choose  to  lay  a  wager. '^ 
Equally  emphatic  is  Belford,  J.,  in  Eldred  v,  Malloy  (2  Col.  321), 
wherein  he  says:  "If  we  enter  upon  the  work  of  settling  beta 
made  by  gamblers  in  one  case  ...  we  may  despair  of  ever  find- 
ing time  for  the  dispatch  of  these  weightier  matters  which  affect 
the  person  and  property  rights  of  the  respectable  people  in  this 
territory.  If  the  gate  is  once  opened  for  this  kind  of  litigation,  it 
is  more  than  probable  we  may  be  overrun  with  questions  arising 
out  of  bets.  The.  spirit  of  our  laws  discountenances  gambling." 
Wagers  are  inconsistent  with  the  established  interests  of  society, 
and  in  conflict  with  morals  of  the  age,  and  as  such  they  are 
void  as  against  public  policy.  In  view  of  these  considerations,  we 
do  not  think  that  such  transactions,  though  upon  indifferent 
subjects,  are  valid  in  this  State. 

2.  The  next  contention  for  the  defendant  is,  that  the  alleged 
agreement  was  corrupt,  illegal,  and  criminal  in  this,  that  it  was 
in  advance  "  fixed  "  that  one  of  the  parties  should  win,  and  that 
certain  persons  should  lose  their  money ;  in  other  words,  that  the 
agreement  had  in  contemplation  "a  job  race."  This,  it  is 
claimed,  put  the  plaintiff  in  pari  delicto  with  the  defendant,  and 
as  a  consequence  he  is  entitled  to  the  benefit  of  the  rule  potior  est 
conditio  possidentis.  The  general  rule  is,  that  the  law  will  not 
interfere  in  favor  of  either  party  in  pari  delicto,  but  will  leave  them 
in  the  condition  in  which  they  are  found,  from  motives  of  public 
policy.  There  is  no  doubt,  where  money  has  been  paid  on  an 
illegal  contract  which  has  been  executed,  and  both  parties  are  in 
part  delicto,  the  courts  will  not  compel  the  return  of  the  money 
so  paid.  But  the  cases  show  that  an  important  distinction  is 
made  between  executory  and  executed  illegal  contracts.  While 
the  contract  is  executory,  the  law  will  neither  enforce  it  nor 
award  damages,  but  the  party  paying  the  money,  or  putting  up 
the  property,  may  rescind  the  contract  and  recover  back  his 
money.  If  the  contract  is  already  executed,  nothing  paid  or 
delivered  can  be  recovered  back.  This  arises  out  of  a  distinction 
between  an  action  in  affirmance  of  an  illegal  contract  and  one  in 
disaffirmance  of  it.  In  the  former,  such  an  action  cannot  be 
maintained,  but  in  the  latter,  an  action  may  be  maintained  for 
money  had  and  received.     The  reason  is,  that  the  plaintiff's  claim 


410  FORMATION  OF  CONTRACT.  [Part  H. 

is  not  to  enforce,  but  to  repudiate,  an  illegal  agreement.  Whar- 
ton, Con.  354.  In  such  case  there  is  a  locus  poenitenticB ;  the 
wrong  is  not  consummated,  and  the  contract  may  be  rescinded  by 
«ither  party. 

In  Edgar y.  Fowler  (3  East,  225)  Lord  EUenborough  said:  "In 
illegal  transactions  the  money  has  always  been  stopped  while  it 
is  in  transitu  to  the  person  entitled  to  receive  it."  As  Lord 
Justice  Mellish  said:  "To  hold  that  the  plaintiff  is  entitled  to 
recover  does  not  carry  out  the  illegal  transaction,  but  the  effect  is 
to  put  everybody  in  the  same  situation  as  they  were  before  the 
illegal  transaction  was  determined  upon,  and  before  the  parties 
took  any  steps.  If  money  is  paid  or  goods  delivered  for  an  illegal 
purpose,  the  person  who  has  so  paid  the  money  or  delivered  the 
goods  may  recover  them  back  before  the  illegal  purpose  is  carried 
out;  but  if  he  waits  till  the  illegal  purpose  is  carried  out,  or  if 
he  seeks  to  enforce  the  illegal  transaction,  in  neither  case  can  he 
maintain  an  action;  the  law  will  not  allow  that  to  be  done." 
Taylor  v.  Bowers,  1  Q.  B.  Div.  291.  In  Hastelow  v.  Jackson 
(8  Barn.  &  Cress.  221),  which  was  an  action  by  one  of  the  parties 
to  a  wager  on  the  event  of  a  boxing  match,  commenced  against 
the  stakeholder  after  the  battle  had  been  fought,  Littledale,  J., 
said :  "  If  two  persons  enter  into  an  illegal  contract  and  money  is 
paid  upon  it  by  one  to  the  other,  that  may  be  recovered  back 
"before  the  execution  of  the  contract,  but  not  afterwards."  Smith 
V.  Bickmore,  4  Taunt.  474;  Tappenden  v.  Randall,  2  Bos.  &  Pul. 
467;  Lowry  v.  Bourdien,  2  Doug.  468;  Munt  v.  Stokes,  4  T.  R. 
561 ;  Utica  Ins.  Co.  v.  Kip,  8  Cow.  20 ;  Merritt  v.  Millard,  4  Keys 
Q^.  Y.),  208;  White  v.  Franklin  Bank,  22  Pick.  181;  0' Bryan  v. 
Fitzpatrick,  48  Ark.  490.  "And  this  rule,"  says  Mr.  Justice 
Woods,  "  is  applied  in  the  great  majority  of  the  cases,  even  when 
the  parties  to  an  illegal  contract  are  in  pari  delicto,  because  the 
question  which  of  two  parties  is  the  more  blamable  is  often  diffi- 
cult of  solution,  and  quite  immaterial."  Spring  Co.  v.  Knowlton, 
103  U.  S.  60.  The  object  of  the  law  is  to  protect  the  public,  and 
not  the  parties.  This  is  upon  the  principle  that  it  best  comports 
with  public  policy  to  arrest  the  illegal  transaction  before  it  is 
consummated.     Stacy  v.  Foss,  19  Me.  335  (36  Am.  Dec.  755). 

3.    It  only  remains   to   apply  these  principles   to   the   facts. 


Chap.  V.  §  2.]  LEGALITY  OF  OBJECT.  411 

These  show  that  the  plaintiff  was  cognizant  that  the  race  had  been 
fixed  in  advance  —  that  one  of  the  parties  should  win,  and  that 
certain  other  persons  should  lose  their  money  —  that  it  was  a  bogus 
race,  and  the  arrangement  based  upon  it  corrupt,  and  designed 
to  cheat  and  defraud  the  other  parties;  but,  at  the  same  time, 
they  show  that  he  repented  and  repudiated  the  transaction  before 
it  was  consummated,  by  demanding  the  return  of  his  money  the 
evening  of  the  day  before  the  race,  and  on  the  day  of  the  race, 
but  before  it  was  to  come  off,  and  that  the  defendant  refused  to 
pay  it  back,  and  that  he  afterwards  forbade  the  defendant  to  pay 
said  money  to  any  other  person  than  himself.  He  availed  him- 
self of  the  opportunity  which  the  law  affords  a  person  to  with- 
draw from  the  illegal  contract  before  it  has  been  executed;  he 
repented  before  the  meditated  wrong  was  consummated,  and  twice 
demanded  to  withdraw  his  money,  and  thereby  rescinded  the  con- 
tract. To  allow  the  plaintiff  to  recover  does  not  aid  or  carry  out 
the  corrupt  and  illegal  transaction,  but  the  effect  is  to  put  the 
parties  in  the  same  condition  as  they  were  before  it  was  deter- 
mined upon.  By  allowing  the  party  to  withdraw,  the  contem- 
plated wrong  is  arrested,  and  not  consummated.  This  the  law 
encourages,  and  no  obstacle  should  be  thrown  in  the  way  of  his 
repentance.  Hence,  if  the  plaintiff  retreated  before  the  bet  had 
been  decided,  his  money  ought  to  have  been  returned  to  him,  and 
in  default  of  this  he  is  entitled  to  recover. 

There  was  no  error,  and  the  judgment  must  be  a£&rraed.^ 

1  See  also,  Tyler  v.  Carlisle,  79  Me.  210,  ante,  p.  390. 


/ 


H- 


Paet   hi. 
THE  OPEKATION  OF  CONTRACT. 

CHAPTER  I. 

THE  LIMITS  OF  THE  CONTRACTUAL  OBLIGATION. 

§  1.  A  man  cannot  incur  liabilities  from  a  contract  to  'which  he 
was  not  a  party. 

(i.)  Paying  another's  debt. 

CRUMLISH'S  ADM'R  v.  CENTRAL  IMPROVEMENT  CO. 

et  al. 

38  WEST  VIRGINIA,  390.— 1893. 

Suit  in  equity  against  the  Central  Improvement  Co.  for  the 
distribution  of  a  fund  for  the  payment  of  creditors  of  the  com- 
pany. Among  the  demands  presented  for  payment  was  a  judg- 
ment in  favor  of  Jamison  &  Co.,  which  was  disallowed,  payment 
being  pleaded.     Jamison  &  Co.  appeal. 

In  a  suit  by  Jamison  &  Co.  against  the  Central  Improvement 
Co.,  Jamison  &  Co.  had  attached  bonds  of  the  Shenandoah 
Valley  Railroad  held  by  a  third  party  for  the  benefit  of  the 
Central  Improvement  Co.  The  Railroad  Co.  desired  to  make  a 
new  loan,  and  in  order  to  cancel  the  bonds  that  had  been  attached, 
devised  the  following  plan:  Jamison  &  Co.  and  Clark  &  Co.,  the 
latter  bankers  and  financial  agents  for  the  Railroad  Co.,  agreed 
that  Jamison  &  Co.  should  transfer  to  Clark  &  Co.  all  their  in- 
terest in  the  bonds.  Jamison  &  Co.  were  to  get  judgment  upon  the 
attachments,  levy  upon  and  sell  the  bonds,  and  if  they  were  not 
bid  up  to  the  amount  of  the  judgment,  then  Jamison  &  Co.  were 
to  buy  them  and  transfer  them  to  Clark  &  Co.,  whereupon  Clark 
&  Co.  were  "to  pay"  to  Jamison  &  Co.,  in  cash  and  notes,  the 

412 


r.HA¥.  I.  §  1.]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  413 

amount  of  the  judgment  against  the  Central  Improvement  Co. 
The  bonds  sold  for  less  than  the  amount  of  the  judgment,  and 
Clark  &  Co.  paid  to  Jamison  &  Co.  the  balance  of  the  judgment 
as  agreed,  receiving  in  return  a  transfer  of  the  bonds.  In  con- 
sequence of  this  transaction,  the  commissioner  reported  the 
judgment  as  paid,  and  disallowed  the  claim. 

Brannon,  J.  .  .  .  But  this  payment  was  made  by  a 
stranger,  without  request  or  ratification  by  the  debtor,  so  far  as 
appears.  Does  it  satisfy  the  judgment?  As  it  seems  to  me, 
the  answer  depends  upon  whether  you  mean  as  to  the  creditor  or 
debtor.  It  remains  a  correct  legal  proposition  to  the  present,  | 
that  one  man,  who  is  under  no  obligation  to  pay  the  debt  of  I 
another,  cannot  without  his  request  officiously  pay  that  other's  / 
debt,  and  charge  him  with  it.  If  the  debtor  ratify  such  pay- 
ment, the  debt  is  discharged,  and  he  becomes  liable  to  the  stranger 
for  money  paid  to  his  use.  If  he  refuse  to  ratify  it,  he  disclaims 
the  payment,  and  the  debt  stands  unpaid  as  to  him.  In  the  one 
case,  the  stranger  would  at  law  sue  the  debtor  for  money  paid 
to  his  use ;  in  the  other,  enforce  the  debt  in  the  creditor's  name 
for  his  use.  If  his  payment  is  not  ratified,  he  may  go  into  equity 
praying  that,  if  the  debtor  ratify  it,  said  debtor  may  be  decreed 
to  repay  him,  or,  if  the  debtor  do  not  ratify  the  payment,  that 
the  debt  be  treated  as  unpaid  as  between  him  and  the  debtor, 
and  that  it  be  enforced  in  his  favor  as  an  equitable  assignee. 
Neely  v.  Jones,  16  W.  Va.  625;  Moore  v.  Ligon,  22  W.  Va.  292; 
Beard  v.  ArbucJcle,  19  W.  Va.  135. 

But  how  as  to  the  creditor?  When  a  stranger  pays  him  the  \ 
debt  of  a  third  party  without  the  request  of  such  third  party,  as  ) 
in  this  case,  can  the  creditor  say  the  debt  is  yet  unpaid,  and  en-  | 
force  it  against  the  debtor,  as  is  attempted  to  be  done  by  Jamison  / 
&  Co.?  Can  he  accept  such  payment  and  say,  because  it  was  I 
made  by  a  stranger,  it  is  no  payment?  Is  his  acceptance  not  any 
estoppel  by  conduct  in  pais,  as  to  him?  ^ 

There  has  been  a  difference  of  opinion  in  this  matter.  The 
old  English  case  of  Orymes  v.  Blofield  (Cro.  Eliz.  541),  decided 
in  Elizabeth's  reign,  is  the  parent  of  the  cases  holding  that  even 
the  creditor  accepting  payment  from  a  stranger  may  repudiate, 
and  still  enforce  his  demand  as  unpaid.     That  case  is  said  to 


414  OPERATION  OF  CONTRACT.  [Pabt  IIL 

have  decided  that  a  plea  of  accord  and  satisfaction  by  a  stranger 
is  not  good,  while  Rolle.  Abr.  471  (condition  F.)  says  it  was 
decided  just  the  other  way.  Denman,  C.  J.,  questioned  its 
authority  in  Thurman  v.  Wild  (11  A.  &  E.  453,  39  E.  C.  L. 
145).  Opposite  holding  has  been  made  in  England  in  Hawkshaw 
V.  Rawlings  (1  Strange,  24).  Its  authority  is  questioned  at  the 
close  of  the  opinion  by  Cresswell,  J.,  in  Jones  v.  Broadhurst  (9 
M.  G.  &  S.,  C.  B.,  173,  67  E.  C.  L.  172),  as  contrary  to  an  ancient 
decision  in  36  Hen.  VI.,  and  against  reason  and  justice.  Parke, 
B.,  seemed  to  think  it  law  in  Simpson  v.  Eggington  (10  Exch. 
845).  It  was  followed  in  Edgcombe  v.  Rodd  (5  East,  294)  and 
Stark  V.  Thompson  (3  T.  B.  Mon.  296).  Lord  Coke  held  the  sat- 
isfaction good.  Co.  Litt.  206  b,  207  a.  See  5  Rob.  Pr.  (Xew) 
884;  7  Rob.  Pr.  (New)  548.  The  cases  of  Goodwin  v.  Cremer 
(18  A.  &  E.,  N.  S.  757,  83  E.  C.  L.  757),  and  Kemp  v.  Balls  (10 
Exch.  607,  28  Eng.  Law  &  Eq.  498),  seem  to  hold  that  payment 
must  be  made  by  a  third  person  as  agent  for,  and  on  account  of, 
debtor,  with  his  assent  or  ratification.  In  New  York  old  cases 
held  this  doctrine.  Clow  v.  Borst,  6  Johns.  37;  Bleakley  v. 
White,  4  Paige,  654.  But  later,  in  Wellington  v.  Kelly  (84 
N.  Y.  543),  Andrews,  J.,  said  that  the  old  cases  were  doubtful, 
but  had  not  been  overruled,  but  it  was  not  necessary  in  that  case 
to  say  whether  it  should  longer  be  regarded  as  law,  and  the 
syllabus  makes  a  quaere  on  the  point.  It  was  held  in  Harrison 
V.  Hicks  (1  Port.  Ala.  423),  that  "payment  of  a  debt,  though 
made  by  one  not  a  party  to  the  contract,  and  though  the  assent 
of  the  debtor  to  the  payment  does  not  appear,  is  still  the  extin- 
guishment of  the  demand."  The  opinion  says  that,  as  between 
the  person  paying  and  him  for  whose  benefit  it  was  paid,  a 
question  might  arise  whether  it  was  voluntary,  which  would 
depend  on  circumstances  of  previous  request  or  subsequent 
[assent],  express  or  implied.  This  doctrine  is  sustained  by 
Martin  v.  Quinn,  37  Cal.  55;  Gh'ay  v.  Herman,  lb  "Wis.  453  (44 
N.  W.  Kep.  248);  Cain  v.  Bryant,  12  Heisk.  45;  Leavitt  v. 
Morrow,  6  Ohio  St.  71;  Webster  v.  Wyser,  1  Stew.  (Ala.)  184; 
Harvey  v.  Tama  Co.,  53  la.  228  (5  N.  W.  Eep.  130).  Bish.  Cont. 
§  211  holds  that,  if  payment  "be  accepted  by  creditor  in  dis- 
charge of  debt,  it  has  that  effect."     See  2  Whart.  Cont.  §  1008. 


Chap.  I.  §  1.]      LIMITS  OF  CONTRACTUAL  OBLIGATION.  416 

It  seems  utterly  unjust  and  repugnant  to  reason,  that  a  creditor 
accepting  payment  from  a  stranger  of  the  third  person's  debt 
should  be  allowed  to  maintain  an  action  against  the  debtor  plead- 
ing and  thereby  ratifying  such  payment,  on  the  technical  theory 
that  he  is  a  stranger  to  the  contract.  The  creditor  has  himself 
for  this  purpose  allowed  him  to  make  himself  a  quasi  party,  and 
consents  to  treat  him  so,  so  far  as  payment  is  concerned.  To 
regard  the  debt  paid,  so  far  as  he  is  concerned,  is  but  to  hold  him 
to  the  result  of  his  own  act.  Shall  he  collect  the  debt  again? 
In  that  case  can  the  stranger  recover  back?  What  matters  it  to 
the  creditor  who  pays?  As  the  Supreme  Courts  of  Wisconsin 
and  ,Ohio,  in  cases  above  cited  said,  this  doctrine  is  against 
common  sense_and  justice.  It  does  not  at  all  infringe  the  rule 
that  one  cannot  at  law  make  another  his  debtor  without  request, 
to  allow  such  payment  to  satisfy  the  debt  as  to  the  creditor ;  and 
this  court,  while  recognizing  the  rule  that  one  cannot  officiously 
pay  the  debt  of  another  and  sue  him  at  law,  unless  he  has  ratified 
it,  by  allowing  the  stranger  to  go  into  equity  and  get  repayment, 
makes  the  payment  in  the  eyes  of  a  court  of  equity  operate  to 
satisfy  the  creditor,  and  render  the  stranger  a  creditor  of  the 
debtor.  Neely  v.  Jones,  16  W.  Va.  625.  I  know  that  in  that 
case  it  is  held  that,  "  if  a  payment  by  a  stranger  is  neither  rati- 
fied or  authorized  by  the  debtor,  it  will  not  be  held  to  be  a  dis- 
charge of  the  debt;  "  but,  though  this  point  is  general,  that  was 
a  case  of  the  stranger  seeking  to  make  the  debtor  repay,  and  the 
case  and  opinion  intended  to  lay  down  the  rule  at  law  only  as 
between  the  stranger  paying  and  the  debtor,  not  as  between  the 
creditor  and  debtor.  So  I  hold  that,  when  Jamison  &  Co.  re- 
ceived the  money  for  this  judgment,  it  operated  as  a  discharge  as 
to  them. 

***** 

Therefore,  so  much  of  the  decree  of  March  2,  1891,  as  rejects 
the  claim  of  B.  K.  Jamison  &  Co.  ...  is  afiirmed.^ 

1  Cf .  Gleason  v.  Dyke,  22  Pick.  390,  ante,  p.  206. 

The  maker  of  a  note  cannot  avail  himself  of  a  part  payment  made  thereon 
by  an  indorser.     Madison  Sq.  Bk.  v.  Pierce^  137  N.  Y.  444. 


416  OPERATION  OF  CONTRACT.  [Pabt  IIL 

(it.)  Inducing  breach  of  contract. 

WALKER  et  al.  v.  CRONIN. 
107  MASSACHUSETTS,  556.  — 1871, 

Tort.     Demurrer  to  declaration  sustained.     Plaintiffs  appeal. 

Wells,  J.  .  .  .  The  second  and  third  counts  recite  con- 
tracts of  the  plaintiffs  with  their  workmen  for  the  performance 
of  certain  work  in  the  manufacture  of  boots  and  shoes;  and 
allege  that  the  defendant,  well  knowing  thereof,  with  the  unlaw- 
ful purpose  of  hindering  and  preventing  the  plaintiffs  from  carry- 
ing on  their  business,  induced  said  persons  to  refuse  and  neglect 
to  perform  their  contracts,  whereby  the  plaintiffs  suffered  great 
damage  in  their  business. 

It  is  a  familiar  and  well-established  doctrine  of  the  law  upon 
the  relation  of  master  and  servant,  that  one  who  entices  away  a 
servant,  or  induces  him  to  leave  his  master,  may  be  held  liable 
in  damages  therefor,  provided  there  exists  a  valid  contract  for 
continued  service,  known  to  the  defendant.  It  has  sometimes 
been  supposed  that  this  doctrine  sprang  from  the  English  statute 
of  laborers,  and  was  confined  to  menial  service.  But  we  are  sat- 
isfied that  it  is  founded  upon  the  legal  right  derived  from  the 
contract,  and  not  merely  upon  the  relation  of  master  and  servant; 
and  that  it  applies  to  all  contracts  of  employment,  if  not  to  con- 
tracts of  every  description. 

In  Hart  v.  Aldridge  (Cowp.  54)  it  was  applied  to  a  case  very 
much  like  the  present. 

In  Gunter  v.  Astor  (4  J.  B.  Moore,  12)  it  was  applied  to  the 
enticing  away  of  workmen  not  hired  for  a  limited  or  constant 
period,  but  who  worked  by  the  piece  for  a  piano  manufacturer. 

In  Sheperd  v.  Wdkeman  (Sid.  79)  it  was  applied  to  the  loss 
of  a  contract  of  marriage  by  reason  of  a  false  and  malicious  letter 
claiming  a  previous  engagement. 

In  Winsmore  v.  GreenbanJc  (Willes,  577)  the  defendant  was 
held  liable  in  damages  for  unlawfully  and  unjustly  "  procuring, 
enticing,  and  persuading"  the  plaintiff's  wife  to  remain  away 
from  him,  whereby  he  lost  the  comfort  and  society  of  his  wife, 
and  the  profit  and  advantage  of  her  fortune. 


Chap.  I.  §  1.]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  417 

In  Lumley  v.  Gye  (2  El.  &  Bl.  216)  the  plaintiff  had  engaged 
Miss  Wagner  to  sing  in  his  opera,  and  the  defendant  knowingly- 
induced  her  to  break  her  contract  and  refuse  to  sing.  It  was 
objected  that  the  action  would  not  lie,  because  her  contract  was 
merely  executory,  and  she  had  never  actually  entered  into  the 
service  of  the  plaintiff;  and  Coleridge,  J.,  dissented,  insisting 
that  the  only  foundation  for  such  an  action  was  the  statute  of 
laborers,  which  did  not  apply  to  service  of  that  character;  but 
after  full  discussion  and  deliberation  it  was  held  that  the 
action  would  lie  for  the  damages  thus  caused  by  the  defendant. 

In  Boston  Glass  Manufactory  v.  Binney  (4  Pick.  425),  which 
was  for  inducing  workmen,  skilled  in  several  departments  of 
glass-making,  to  leave  the  employment  of  the  plaintiff,  it  was 
not  suggested  that  the  defendants  would  not  have  been  liable  if 
there  had  been  an  existing  contract  between  the  plaintiff  and  the 
workmen. 

Upon  careful  consideration  of  the  authorities,  as  well  as  of  the 
principles  involved,  we  are  of  opinion  that  a  legal  cause  of  action 
is  sufficiently  stated  in  each  of  the  three  counts  of  the  declara- 

Demurrer  overruled.* 

^  Inducing  Workmen  to  quit  Employment.  —  The  general  rule  in  the 
United  States  is  in  accordance  with  the  English  authorities  and  the  above 
case.  In  Old  Dominion  S.  S.  Co.  v.  McKenna  (30  Fed.  Rep.  48 ;  S.  C. 
Burdick's  Cases  on  Torts,  195)  the  court,  Brown,  J.,  said:  "The  defend- 
ants not  being  in  the  plaintiff's  employ,  and  without  any  legal  justification 
so  far  as  appears,  —  a  mere  dispute  about  wages,  the  merits  of  which  are  not 
stated,  not  being  any  legal  justification,  —  procured  plaintiff's  workmen  in 
this  city  and  in  Southern  ports  to  quit  work  in  a  body,  for  the  purpose  of 
Inflicting  injury  and  damage  upon  the  plaintiff  until  it  should  accede  to  the 
defendants'  demands,  and  pay  the  Southern  negroes  the  same  wages  as  New 
York  'longshoremen,  which  the  plaintiff  was  under  no  obligation  to  grant ; 
and  such  procurement  of  workmen  to  quit  work,  being  designed  to  inflict 
injury  on  the  plaintiff,  and  not  being  justified,  constituted  in  law  a  malicious 
and  illegal  interference  with  the  plaintiff's  business,  which  is  actionable." 
In  Toledo  &c.  By.  Co.  v.  Pennsylvania  Co.  et  al.  (54  Fed.  Rep.  730)  the 
court  granted  a  temporary  injunction,  pending  the  action,  against  the  Chief 
of  the  Brotherhood  of  Locomotive  Engineers,  restraining  him  from  issuing 
or  continuing  in  force  any  rule  or  order  of  the  Brotherhood  ordering  en- 
gineers not  to  handle  the  cars  of  the  complainant  company.  Taft,  Circuit 
Judge  (p.  744),  says:  "The  many  engineers  who  serve  the  defendant  com- 
panies will  refuse  to  handle  the  complainant's  freight.  The  defendant  com- 
panies will  probably  be  coerced  thereby  to  refuse  complainant's  freight.  .  .  . 


418  OPERATION  OF  CONTRACT.  [Part  IIL 

JONES   V.    STANLY. 

76  NORTH  CAROLINA,  355. —1877. 

Action  for  damages.  Judgment  for  plaintiff,  which  was  ar- 
rested by  trial  court.     Plaintiff  appeals. 

Rodman,  J.  It  was  decided  in  Haskins  v.  Royster  (70  N.  C. 
601)  that  if  a  person  maliciously  entices  laborers  or  croppers  to 
break  their  contracts  with  their  employer  and  desert  his  service, 
the  employer  may  recover  damages  against  such  person.  The 
same  reasons  cover  every  case  where  one  person  maliciously  per- 
suades another  to  break  ajiy  contract  with  a  third  person.  It  is 
not  confined  to  contracts  for  service.  In  the  present  case  the 
plaintiff  made  a  contract  with  the  Atlantic  &  North  Carolina 
Railroad  Company,  of  which  the  defendant  was  President  and 
Superintendent,  by  which  the  company  agreed  to  transport  from 
points  on  their  road  to  Morehead  City  a  large  number  of  cross- 
ties  which  plaintiff  had  contracted  to  deliver  in  Cuba.  After  the 
contract  had  been  partly  performed  the  defendant,  being  still 
President  and  Superintendent  of  the  company,  maliciously  and 

The  injury  will  be  irreparable,  and  a  judgment  for  damages  at  law  will  be 
wholly  inadequate.  The  authorities  leave  no  doubt  that  in  such  a  case  an. 
injunction  will  issue  against  a  stranger  who  thus  intermeddles,  and  harasses 
complainant's  business.  ...  It  would  seem  from  the  foregoing  authorities 
that  we  may  enjoin  Arthur  from  directing  the  engineers  to  quit  work,  for 
the  purpose  of  coercing  the  defendant  companies  to  violate  the  law  and  the 
complainant's  rights.  Though  we  cannot  enjoin  the  engineers  from  unlaw- 
fully quitting,  it  does  not  follow  that  we  may  not  enjoin  Arthur  from  order- 
ing them  to  do  so."  In  Webber  v.  Barry  (66  Mich.  127)  it  was  held  that 
one  who  enters  the  premises  of  another  "for  the  purpose  of  inducing  per- 
sons in  the  employ  of  that  other  to  leave  their  employment  to  the  injury  of 
the  employer,  for  the  purpose  of  getting  higher  wages,  or  working  less  hours 
for  the  same  pay,  or  for  any  other  reason,"  is  a  trespasser.  See,  for  differ- 
ent phases  of  the  general  doctrine,  Bixby  v.  Dunlap,  56  N.  H.  456 ;  Has- 
kins V.  Boyster,  70  N.  C.  601  ;  Dickson  v.  Dickson,  33  La.  Ann.  1261.  That 
a  workman  has  an  action  against  one  who  maliciously  induces  his  employer 
to  discharge  him,  see  Chipley  v.  Atkinson,  23  Fla.  206. 

Inducing  Breach  of  Contract  of  Service  other  than  Manual.  — 
In  the  case  of  Bourlier  Brothers  v.  Macauley  (91  Ky.  135)  it  was  held  not 
actionable  for  defendant  to  induce  an  actress  to  break  her  contract  to  per- 
form at  plaintiff's  theatre  and  to  enter  into  a  contract  to  perform  at  defend- 
ant's rival  theatre.  The  court  expressly  declined  to  follow  Lumley  v.  Gye., 
and  approved  the  dissenting  opinion  of  Coleridge,  J.,  in  that  case. 


Chap.  I.  §  1]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  419 

for  the  purpose  of  injuring  the  plaintiff,  as  the  jury  have  found, 
refused  to  complete  the  contract,  whereby  plaintiff  was  injured. 
After  the  jury  had  found  a  verdict  for  the  plaintiff  and  assessed 
his  damages  the  judge  arrested  the  judgment,  and  the  plaintiff 
appealed.  In  this  we  think  the  judge  erred  and  his  judgment 
must  be  reversed. 

It  is  the  duty  of  this  court  to  give  such  judgment  as  it  appears 
on  the  record  that  the  court  below  should  have  given.  The 
plaintiff  moves  here  for  judgment  upon  the  verdict.  There  are 
no  exceptions  by  defendant  to  the  judge's  charge,  and  it  does  not 
appear  that  he  asked  for  a  new  trial.  The  instructions  of  the 
judge  on  the  question  of  damages  are  not  full,  but  it  does  not 
appear  that  he  was  requested  to  give  any  others.  If  he  had 
thought  the  damages  excessive,  he  would  have  set  the  verdict 
aside  and  given  a  new  trial  on  that  ground.  We  neither  do  nor 
can  know  anything  of  the  evidence,  and  if  we  did  we  could  not 
set  aside  the  verdict  and  give  a  new  trial  on  that  ground,  except 
perhaps  where  it  appeared  to  be  a  very  gross  case  of  excess. 

Judgment  below  reversed  and  a  judgment  in  this  court  for  the 

plaintiff  according  to  the  verdict. 

Judgment  reversed.* 

1  Accord :  Bice  v.  Manley,  66  N.  Y.  82,  where  the  contract  was  unenforce- 
able under  the  statute  of  frauds,  but  would  have  been  performed  had  not 
the  defendant  interfered. 

Contra:  Chambers  v.  Baldwin,  91  Ky.  121  ;  Boyson  v.  Thorn,  98  Cal. 
678.  These  cases  hold  that  an  action  can  be  maintained  only  when  the 
defendant  employs  some  unlawful  means,  as  threats,  violence,  falsehood,  or 
deception,  to  induce  the  breach  of  the  contract,  and  that  it  is  not  enough  to 
show  that  the  defendant  acted  maliciously.  In  Chambers  v.  Baldicin  (pp. 
126-7)  Lewis,  J.,  says :  "  Cooley  on  Torts,  497,  agreeing  with  Justice  Coler- 
idge, says :  '  An  action  cannot,  in  general,  be  maintained  for  inducing  a 
third  person  to  break  his  contract  with  the  plaintiff,  the  consequence  after 
all  being  only  a  broken  contract,  for  which  the  party  to  the  contract  may 
have  his  remedy  by  suing  upon  it.'  And  it  seems  to  us  that  rule  harmo- 
nizes with  both  principle  and  policy,  and  to  it  there  can  be  safely  and  con- 
sistently made  but  two  classes  of  exceptions ;  for,  as  to  make  a  contract 
binding,  the  parties  must  be  competent  to  contract  and  do  so  freely,  the 
natural  and  reasonable  presumption  is,  that  each  party  enters  into  it  with 
his  eyes  open,  and  purpose  and  expectation  of  looking  alone  to  the  other  for 
redress  in  case  of  breach  by  him.  One  such  exception  was  made  by  the 
Kn,i;lish  statute  of  laborers  to  apply  where  apprentices,  menial  servants, 
and  others  whose  sole  means  of  living  was  by  manual  labor,  were  enticed  to 


420  OPERATION  OF  CONTRACT.  [Part  HI. 

§  2.  Can  a  man  acquire  rights  under  a  contract  to  'which  he  Is 
not  a  party  ?     Promise  for  benefit  of  third  party. 

LEHOW  V.  SIMONTON  et  al 

3  COLORADO,  346.  — 1877. 

Assumpsit.  Plea  of  set-off.  A  demurrer  to  the  plea  was 
sustained. 

The  plea  set  forth  that  the  plaintiff,  Pierce,  had  purchased  the 
interest  of  one  Phifer  in  the  business  of  Simonton  &  Phifer,  and 
had  agreed  to  assume  one-half  of  the  indebtedness  of  the  firm 
jointly  with  the  plaintiff,  Simonton;  that  Simonton  &  Phifer 
were  then  indebted  to  defendant  in  the  sum  of  ^2000 ;  and  that 
Pierce  jointly  with  Simonton,  plaintiffs  herein,  undertook  and 
agreed  with  the  old  firm  to  pay  this  amount  to  defendant. 

Wells,  J.  1.  Whatever  may  be  the  general  rule  in  the  case 
of  a  plea,  it  is  certain  that  the  declaration  in  counting  upon  a 
promise  good  in  parol  by  the  common  law  need  not  show  a  com- 
pliance with  the  requisites  of  the  statute  of  frauds.  The  statute 
prescribes  a  rule  of  evidence,  and  not  a  rule  of  pleading.  Steph. 
PL  313,  374;  Brown  on  Stat,  of  Frauds,  §  505;  1  Chit.  PI.  (16th 
Am.  ed.)  245.  Now  the  plea  of  set-off  is  in  the  nature  of  a 
declaration,  and  in  respect  to  the  decree  of  certainty  required, 
is  governed  by  the  same  rule.  Waterman  on  Set-off,  §  646.  The 
-question,  whether  the  undertaking  mentioned  in  the  plea  is 
Tf ithin  the  statute  of  frauds,  does  not  arise. 

2.  It  seems  to  be  the  settled  doctrine  of  the  courts  of  England 
at  this  day,  that  a  stranger  to  the  consideration  cannot  enforce 
the  contract  by  an  action  thereon  in  his  own  name,  though  he  be 
avowedly  the  party  intended  to  be  benefited.  1  Chit,  on  Cont. 
(11th  Am.  ed.)  74.  In  this  country  there  are  many  cases  which 
assert  the  same  rule.  Salmon  v.  Brown,  6  Blackf.  347;  Britzell 
V.  Fryberger,  2  Cart.  176;  Clapp  v.  Lawton,  31. Conn.  103;  Conk- 
lin  V.  Smith,  7  Ind.  108 ;  Mellen  v.  Whipple,  IjGray,  321 ;  Robertson 

leave  their  employment,  and  may  be  applied  in  this  State  in  virtue  of  and  as 
regulated  by  our  own  statutes.  The  other  arises  where  a  person  has  been 
procured  against  his  will  or  contrary  to  his  purpose,  by  coercion  or  deception 
of  another,  to  break  his  contract.  Green  v.  Button,  2  Cromp.  M.  &  R.  707  ; 
Aihley  V.  Dixon,  48  N.  Y.  430." 


Chap.  I.  §  2.]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  421 

V,  Beed,  47  Penn.  St.  115;  Exchange  Bank  v.  Price,  107  Mass.  42; 
Warren  v.  Bachelder,  15  K.  H.  129  ;  McLaren  v.  Hutchison, 
18  Cal.  81,  and  some  others  which  are  not  accessible  to  us. 

But  as   respects  simple  contracts,  the  decided  preponderance! 
of  American  authority  sustains  the  action   of  the   beneficiary./ 
1  Pars,  on  Cont.  467;  1  Chit.  PI.  (16th  Am.  ed.)  5  n.  (n.  1);  2 
Greenl.  Ev.  109;   Thorp  v.  The  Keokuk  Coal  Co.,  48  N.  Y.  253; 
McDowell  V.  Laev,  35  Wis.  175;  Bowhanna^  v.  Pope,  42  Me.  93; 
Joslin  V.  N.  J.  Car  Spring  Co.,  36  N.  J.  L.  141;  Myer  v.  Lowell, 
44  Mo.  328  ;   Sanders  v.   Clason,  13  Minn.   379  ;    TJiompson  v. 
Gordon,  3  Strobh.  (S.  C.)  196;  Scott's  Adm'r  v.  Gill,  19  Iowa, 
187;  ^?fen  v.  Thomas,  3  Mete.  (Ky.)  198;  Draughan  v.  Bunting, 
9  Ired.  10;  Hendrick  v.  Lindsay,  3  Otto,  143;  Beasley  v.   IFe&- 
ster,   64  111.  458;    7n  re  i2tce,   9  Bankr.   Reg.  375;  Bagaley  v. 
TFafers,  7  Ohio  St.  369,  and  many  others  in  the  reports  of  the 
same  courts,  are  to  this  effect.     To  harmonize  the  decisions  is  I 
impossible.     The  doctrine  of  those  last  quoted,  while  confess- 
edly an  anomaly,  seems  to  us  the  more  convenient.     It  accords  1 
the  remedy  to  the  party  who  in  most  instances  is  chiefly  inter-  i 
ested  to  enforce  the  promise,  and  avoids  multiplicity  of  actions,  f 
That  it  should  occasion  injustice  to  either  party  seems  to  us 
impossible. 

3.  The  plea  fails  to  show  to  whom  the  promises  relied  upon 
were  made;  but  this  is  equivalent  to  stating  promise  to  the  party 
from  whom  the  consideration  proceeded.  1  Chit.  PI.  (16th  ed.) 
309  (A;.);  and  according  to  Delaivare  and  Hudson  Canal  Co.  v. 
Westchester  Bank  (4  Denio,  97),  this  is  the  proper  form  of  the 
averment. 

Judgment  reversed  with  costs,  and  cause  remanded.    Reversed.* 

1  "  It  is  also  argued,  as  Mansfield's  name  does  not  appear  in  the  letters  of 
Hendrick,  that  he  could  not  join  in  this  action.  This  would  be  true,  if  the 
promise  were  under  seal,  requiring  an  action  of  debt  or  covenant ;  but  the 
right  of  a  party  to  maintain  assumpsit  on  a  promise  not  under  seal,  made  to 
another  for  his  benefit,  although  much  controverted,  is  now  the  prevailing 
rule  in  this  country."  —  Mr.  Justice  Davis,  in  Hendrick  v.  Lindsay,  93  U.  S. 
143,  149. 

Accord:  Dean  v.  Walker,  107  111.  540;  Worley  v.  Sipe,  111  Ind.  238; 
Burton  v.  Larkin,  36  Kans.  246;  Coates  v.  Penn.  Ins.  Co.,  68  Md.  172; 
Rogers  v.  Oosnell,  58  Mo.  589 ;  Shamp  v.  Meyer,  20  Neb.  223 ;  Trimble  v. 
Strother,  26  Ohio  St.  378. 


422  OPERATION  OF  CONTRACT.  [Part  UI, 

LAWRENCE  v.  FOX. 

20  NEW  YORK,  268.  — 1859. 

Appeal  from  the  Superior  Court  of  the  city  of  Buffalo.  On 
the  trial  before  Mr.  Justice  Masten,  it  appeared  by  the  evidence 
of  a  bystander,  that  one  Holly,  in  i!^oveniber,  1857,  at  the  request 
of  the  defendant,  loaned  and  advanced  to  him  $300,  stating  at  the 
time  that  he  owed  that  sum  to  the  plaintiff  for  money  borrowed 
of  him,  and  had  agreed  to  pay  it  to  him  the  then  next  day ;  that 
the  defendant,  in  consideration  thereof,  at  the  time  of  receiving 
the  money,  promised  to  pay  it  to  the  plaintiff  the  then  next  day. 
Upon  this  state  of  facts  the  defendant  moved  for  a  nonsuit,  upon 
three  several  grounds,  viz. :  That  there  was  no  proof  tending  to 
show  that  Holly  was  indebted  to  the  plaintiff;  that  the  agreement 
by  the  defendant  with  Holly  to  pay  the  plaintiff  was  void  for 
want  of  consideration,  and  that  there  was  no  privity  between  the 
plaintiff  and  defendant.  The  court  overruled,  the  motion,  and 
the  counsel  for  the  defendant  excepted.  The  cause  was  then  sub- 
mitted to  the  jury,  and  they  found  a  verdict  for  the  plaintiff  for 
the  amount  of  the  loan  and  interest,  $344.66,  upon  which  judg- 
ment was  entered;  from  which  the  defendant  appealed  to  the 
Superior  Court,  at  General  Term,  where  the  judgment  was 
aflfirmed,  and  the  defendant  appealed  to  this  court.  The  cause 
was  submitted  on  printed  arguments. 

H.  Gray,  J.  The  first  objection  raised  on  the  trial  amounts 
to  this :  That  the  evidence  of  the  person  present,  who  heard  the 
declarations  of  Holly  giving  directions  as  to  the  payment  of  the 
money  he  was  then  advancing  to  the  defendant,  was  mere  hearsay 
and  therefore  not  competent.  Had  the  plaintiff  sued  Holly  for 
this  sum  of  money,  no  objection  to  the  competency  of  this  evidence 
would  have  been  thought  of;  and  if  the  defendant  had  performed 
his  promise  by  paying  the  sum  loaned  to  him  to  the  plaintiff, 
and  Holly  had  afterwards  sued  him  for  its  recovery,  and  this 
evidence  had  been  offered  by  the  defendant,  it  would  doubtless 
have  been  received  without  an  objection  from  any  source.  All 
the  defendant  had  the  right  to  demand  in  this  case  was  evidence 
which,  as  between  Holly   and  the  plaintiff,  was  competent  to 


Chap.  I.  §  2.]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  423 

establish  the  relation  between  them  of  debtor  and  creditor.  For 
that  purpose  the  evidence  was  clearly  competent;  it  covered  the 
whole  ground  and  warranted  the  verdict  of  the  jury. 

But  it  is  claimed  that,  notwithstanding  this  promise  was  estab- 
lished by  competent  evidence,  it  was  void  for  the  want  of  con- 
sideration. It  is  now  more  than  a  quarter  of  a  century  since  it 
was  settled  by  the  Supreme  Court  of  this  State  —  in  an  able  and 
painstaking  opinion  by  the  late  Chief  Justice  Savage,  in  which 
the  authorities  were  fully  examined  and  carefully  analyzed  — 
that  a  promise  in  all  material  respects  like  the  one  under  con-A 
sideration  was  valid;  and  the  judgment  of  that  court  was  unani-U 
mously  affirmed  by  the  court  for  the  correction  of  errors.  Farley 
v.  Cleveland,  4  Cow.  432;  same  case  in  error,  9  Id.  639.  In  that 
case  one  Moon  owed  Farley  and  sold  to  Cleveland  a  quantity  of 
hay,  in  consideration  of  which  Cleveland  promised  to  pay  Moon's 
debt  to  Farley;  and  the  decision  in  favor  of  Farley's  right  to 
recover  was  placed  upon  the  ground  that  the  hay  received  by 
Cleveland  from  Moon  was  a  valid  consideration  for  Cleveland's 
promise  to  pay  Farley,  and  that  the  subsisting  liability  of  Moon 
to  pay  Farley  was  no  objection  to  the  recovery.  The  fact  that 
the  money  advanced  by  Holly  to  the  defendant  was  a  loan  to  him 
for  a  day,  and  that  it  thereby  became  the  property  of  the  defend- 
ant, seemed  to  impress  the  defendant's  counsel  with  the  idea  that 
because  the  defendant's  promise  was  not  a  trust  fund  placed  by 
the  plaintiff  in  the  defendant's  hands,  out  of  which  he  was  to 
realize  money  as  from  the  sale  of  a  chattel  or  the  collection  of  a 
debt,  the  promise,  although  made  for  the  benefit  of  the  plain- 
tiff, could  not  inure  to  his  benefit.  The  hay  which  Cleveland 
delivered  to  Moon  was  not  to  be  paid  to  Farley,  but  the  debt 
incurred  by  Cleveland  for  the  purchase  of  the  hay,  like  the  debt 
incurred  by  the  defendant  for  money  borrowed,  was  what  was  to 
be  paid.  That  case  has  been  often  referred  to  by  the  courts  of 
this  State,  and  has  never  been  doubted  as  sound  authority  for  the 
principle  upheld  by  it.  Barker  v.  Bucklin,  2  Denio,  45 ;  Hudson 
Canal  Company  v.  The  Westchester  Bank,  4  Id.  97.  It  puts  to 
rest  the  objection  that  the  defendant's  promise  was  void  for  want 
of  consideration.  The  report  of  that  case  shows  that  the  promise 
was  not  only  made  to  Moon  but  to  the  plaintiff  Farley.     In  this 


424  OPERATION  OF  CONTRACT.  [Part  III. 

case  the  promise  was  made  to  Holly  and  not  expressly  to  the 
plaintiff;  and  this  difference  between  the  two  cases  presents  the 
question,  raised  by  the  defendant's  objection,  as  to  the  want  of 
privity  between  the  plaintiff  and  defendant. 

As  early  as  1806  it  was  announced  by  the  Supreme  Court  of 
this  State,  upon  what  was  then  regarded  as  the  settled  law  of 
England)  "  that  where  one  person  makes  a  promise  to  another  for 
the  benefit  of  a  third  person,  that  third  person  may  maintain  an 
action  upon  it."  Schemerhorn  v.  Vanderheyden  (1  John.  R.  140) 
has  often  been  reasserted  by  our  courts  and  never  departed  from. 
The  case  of  Seaman  v.  White  has  occasionally  been  referred  to 
(but  not  by  the  courts),  not  only  as  having  some  bearing  upon  the 
question  now  under  consideration,  but  as  involving  in  doubt  the 
soundness  of  the  proposition  stated  in  Schemerhorn  v.  Vander- 
heyden. In  that  case  one  Hill,  on  the  17th  of  August,  1835, 
made  his  note  and  procured  it  to  be  indorsed  by  Seaman  and 
discounted  by  the  Phoenix  Bank.  Before  the  note  matured  and 
while  it  was  owned  by  the  Phoenix  Bank,  Hill  placed  in  the  hands 
of  the  defendant,  Whitney,  his  draft  accepted  by  a  third  party, 
which  the  defendant  indorsed,  and  on  the  7th  of  October,  1835, 
got  discounted  and  placed  the  avails  in  the  hands  of  an  agent 
with  which  to  take  up  Hill's  note;  the  note  became  due,  Whitney 
withdrew  the  avails  of  the  draft  from  the  hands  of  his  agent  and 
appropriated  it  to  a  debt  due  him  from  Hill,  and  Seaman  paid 
the  note  indorsed  by  him  and  brought  his  suit  against  Whitney. 
Upon  this  state  of  facts  appearing,  it  was  held  that  Seaman  could 
not  recover :  first,  for  the  reason  that  no  promise  had  been  made 
by  Whitney  to  pay,  and  second,  if  a  promise  could  be  implied 
from  the  facts  that  Hill's  accepted  draft,  with  which  to  raise  the 
means  to  pay  the  note,  had  been  placed  by  Hill  in  the  hands  of 
Whitney,  the  promise  would  not  be  to  Seaman,  but  to  the  Phoenix 
Bank,  who  then  owned  the  note;  although,  in  the  course  of  the 
opinion  of  the  court,  it  was  stated  that,  in  all  cases  the  principle 
of  which  was  sought  to  be  applied  to  that  case,  the  fund  had  been 
appropriated  by  an  express  undertaking  of  the  defendant  with 
the  creditor.  But  before  concluding  the  opinion  of  the  court  in 
this  case,  the  learned  judge  who  delivered  it  conceded  that  an 
undertaking  to  pay  the  creditor  may  be  implied  from  an  arraii[^  ^ 


Chap.  I.  §2.]      LIMITS  OF  CONTRACTUAL  OBLIGATION.  425 

ment  to  that  effect  between  the  defendant  and  the  debtor.  This 
question  was  subsequently,  and  in  a  case  quite  recent,  again  the 
subject  of  consideration  by  the  Supreme  Court,  when  it  was  held, 
that  in  declaring  upon  a  promise,  made  to  the  debtor  by  a  third 
party  to  pay  the  creditor  of  the  debtor,  founded  upon  a  considera- 
tion advanced  by  the  debtor,  it  was  unnecessary  to  aver  a  promise 
to  the  creditor;  for  the  reason  that  upon  proof  of  a  promise  made 
to  the  debtor  to  pay  the  creditor,  a  promise  to  the  creditor  would 
be  implied.  And  in  support  of  this  proposition,  in  no  respect 
distinguishable  from  the  one  now  under  consideration,  the  case 
of  Schemerhorn  v.  Vanderheyden,  with  many  intermediate  cases 
in  our  courts,  were  cited,  in  which  the  doctrine  of  that  case  was 
not  only  approved  but  aflBrmed.  T7ie  Delaware  and  Hudson  Canal 
Company  v.  The  Westchester  County  Bank,  4  Denio,  97. 

The  same  principle  is  adjudged  in  several  cases  in  Massachu- 
setts. I  will  refer  to  but  few  of  them.  Arnold  v.  Lyman,  17 
Mass.  400;  Hall  v.  Marston,  Id.  575;  Brewer  v.  Dyer,  7  Cush. 
337,  340.  In  Hall  v.  Marston  the  court  say :  "  It  seems  to  have 
been  well  settled  that  if  A  promises  B  for  a  valuable  consideration 
to  pay  C,  the  latter  may  maintain  assumpsit  for  the  money;" 
and  in  Brewer  v.  Dyer,  the  recovery  was  upheld,  as  the  court 
said,  "  upon  the  principle  of  law  long  recognized  and  clearly  estab- 
lished, that  when  one  person,  for  a  valuable  consideration, 
engages  with  another,  by  a  simple  contract,  to  do  some  act  for  the 
benefit  of  a  third,  the  latter,  who  would  enjoy  the  benefit  of  the 
act,  may  maintain  an  action  for  the  breach  of  such  engagement; 
that  it  does  not  rest  upon  the  ground  of  any  actual  or  supposed 
relationship  between  the  parties,  as  some  of  the  earlier  cases 
would  seem  to  indicate,  but  upon  the  broader  and  more  satisfac- 
tory basis,  that  the  law  operating  on  the  act  of  the  parties  creates 
the  duty,  establishes  a  privity,  and  implies  the  promise  and 
obligation  on  which  the  action  is  founded."  There  is  a  more 
recent  case  decided  by  the  same  court,  to  which  the  defendant  has 
referred,  and  claims  that  it  at  least  impairs  the  force  of  the  former 
cases  as  authority.  It  is  the  case  of  Mellen  v.  Whipple,  1  Gray, 
317.  In  that  case  one  Rollins  made  his  note  for  $500  payable 
to  Ellis  and  Mayo,  or  order,  and  to  secure  its  payment  mortgaged 
to  the  payees  a  certain  lot  of  ground,  and  then  sold  and  conveyed 


426  OPERATIOX  OF  CONTRACT.  [Part  IU. 

the  mortgaged  premises  to  the  defendant,  by  deed  in  which  it  was 
stated  that  the  "  granted  premises  were  subject  to  a  mortgage  for 
$500,  which  mortgage,  with  the  note  for  which  it  was  given,  the 
said  Whipple  is  to  assume  and  cancel."  The  deed  thus  made  was 
accepted  by  Whipple,  the  mortgage  was  afterwards  duly  assigned, 
and  the  note  indorsed  by  Ellis  and  Mayo  to  the  plaintiff's  intes- 
tate. After  Whipple  received  the  deed  he  paid  to  the  mortgagees 
and  their  assigns  the  interest  upon  the  mortgage  and  note  for  a 
time,  and  upon  refusing  to  continue  his  payments  was  sued  by  the 
plaintiff  as  administratrix  of  the  assignee  of  the  mortgage  and 
note.  The  court  held  that  the  stipulation  in  the  deed  that 
Whipple  should  pay  the  mortgage  and  note  was  a  matter  exclu- 
sively between  the  two  parties  to  the  deed;  that  the  sale  by 
Rollins  of  the  equity  of  redemption  did  not  lessen  the  plaintiff's 
security,  and  that  as  nothing  had  been  put  into  the  defendant's 
hands  for  the  purpose  of  meeting  the  plaintiff's  claim  on  Rollins, 
there  was  no  consideration  to  support  an  express  promise,  much 
less  an  implied  one,  that  Whipple  should  pay  Mellen  the  amount 
of  the  note.  This  is  all  that  was  decided  in  that  case,  and  the 
substance  of  the  reasons  assigned  for  the  decision ;  and  whether 
the  case  was  rightly  disposed  of  or  not,  it  has  not  in  its  facts  any 
analogy  to  the  case  before  us,  nor  do  the  reasons  assigned  for  the 
decision  bear  in  any  degree  upon  the  question  we  are  now 
■considering. 

But  it  is  urged  that  because  the  defendant  was  not  in  any  sense 
a  trustee  of  the  property  of  Holly  for  the  benefit  of  the  plaintiff, 
the  law  will  not  imply  a  promise.  I  agree  that  many  of  the 
cases  where  a  promise  was  implied  Avere  cases  of  trusts,  created 
for  the  benefit  of  the  promisor.  The  case  of  Felton  v.  Dickinson 
(10  Mass.  189,  190)  and  others  that  might  be  cited  are  of  that 
class;  but  concede  them  all  to  have  been  cases  of  trusts,  and  it 
proves  nothing  against  the  application  of  the  rule  to  this  case. 
The  duty  of  the  trustee  to  pay  the  cestuis  que  trust,  according  to 
the  terms  of  the  trust,  implies  his  promise  to  the  latter  to  do  so. 
In  this  case  the  defendant,  upon  ample  consideration  received 
from  Holly,  promised  Holly  to  pay  his  debt  to  the  plaintiff;  the 
consideration  received  and  the  promise  to  Holly  made  it  as 
plainly  his  duty  to  pay  the  plaintiff  as  if  the  money  had  been 


€hap.  I.  §  2.]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  427 

remitted  to  him  for  that  purpose,  and  as  well  implied  a  promise 
to  do  so  as  if  he  had  been  made  a  trustee  of  property  to  be  con- 
verted into  cash  with  which  to  pay.  The  fact  that  a  breach  of 
the  duty  imposed  in  the  one  case  may  be  visited,  and  justly,  with 
more  serious  consequences  than  in  the  other,  by  no  means  dis- 
proves the  payment  to  be  a  duty  in  both.  Tlie  principle  illus- 
trated by  the  example  so  frequently  quoted  (which  concisely 
states  the  case  in  hand),  "that  a  promise  made  to  one  for  the 
benefit  of  another,  he  for  whose  benefit  it  is  made  may  bring  an 
apCtion  for  its  breach,"  has  been  applied  to  trust  cases,  not  because 
it  was  exclusively  applicable  to  those  cases,  but  because  it  was  a 
principle  of  law,  and  as  such  applicable  to  those  cases. 

It  was  also  insisted  that  Holly  could  have  discharged  the 
defendant  from  his  promise,  though  it  was  intended  by  both 
parties  for  the  benefit  of  the  plaintiff,  and  therefore  the  plaintiff 
was  not  entitled  to  maintain  this  suit  for  the  recovery  of  a 
demand  over  which  he  had  no  control.  It  is  enough  that  the 
plaintiff  did  not  release  the  defendant  from  his  promise,  and 
whether  he  could  or  not  is  a  question  not  now  necessarily 
involved;  but  if  it  was,  I  think  it  would  be  found  difficult  to 
maintain  the  right  of  Holly  to  discharge  a  judgment  recovered  by 
the  plaintiff  upon  confession  or  otherwise,  for  the  breach  of  the 
defendant's  promise ;  and  if  he  could  not,  how  could  he  discharge 
the  suit  before  judgment,  or  the  promise  before  suit,  made  as  it 
was  for  the  plaintiff's  benefit  and  in  accordance  with  legal  pre- 
sumption accepted  by  him  (Berly  v.  Taylor,  5  Hill,  577-684,  et 
«eg.),  until  his  dissent  was  shown.  The  cases  cited,  and  espe- 
cially that  of  Farley  v.  Cleveland,  establish  the  validity  of  a 
parol  promise;  it  stands  then  upon  the  footing  of  a  written  one. 
Suppose  the  defendant  had  given  his  note  in  which,  for  value 
received  of  Holly,  he  had  promised  to  pay  the  plaintiff  and  the 
plaintiff  had  accepted  the  promise,  retaining  Holly's  liability. 
Very  clearly  Holly  could  not  have  discharged  that  promise,  be  the 
right  to  release  the  defendant  as  it  may. 

No  one  can  doubt  that  he  owes  the  sum  of  money  demanded  of 
him,  or  that  in  accordance  with  his  promise  it  was  his  duty  to 
have  paid  it  to  the  plaintiff;  nor  can  it  be  doubted  that  whatever 
may  be  the  diversity  of  opinion  elsewhere,  the  adjudications  in 


428  OPERATION  OF  CONTRACT.  [Pakt  IIL 

this  State,  from  a  very  early  period,  approved  by  experience, 
have  established  the  defendant's  liability;  if,  therefore,  it  could 
be  shown  that  a  more  strict  and  technically  accurate  application 
of  the  rules  applied  would  lead  to  a  different  result  (which  I  by 
no  means  concede),  the  effort  should  not  be  made  in  the  face  of 
manifest  justice. 

The  judgment  should  be  affirmed. 

Johnson,  C.  J.,  Denio,  Selden,  Allen,  and  Strong,  JJ.,  con- 
curred. Johnson,  C.  J.,  aad  Denio,  J.,  were  of  opinion  that  the 
promise  was  to  be  regarded  as  made  to  the  plaintiff  through  the 
medium  of  his  agent,  whose  action  he  could  ratify  when  it  came 
to  his  knowledge,  though  taken  without  his  being  privy  thereto. 

Comstock,  J.,  and  Grover,  J.,  dissented. 

Judgment  affirmed.^ 


BASSETT  et  al.    v.    HUGHES. 
63  WISCONSIN,  319.  — 1877. 

Action  for  balance  of  indebtedness  due  originally  from  Hugh 
W.  Hughes  (defendant's  father)  to  the  plaintiffs.  Judgment  for 
plaintiffs.     Defendant  appeals. 

Hugh  W.  Hughes  conveyed  to  defendant  certain  property  in 

1  "  To  give  a  third  party  who  may  derive  a  benefit  from  the  performance  of 
the  promise  an  action,  there  must  be,  first,  an  intent  by  the  promisee  to  secure 
Bome  benefit  to  the  third  party,  and  seconct^^Sme  privity  between  tne  two,  tne' 
promisee  and  the  party  to  be  benefited,  and  some  obligation  or  duty  owing 
from  the  former  to  the  latter  which  would  give  him  a  legal  or  equitable  claim 
to  the  benefit  of  the  promise,  or  an  equivalent  from  him  personally.  .  .  . 
The  courts  are  not  inclined  to  extend  the  doctrine  of  Lawrence  v.  Fox  (20 
N.  Y.  268)  to  cases  not  clearly  within  the  principle  of  that  decision.  Judges 
have  differed  as  to  the  principle  upon  which  Lawrence  v.  Fox  and  kindred 
cases  rest,  but  in  every  case  in  which  an  action  has  been  sustained  there  has 
been  a  debt  or  duty  owing  by  the  promisee  to  the  party  claiming  to  sue  upon 
the  promise.  Whether  the  decisions  rest  upon  the  doctrine  of  agency,  the 
promisee  being  regarded  as  the  agent  for  the  third  party,  who,  by  bringing 
his  action,  adopts  his  acts,  or  upon  the  doctrine  of  a  trust,  the  promisor 
being  regarded  as  having  received  money  or  other  thing  for  the  third  party, 
is  not  material.  In  either  case  there  must  be  a  legal  right,  founded  upon 
some  obligation  of  the  promisee,  in  the  third  party,  to  adopt  and  claim  the 
promise  as  made  for  his  benefit."  —  Allen,  J.,  in  Vrooman  v.  Tuj'ner,  69 
N.  Y.  280.    Accord :  Jefferson  v.  Asch,  53  Minn.  446. 


Chap.  I.  §  2.]      LIMITS  OF  CONTRACTUAL  OBLIGATION.  429 

consideration  of  which  defendant  executed  a  bond  in  which  he 
covenanted  to  pay  all  his  father's  debts.  At  that  time  the  father 
owed  the  plaintiffs  the  debt  in  suit.  Defendant  made  one  pay- 
ment on  the  debt,  but  refused  to  pay  the  balance. 

Defendant  sought  to  prove  that  his  covenant  with  his  father 
was  rescinded  by  an  agreement  between  him  and  his  father,  but 
the  court  excluded  the  testimony. 

Lyon,  J.  1.  It  is  settled  in  this  State,  that  when  one  person, 
for  a  valuable  consideration,  engages  with  another  to  do  some 
act  for  the  benefit  of  a  third  person,  the  latter  may  maintain  an 
action  against  the  former  for  a  breach  of  such  engagement.  This 
rule  applies  as  well  to  covenants  under  seals  as  to  simple  con- 
tracts. McDowell  V.  Laev,^  35  Wis.  171,  and  cases  cited.  In 
the  present  case,  the  defendant,  for  a  valuable  consideration, 
engaged  with  his  father  to  pay  the  debt  which  the  latter  owed 
the  plaintiffs,  and,  within  the  above  rule,  the  plaintiffs  may 
maintain  this  action  to  recover  the  unpaid  balance  of  such  debt. 

2.  It  is  quite  immaterial,  if  the  defendant's  covenant  to  pay 
his  father's  debts  was  afterwards  rescinded  by  mutual  agreement 
between  the  parties  to  it.  Before  that  was  done,  the  plaintiffs 
had  been  informed  of  the  covenant,  and  made  no  objection  there- 
to; indeed,  the  fair  inference  from  the  testimony  is,  that  the 
plaintiffs  fully  assented  thereto ;  whether  it  was  or  was  not  com- 
petent for  the  parties  to  the  covenant  to  rescind  it  before  such 
notice  to  and  assent  by  the  plaintiffs,  we  need  not  here  deter- 
mine. Certainly  after  such  notice  and  assent  the  covenant 
could  not  be  rescinded  to  the  prejudice  of  the  plaintiffs,  without 
their  consent.  To  support  the  position  that  it  was  competent  for 
the  defendant  and  his  father  to  rescind  the  contract  and  thus 
defeat  the  plaintiffs'  right  of  action  against  the  defendant,  the 
learned  counsel  for  the  defendant  cites  two  New  York  cases: 

1  "  Certainly  upon  the  doctrine  held  in  Carnegie  v.  Morrison  (2  Met.  381, 
396)  and  in  Brewer  v.  Dyer  (7  Cush.  337,  340),  that  the  law,  operating  upon 
the  act  of  the  parties,  creates  the  duty,  establishes  the  privity,  and  implies 
the  promise  and  obligation  on  which  the  action  is  founded,  there  can  be  no 
good  reason  assigned  for  withholding  contracts  under  seal  from  the  opera- 
tion of  the  principle."— Dixon,  C.  J.  Accord:  Hughes  v.  Oregon  By.  <fc 
Nav.  Co.,  11  Ore.  437  ;  Jefferson  v.  Asch,  63  Minn.  440.  Contra  :  Harms  v. 
McCormick,  132  111.  104. 


430  OPERATION  OF  CONTRACT.  [Part  IH. 

Kelly  V.  Itoberts,  40  N.  Y.  432,  and  Kelly  v.  Babcock,  49  Id.  318. 
These  cases  do  not  sustain  the  position.  In  the  first,  it  was  held 
that  an  agreement,  upon  no  new  consideration,  between  debtor 
and  creditor,  that  the  debtor  shall  pay  the  amount  of  his  debt  to 
a  third  person,  to  whom  the  creditor  is  indebted,  is  not,  in  the 
absence  of  any  notice  or  acceptance  of  or  assent  to  the  arrange- 
ment by  such  third  person,  irrevocable  by  the  creditor.  In  the 
latter  case,  it  was  held  that  "  an  agreement  in  a  bill  of  sale  or 
instrument  of  transfer  of  personal  property,  that  a  portion  of  the 
purchase  money  of  the  goods  sold  may  be  paid  to  and  among  the 
creditors  of  the  vendor,  without  a  consent  or  agreement  on  the 
part  of  the  vendee  thus  to  pay,  creates  no  trust;  the  balance 
unpaid  is  a  debt  due  the  vendor,  and  can  be  reached  by  and  held 
under  an  attachment  against  his  property."  In  this  case  the  de- 
fendant covenaAted  to  pay  his  father's  debts;  there  was  a  new 
and  valid  consideration  for  such  covenant;  and  the  plaintiffs  were 
notified  that  it  had  been  made,  and  gave  their  assent  thereto. 
Thus  we  find  here  all  the  conditions  essential  to  the  plaintiffs' 
right  of  action,  which  were  wanting  in  those  cases.  We  con- 
clude that  the  testimony  offered  to  show  a  rescission  of  the  cove- 
nant was  properly  rejected. 

*  *  m  ^^  * 

Judgment  af&rmed. 


WOOD  et  al.  v.   MORIARTY. 

15  RHODE  ISLAND,  518.— 1887. 

Plaintiffs'  petition  for  a  new  trial. 

DuRFEE,  C.  J.  This  is  assumpsit  for  the  price  of  lumber 
furnished  to  one  Joshua  W.  Tibbetts  for  use  in  the  erection  of 
two  houses  for  the  defendant,  Tibbetts  having  entered  into  a 
written  contract  with  the  defendant  to  build  the  houses  before 
the  lumber  was  furnished.  Tibbetts,  after  going  on  for  a  while 
in  the  execution  of  the  contract,  released  or  assigned  it  to  the 
defendant  by  an  instrument  under  seal.  The  instrument  begins 
by  reciting  the  existence  of  the  contract,  and  proceeds  as  follows, 
to  wit: 


Chap.  I.  §  2.]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  4S1 

"  Now  know  ye  that,  for  good  and  suificient  reason,  and  in  consideration 
of  the  sum  of  twenty-five  dollars  paid  to  me  this  day  by  said  Moriarty,  I 
hereby  transfer  and  assign  said  contract  back  to  said  Thomas  Moriarty, 
he  agreeing  to  relieve  me  from  further  obligation  under  it,  and  I  hereby 
releasing  him  from  all  claims  or  demands  of  whatever  kind  I  may  have 
or  have  had  up  to  this  day,  August  26,  1885,  against  said  Moriarty ;  I 
hereby  acknowledging  full  payment  for  said  claims  and  demands,  and 
this  shall  be  his  receipt  in  full  for  the  same  to  date,  meaning  hereby 
to  convey  to  the  said  Moriarty  all  my  right,  title,  and  interest  into  and 
under  said  contract,  desiring  to  relieve  myself  from  completing  the  work 
under  the  contract,  and  hereby  agree  to  withdraw  from  said  work  on 
said  houses,  and  leave  them  to  his  sole  charge  and  care." 

At  the  trial,  testimony  was  introduced  or  offered  to  prove  the 
purchase  of  the  lumber;  the  execution  of  the  release  or  assign- 
ment; that  the  defendant,  besides  paying  the  consideration  re- 
cited therein,  agreed,  by  way  of  further  consideration,  to  pay  all 
bills  incurred  by  Tibbetts  on  account  of  the  contract  released} 
that  among  these  bills  was  the  bill  of  the  plaintiffs  for  lumber; 
and  that  notice  of  the  arrangement  between  Tibbetts  and  the 
defendant  was  given  by  Tibbetts  to  the  plaintiffs.  The  testi- 
mony as  to  the  agreement  to  pay  the  bills  incurred  by  Tibbetts 
was  allowed  to  go  in  de  bene  esse,  and  at  the  close  of  the  testi- 
mony for  the  plaintiffs  the  court  directed  a  nonsuit.  The  plain- 
tiffs petitioned  for  a  new  trial. 

The  questions  are,  whether  the  plaintiffs  were  entitled  to 
prove  by  oral  testimony  that  the  defendant  agreed  to  pay  the 
bills  incurred  by  Tibbetts  under  his  contract,  by  way  of  further 
consideration  for  the  release  or  assignment,  and  if  so,  whether, 
upon  proof  thereof,  the  plaintiffs  could  maintain  their  action. 

The  general  rule  is,  that  parol  evidence  is  inadmissible  to  con- 
tradict, add  to,  subtract  from,  or  vary  the  terms  of  any  written 
instrument.  But  when  the  instrument  is  a  deed,  it  is  held  to  be 
no  infringement  of  the  rule  to  permit  a  party  to  prove  some 
other  consideration  than  that  which  is  expressed,  provided  it  be 
consistent  with  that  which  is  expressed,  and  do  not  alter  the 
effect  of  the  instrument.  1  Greenleaf  on  Evidence,  §  304.  In 
Miller  v.  Goodwin  (8  Gray  542)  it  was  held  that  an  agreement 
under  seal  by  a  man  with  a  woman  who  afterwards  became  his 
wife,  to  convey  certain  real  estate  to  her  in  consideration  of  past 


482  OPERATION  OF  CONTRACT.  [Part  HI. 

services,  could  be  supplemented  by  parol  proof  that  the  agree- 
ment was  for  the  further  consideration  of  marriage  between  the 
parties.  See  also  Villers  v.  Beaumont,  2  Dyer,  146  a;  2  Phillips 
on  Evidence,  655.  In  McCrea  v.  Purmort  (16  Wend.  460)  the 
consideration  of  a  deed  conveying  land  was  expressed  to  be  money 
paid,  and  it  was  held  that  parol  evidence  was  admissible  to  show 
that  the  real  consideration  was  iron  of  a  specific  quantity,  valued 
at  a  stipulated  price.  Murray  v.  Smith,  1  Duer,  412;  Jordan  v. 
White,  20  Minn.  91;  Tt/ler  v.  Carlton,  7  Me.  175;  NicJcersonr. 
Saunders,  36  Me.  413;  National  Exchange  Bank  v.  Watson,  13 
R.  I.  91;  2  Phillipps  on  Evidence,  655;  Coiven  &  Hill's  Notes, 
No.  490.  We  think  the  nonsuit  is  not  sustainable  on  this 
ground. 

The  defendant  contends  that  the  agreement  was  within  the 
statute  of  frauds,  being  an  agreement  not  in  writing  to  answer 
for  the  debt  of  another.  But  an  agreement  to  answer  for  the 
debt  of  another,  to  come  within  the  statute  of  frauds,  must  be 
an  agreement  with  the  creditor.  A  promise  by  A  to  B  to  pay  a 
debt  due  from  B  to  C  is  not  within  the  statute  of  frauds.  East- 
wood V.  Kenyon,  11  A.  &  E.  438;  Browne  on  the  Statute  of  Frauds, 
§  188.  The  contract  here,  as  made  between  Tibbetts  and  the 
defendant,  was  certainly  not  within  the  statute. 

The  question,  therefore,  takes  this  form,  namely,  whether  the 
plaintiffs  are  entitled  to  take  advantage  of  the  contract  and  bring 
suit  upon  or  under  it,  and  if  so,  whether  to  such  suit  the  statute 
is  not  a  good  defense.  Some  of  the  cases  cited  for  the  plaintiffs 
cover  both  these  points  completely.  Barker  v.  Bucklin,  2  Denio, 
45;  Johnson  V.  Knapp,  36  Iowa,  616;  Barker  y.  Bradley,  42  N.  Y. 
316,  1  Am.  Rep.  521;  Beasley  v.  Webster,  64  111.  458;  Jordan  v. 
White,  20  Minn.  91 ;  JosUn  v.  New  Jersey  Car  Spring  Co.,  36  N.  J. 
Law,  141 ;  Townsend  v.  Long,  77  Pa.  St.  143,  146.  Similar  cita- 
tions might  be  multiplied  if  we  cared  to  load  our  opinion  with 
them.  See  Browne  on  the  Statute  of  Frauds,  §§  166  a,  166  6,  and 
notes.  On  the  other  hand,  the  cases  are  numerous  which  hold 
that  such  an  action  is  not  maintainable  for  want  of  privity  be- 
tween the  parties.  Mr.  Browne,  in  §  166  a,  says  that  this  is  the 
settled  doctrine  in  England,  Michigan,  and  Connecticut;  that  in 
North  Carolina  and  Tennessee  the   question  seems  to   remain 


Chap.  I.  §  2.]       LIMITS  OF  CONTRACTUAL  OBLIGATION.  438 

open ;  and  that  in  Massachusetts  the  English  doctrine  seems  to 
be  growing  in  favor,  contrary  to  the  earlier  cases;  but  that  in 
the  other  States  the  creditor's  right  to  sue  has  been  generally 
recognized.  The  course  of  decision  in  this  State  favors  the 
creditor's  right  to  sue,  and  in  principle,  we  think,  recognizes  it, 
though  it  has  not  hitherto  extended  to  a  purely  oral  contract. 
Urquhart  v.  Brayton,  12  R.  I,  169;  Merriman  v.  Social  Manufac- 
turing Co.,  12  E..  I.  175.  Courts  that  allow  the  action  generally 
hold  that  it  is  not  affected  by  the  statute  of  frauds,  though,  as 
Mr.  Browne  remarks,  they  do  not  unite  in  the  reasons  which 
they  give  for  so  holding.  Mr.  Browne  himself  suggests  that  the 
contract,  as  between  the  creditor  and  promisor,  arises  by  impli- 
cation out  of  the  duty  of  the  promisor  under  his  contract  with 
the  debtor,  and  that,  being  implied,  it  is  not  within  the  statute 
of  frauds.  Browne  on  the  Statute  of  Frauds,  §  166  6.  The  view 
accords  with  the  doctrine  of  Brewer  v.  Dyer  (7  Cush.  337),  where 
the  court  remarks,  p.  340,  "  that  the  law,  operating  on  the  act  of  the 
parties,  creates  the  duty,  establishes  the  privity,  and  implies  the 
promise  and  obligation  on  which  the  action  is  founded." 

The  diversity  of  decision  shows  that  the  action  cannot  be  main- 
tained without  resorting  to  implications  or  assumptions  which 
the  courts  do  not  always  find  it  easy  to  allow,  and  which  they 
sometimes  refuse  to  allow.  It  seems  to  us  that  we  shall  best 
find  the  grounds,  if  there  are  any,  on  which  the  action  can  be 
maintained,  by  an  analysis  or  explication  of  the  contract  with 
the  debtor.  The  contract  is  this:  A  agrees  with  B,  for  a  consid- 
eration moving  from  B,  to  pay  to  C  the  debt  which  B  owes  to 
C  The  contract  is  absolute.  If  A  does  not  pay  the  debt,  and 
B  has  to  pay,  it  is  broken.  It  is,  therefore,  a  contract  by  A  to 
pay  the  debt  in  lieu  of  B,  or  in  relief  of  B ;  to  take  it  on  him- 
self, and  become,  so  far  as  he  can  independently  of  C,  the 
debtor  of  C  in  place  of  B.  The  contract,  as  between  A  and  B, 
is  not  collateral,  but  substitutional.  But,  this  being  so,  how 
does  C,  who  is  not  a  party  to  it,  get  the  right  to  sue  A  upon 
or  by  reason  of  it?  It  has  been  held  that  he  gets  this  right 
directly  from  the  contract  itself,  because  B,  in  making  it  with 
A,  makes  it  for  C,  if  C  desires  to  accede  to  it,  as  well  as  for 
himself,  so  that  C  has  only  to  ratify  or  assent  to  it,  which  he 


434  OPERATION  OF  CONTRACT.  [Part  UI, 

does  unequivocally  by  suing  on  it.  But,  in  this  view,  if  C 
accepts  the  contract,  he  must  accept  it  as  made;  that  is,  as  a. 
contract  by  which  A  agrees  that  he,  instead  of  B,  will  pay  the 
debt  which  B  owes  to  C.  C  cannot,  at  the  same  time,  assent 
to  the  contract  and  dissent  from  the  terms  of  it.  Accordingly, 
if  he  sues  A  on  the  contract,  he  must  sue  him  instead  of  B,  and 
cannot  also  sue  B,  and  B  is  therefore  released.  But,  as  we 
have  seen,  another  view  has  been  taken.  It  has  been  held  that 
the  contract  between  A  and  B  imposes  a  duty  upon  A  to  pay 
to  C  the  debt  which  B  owes  to  him,  and  that  from  this  duty 
the  law  implies  a  promise  by  A  in  favor  of  C  to  pay  B's  debt 
to  C.  But  if  a  promise  is  implied  from  the  duty,  the  promise 
must  correspond  to  the  duty.  The  duty  which  the  contract  im- 
poses upon  A  is  that  he,  instead  of  B,  shall  pay  the  debt  which 
B  owes  to  C,  and  accordingly  so  must  be  the  promise  to  be 
implied  from  it.  If,  therefore,  C  sues  A  upon  the  implied 
promise,  he  must  sue  him  as  liable,  instead  of  B,  for  the  debt 
of  B  to  him,  C;  he  cannot  consistently  sue  both  A  and  B, 
and  consequently  B  is  released. 

We  do  not  claim  that  either  of  these  views  is  free  from  diffi- 
culty. Either  of  them,  however,  is  free  from  one  difficulty  which 
other  views  encounter,  and  which  is  a  principal  reason  why  the 
courts  which  refuse  to  allow  the  action  refuse  to  do  so.  Other 
views  give  the  creditor  the  benefit  of  the  new  contract  for  noth- 
ing, since  they  allow  him  still  to  retain  his  hold  upon  the  original 
debtor;  whereas,  according  to  either  of  the  views  above  set  forth, 
the  creditor  cannot  have  the  benefit  of  the  new  contract  without 
assenting  to  the  terms  of  it,  thereby  releasing  the  original 
debtor,  so  that  the  assent  is  in  itself  a  consideration.  As  cases 
which  support  these  views,  we  will  refer  to  Warren  v.  Batch- 
elder,  16  N.  H.  580  ;  Bohanan  v.  Pope,  42  Me.  93.  See  also 
Clough  V.  Giles,  2  New  Eng.  Reporter,  870.  Of  course,  if  either 
view  be  correct,  the  liability  under  the  contract  is  not  collat- 
eral, but  direct  and  substitutional,  and  therefore  not  within  the 
statute  of  frauds. 

We  do  not  think  this  case  is  distinguishable  in  principle  from 
Urquhart  v.  Brayton,  12  R.  I.  169.  The  doctrine  of  the  latter 
case  is  not  only  just  and  convenient,  but  also  consonant  with  the 


Chap.  I.  §  2.]      LIMITS  OF  CONTRACTUAL  OBLIGATION.  435 

purposes  of  the  parties,  and  we  are  not  prepared  to  recede  from 
it.  As  is  remarked  by  the  court  in  Lehow  v.  Simonton  et  al.  (3 
Colorado,  346),  "  it  accords  the  remedy  to  the  party  who  in  most 
instances  is  chiefly  interested  to  enforce  the  promise,  and  avoids 
multiplicity  of  actions." 

We  think  the  declaration  proper  in  point  of  form,  and  we  do 
not  think  the  nonsuit  is  justifiable  on  the  ground  of  variance. 

In  Warren  v.  Batchelder  (16  K.  H.  580)  the  court  held  that  a 

demand  on  the  defendant  was  requisite  before  the  suit.     Whether 

this  is  so  we  need  not  decide,  for  the  evidence  in  this  case  shows 

a  demand  before  suit. 

Stiness,  J.,  non-concurring. 

Petition  granted.* 


/ 


BORDEN  et  al.   v.    BOARDMAN. 

157  MASSACHUSETTS,  410.  — 1892. 

Contract.  C.  contracted  to  build  a  house  for  defendant.  When 
the  time  for  the  first  payment  came  defendant  requested  C.  to- 
have  present  all  persons  having  claims  against  the  house.  Plain- 
tiffs had  a  claim  for  $150,  but  were  not  present,  and  at  C.'s  re- 
quest defendant  reserved  from  the  amount  due  C.  $200  out  of 
which  he  promised  to  pay  plaintiffs'  claim.  Plaintiffs  subse- 
quently asked  defendant  about  the  arrangement,  and  defendant 
said  he  held  the  money  under  the  above  agreement  with  C,  but 
had  been  advised  not  to  pay  it  at  present.  Defendant  claimed 
that,  upon  the  evidence,  plaintiffs  were  not  entitled  to  recover, 
and  offered  to  show  that  a  day  or  so  after  the  above  settlement 
C.  had  abandoned  the  contract,  and  that  when  plaintiffs  inquired 
about  the  arrangement  defendant  informed  them  that  C.  had 

1  "  When  a  creditor  of  a  partnership  after  dissolution  thereof,  knowing 
that  one  or  several  of  the  partners  have  agreed  with  the  others  to  assume 
and  pay  the  debts  of  the  firm,  takes  the  negotiable  notes  of  those  who 
should  pay,  in  payment  of  the  debt  of  the  firm,  he  thereby  cancels  the  claim 
against  the  firm,  and  discharges  the  other  partners.  Story  on  Partnership, 
276,  277,  and  278  ;  §§  155, 156  and  notes  ;  Collier  on  Partnership,  book  3,  §  3, 
and  cases  cited ;  Arnold  v.  Camp,  12  J.  II.  409  ;  Waydell  v.  Luer,  3  Denio, 
410."  —  Grover,  J.,  in  Millerd  v.  Thorn,  56  N.  Y.  402,  406. 


436  OPERATION  OF  CONTRACT.  [Part  ni. 

broken  his  contract,  and  that  defendant  was  damaged  thereby. 
This  evidence  was  excluded  and  a  verdict  directed  for  plaintiffs. 
If  the  ruling  was  right,  the  judgment  was  to  be  entered  on  the 
verdict ;  otherwise,  judgment  for  defendant. 

Morton,  J.  The  evidence  offered  in  bar  was  rightly  excluded. 
The  subsequent  failure  of  Collins  to  perform  his  contract  would 
not  release  the  defendant  from  the  obligation,  if  any,  which  he 
had  assumed  to  the  plaintiffs,  in  the  absence  of  any  agreement, 
express  or  implied,  that  the  money  was  to  be  paid  to  the  plain- 
tiffs only  in  case  Collins  fulfilled  his  contract.  Cook  v.  Wolfen- 
dale,  105  Mass.  401.  There  was  no  evidence  of  such  an  agree- 
ment. 

The  other  question  is  more  difficult.  The  case  does  not  present 
a  question  of  novation;  for  there  was  no  agreement  among  the 
plaintiffs,  Collins,  and- the  defendant  that  the  defendant  should 
pay  to  the  plaintiffs,  out  of  the  money  in  his  hands  and  due  to 
Collins,  a  specific  sum,  and  that  thenceforward  the  defendant 
should  be  released  from  all  liability  for  it  to  Collins,  and  should 
be  liable  for  it  to  the  plaintiffs.  Neither  was  there  any  agree- 
ment between  the  plaintiffs  and  the  defendant  that  the  latter 
would  pay  the  money  to  them.  The  conversation  between  one 
of  the  plaintiffs  and  the  defendant  cannot  be  construed  as  afford- 
ing evidence  of  such  an  agreement.  Coupled  with  the  defend- 
.ant's  admission  that  he  was  holding  money  for  the  plaintiffs  was 
his  repudiation  of  any  liability  to  the  plaintiffs  for  it.  Neither 
can  it  be  claimed  that  there  was  an  equitable  assignment  of  the 
amount  in  suit  from  Collins  to  the  plaintiffs.  There  was  no 
order  or  transfer  given  by  him  to  them;  nor  was  any  notice  of 
the  arrangement  between  him  and  the  defendant  given  hj  him 
to  the  plaintiffs.  Lazarus  v.  Sivan,  147  Mass.  330.  The  case 
upon  this  branch,  therefore,  reduced  to  its  simplest  form,  is  one 
of  an  agreement  between  two  parties,  upon  sufficient  considera- 
tion it  may  be  between  them,  that  one  will  pay,  out  of  funds  in 
his  hand  belonging  to  the  other,  a  specific  sum  to  a  third  person, 
who  is  not  a  party  to  the  agreement,  and  from  whom  no  consid- 
eration moves.  It  is  well  settled  in  this  State  that  no  action 
lies  in  such  a  case  in  favor  of  such  third  party  to  recover  the 
money  so  held  of  the  party  holding  it.     Exchange  Bank  v.  Rice, 


Chap.  I.  §  2.]      LIMITS  OF  CONTRACTUAL  OBLIGATION.  437 

107  Mass.  37,  and  cases  cited;  Rogers  v.  Union  Stone  Co.,  130 
Mass.  581;  New  England  Dredging  Co.  v.  Rockport  Granite  Co., 
149  Mass.  381;  Marston  v.  Bigelow,  150  Mass.  45;  Saunders  v. 
Saunders,  154  Mass.  337.  Certain- exceptions  which  were  sup- 
posed to  exist  have  either  been  shown  not  to  exist,  or  have  been 
confined  within  narrower  limits.  Exchange  Bank  v.  Rice,  and 
Marston  v.  Bigelow,  ubi  supra. 

We  have  assumed  that  the  sum  which  the  defendant  agreed 
with  Collins  to  pay  the  plaintiffs  was  specific.  But  it  is  to  be 
observed  that  the  agreement  between  the  plaintiffs  and  Collins 
was  that  it  should  not  cost  more  than  one  hundred  and  fifty  dol- 
lars to  put  the  building  back.  Collins  told  the  defendant  that 
the  sum  was  due  to  the  plaintiffs.  The  defendant  reserved  two 
hundred  dollars.  It  may  well  be  doubted,  therefore,  whether 
the  defendant  had  in  his  hands  a  specific  sum  to  be  paid  to  the 
plaintiffs,  or  whether  he  agreed  with  Collins  to  hold  and  pay  the 
plaintiffs  a  specific  sum.  If  the  sum  was  not  specific,  the  plain- 
tiffs do  not  claim,  as  we  understand  them,  that  they  can  recover. 

Judgment  for  the  defendant.* 

^Accord:  Pippv.  Beynolds,  20  Mich.  88;  Halsted  v.  Francis,  31  Mich. 
113  ;  Linneman  v.  Moross,  98  Mich.  178  ;  Chamberlain  v.  Ins:  Co.,  56  N.  H. 
249  (semble). 

"In  all  the  cases  since  Tioeddle  v.  Atkinson  (1  B.  &  S.  393),  in  which  a 
person  not  a  party  to  a  contract  has  brought  an  action  to  recover  some  bene- 
fit stipulated  for  him  in  it,  he  has  been  driven,  in  order  to  avoid  being  ship- 
wrecked upon  the  common  law  rule  which  confines  such  an  action  to  parties 
and  privies,  to  seek  refuge  under  the  shelter  of  an  alleged  trust  in  his  favor." 
—  Street,  J.,  in  Faulkner  v.  Faulkner,  23  Ont.  Rep.  252,  258. 


438  OPERATION  OF  CONTRACT.  [Pabt  m. 


CHAPTER   II. 

THE    ASSIGNMENT    OF    CONTRACT. 

§  1.    Assignment  by  act  of  the  parties. 

(i.)    Assignment  of  liabilities. 

ARKANSAS  VALLEY   SMELTING  CO.  v.  BELDEN 
MINING  CO. 

127  UNITED  STATES,  379.  — 1888. 

Action  for  damages  for  breach  of  contract.  Demurrer  to  com- 
plaint sustained.     Plaintiff  brings  error. 

Defendants  contracted  with  Billing  and  Eilers  to  sell  and 
deliver  to  them  10,000  tons  of  carbonated  lead  ore  at  the  rate  of 
50  tons  a  day,  on  condition  that  "all  ore  so  delivered  shall  at 
once,  upon  the  delivery  thereof,  become  the  property  of  the 
second  party."  The  ore  after  delivery  was  to  be  sampled  and 
assayed  in  lots  of  about  100  tons  each,  the  price  to  be  fixed  in 
accordance  with  the  state  of  the  New  York  market  on  the  day  of 
the  delivery  of  samples.  Defendants  delivered  some  ore  to  Bill- 
ing and  Eilers  under  this  contract,  when  the  firm  was  dissolved 
and  the  business,  together  with  the  above  contract,  assigned  to 
G.  Billing,  to  whom  defendants  continued  to  deliver  ore.  The 
business,  together  with  the  above  contract,  was  then  assigned  by 
G.  Billing  to  plaintiff,  who  notified  defendant  of  the  fact. 
Defendant  refused  to  deliver  to  plaintiff  and  notified  plaintiff 
that  it  considered  the  contract  canceled  and  annulled. 

Gray,  J.  If  the  assignment  to  the  plaintiff  of  the  contract 
sued  on  was  valid,  the  plaintiff  is  the  real  party  in  interest,  and 
as  such  entitled,  under  the  practice  in  Colorado,  to  maintain  this 
action  in  its  own  name.  Eev.  Stat.  §  914;  Colorado  Code  of  Civil 
Procedure,  §  3;  Albany  &  Rensselaer  Co.  v.  Lundberg,  121  U.  S. 
451.     The  vital  question  in  the  case,  therefore,  is  whether  the 


/ 


Chap.  U.  §  1.]  ASSIGNMENT  OF  CONTRACT.  439 

contract  between  the  defendant  and  Billing  and  Eilers  was  assign- 
able by  the  latter,  under  the  circumstances  stated  in  the  complaint. 

At  the  present  day,  no  doubt,  an  agreement  to  pay  money,  or 
to  deliver  goods,  may  be  assigned  by  the  person  to  whom  the 
money  is  to  be  paid  or  the  goods  are  to  be  delivered,  if  there  is 
nothing  in  the  terms  of  the  contract,  whether  by  requiring  some- 
thing to  be  afterwards  done  by  him,  or  by  some  other  stipulation, 
which  manifests  the  intention  of  the  parties  that  it  shall  not  be 
assignable. 

But  every  one  has  a  right  to  select  and  determine  with  whom 
he  will  contract,  and  cannot  have  another  person  thrust  upon  him 
■without  his  consent.  In  the  familiar  phrase  of  Lord  Denman, 
**you  have  the  right  to  the  benefit  you  anticipate  from  the  char- 
acter, credit,  and  substance  of  the  party  with  whom  you  contract." 
Humble  v.  Hunter,  12  Q.  B.  310,  317;  Winchester  v.  Howard,  97 
Mass.  303,  305;  Boston  Ice  Go.  v.  Potter,  123  Mass.  28;  King  v. 
Batterson,  13  E.  I.  117,  120;  Lansden  v.  McCarthy,  45  Missouri, 
106.  The  rule  upon  this  subject,  as  applicable  to  the  case  at 
bar,  is  well  expressed  in  a  recent  English  treatise.  "Rights 
arising  out  of  contract  cannot  be  transferred  if  they  are  coupled 
with  liabilities,  or  if  they  involve  a  relation  of  personal  confi- 
dence such  that  the  party  whose  agreement  conferred  those  rights 
must  have  intended  them  to  be  exercised  only  by  him  in  whom 
he  actually  confided."     Pollock  on  Contracts  (4th  ed.),  425. 

The  contract  here  sued  on  was  one  by  which  the  defendant 
agreed  to  deliver  ten  thousand  tons  of  lead  ore  from  its  mines  to 
Billing  and  Eilers  at  their  smelting  works.  The  ore  was  to  be 
delivered  at  the  rate  of  fifty  tons  a  day,  and  it  was  expressly 
agreed  that  it  should  become  the  property  of  Billing  and  Eilers 
as  soon  as  delivered.  The  price  was  not  fixed  by  the  contract,  or 
payable  upon  the  delivery  of  the  ore.  But  as  often  as  a  hundred 
tons  of  ore  had  been  delivered,  the  ore  was  to  be  assayed  by  the 
parties  or  one  of  them,  and,  if  they  could  not  agree,  by  an 
umpire ;  and  it  was  only  after  all  this  had  been  done,  and  accord- 
ing to  the  result  of  the  assay,  and  the  proportions  of  lead,  silver, 
silica,  and  iron,  thereby  proved  to  be  in  the  ore,  that  the  price 
was  to  be  ascertained  and  paid.  During  the  time  that  must 
elapse  between  the  delivery  of  the  ore  and  the  ascertainment  and 


440  OPERATION  OF  CONTRACT.  [Part  IU. 

payment  of  the  price,  the  defendant  had  no  security  for  its  pay- 
ment, except  in  the  character  and  solvency  of  Billing  and  Eilers. 
The  defendant,  therefore,  could  not  be  compelled  to  accept  the 
liability  of  any  other  person  or  corporation  as  a  substitute  for  the 
liability  of  those  with  whom  it  had  contracted. 

The  fact  that  upon  the  dissolution  of  the  firm  of  Billing  and 
Eilers,  and  the  transfer  by  Eilers  to  Billing  of  this  contract, 
together  with  the  smelting  works  and  business  of  the  partnership, 
the  defendant  continued  to  deliver  ore  to  Billing  according  to 
the  contract,  did  not  oblige  the  defendant  to  deliver  ore  to  a 
stranger,  to  whom  Billing  had  undertaken,  without  the  defend- 
ant's consent,  to  assign  the  contract.  The  change  in  a  partner- 
ship by  the  coming  in  or  the  withdrawal  of  a  partner  might 
perhaps  be  held  to  be  within  the  contemplation  of  the  parties 
originally  contracting;  but,  however  that  may  be,  an  assent  to 
such  a  change  in  the  one  party  cannot  estop  the  other  to  deny  the 
validity  of  a  subsequent  assignment  of  the  whole  contract  to  a 
stranger.  The  technical  rule  of  law,  recognized  in  Murray  v. 
Harway  (56  IST.  Y.  337),  cited  for  the  plaintiff,  by  which  a  lessee's 
express  covenant  not  to  assign  has  been  held  to  be  wholly  deter- 
mined by  one  assignment  with  the  lessor's  consent,  has  no 
application  to  this  case. 

The  cause  of  action  set  forth  in  the  complaint  is  not  for  any 
failure  to  deliver  ore  to  Billing  before  his  assignment  to  the 
plaintiff  (which  might  perhaps  be  an  assignable  chose  in  action), 
but  it  is  for  a  refusal  to  deliver  ore  to  the  plaintiff  since  this 
assignment.  Performance  and  readiness  to  perform  by  the  plain- 
tiff and  its  assignors,  during  the  periods  for  which  they  respec- 
tively held  the  contract,  is  all  that  is  alleged;  there  is  no 
allegation  that  Billing  is  ready  to  pay  for  any  ore  delivered  to 
the  plaintiff.  In  short,  the  plaintiff  undertakes  to  step  into  the 
shoes  of  Billing,  and  to  substitute  its  liability  for  his.  The 
defendant  had  a  perfect  right  to  decline  to  assent  to  this,  and  to 
refuse  to  recognize  a  party,  with  whom  it  had  never  contracted, 
as  entitled  to  demand  further  deliveries  of  ore. 

The  cases  cited  in  the  careful  brief  of  the  plaintiff's  counsel, 
as  tending  to  support  this  action,  are  distinguishable  from  the 
case  at  bar,  and  the  principal  ones  may  be  classified  as  follows : 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  441 

First.  Cases  of  agreements  to  sell  and  deliver  goods  for  a  fixed 
price,  payable  in  cash  on  delivery,  in  which  the  owner  would 
receive  the  price  at  the  time  of  parting  with  his  property,  nothing 
further  would  remain  to  be  done  by  the  purchaser,  and  the  rights 
of  the  seller  could  not  be  affected  by  the  question  whether  the 
price  was  paid  by  the  person  with  whom  he  originally  contracted 
or  by  an  assignee.  Sears  v.  Conover,  3  Keyes,  113,  and  4  Abbot 
(N.  Y.  App.),  179;   Tyler  v.  Ban'ows,  6  Robertson  (N.  Y.),  104. 

Second.  Cases  upon  the  question  how  far  executors  succeed 
to  rights  and  liabilities  under  a  contract  of  their  testator.  Hamhlxf 
V.  Trott,  Cowper,  371,  375;  Wentworth  v.  Cock,  10  Ad.  &  El.  42, 
and  2  Per.  &  Dav.  251;  Williams  on  Executors  (7th  ed.),  1723- 
1725.  Assignment  by  operation  of  law,  as  in  the  case  of  an 
executor,  is  quite  different  from  assignment  by  act  of  the  party  j 
and  the  one  might  be  held  to  have  been  in  the  contemplation  of 
the  parties  to  this  contract,  although  the  other  was  not.  A  lease, 
for  instance,  even  if  containing  an  express  covenant  against 
assignment  by  the  lessee,  passes  to  his  executor.  And  it  is  by 
no  means  clear  that  an  executor  would  be  bound  to  perform,  or 
would  be  entitled  to  the  benefit  of,  such  a  contract  as  that  now 
in  question.     Dickinson  v.  Calahan,  19  Penn.  St.  227. 

Third.  Cases  of  assignments  by  contractors  for  public  works, 
in  which  the  contracts,  and  the  statutes  under  which  they  were 
made,  were  held  to  permit  all  persons  to  bid  for  the  contracts, 
and  to  execute  them  through  third  persons.  Taylor  v.  Palmer ^ 
31  California,  240,  247;  St.  Louis  v.  Clemens,  42  Missouri,  69;. 
Philadelphia  v.  Lockhardt,  73  Penn.  St.  211 ;  Devlin  v.  New  York, 
63  N.  Y.  8. 

Fourth.  Other  cases  of  contracts  assigned  by  the  party  who 
was  to  do  certain  work,  not  by  the  party  who  was  to  pay  for  it, 
and  in  which  the  question  was  whether  the  work  was  of  such  a. 
nature  that  it  was  intended  to  be  performed  by  the  original  con- 
tractor only.  Rohson  v.  Drwmmond,  2  B.  &  Ad.  303;  British 
Waggon  Co.  v.  Lea,  5  Q.  B.  D.  149;  Parsons  v.  Woodward,  2 
Zabriskie,  196. 

Without  considering  whether  all  the  cases  cited  were  well 
decided,  it  is  sufficient  to  say  that  none  of  them  can  control  the 
decision  of  the  present  case.  Judgment  affirmed. 


442  OPERATION   OF  CONTRACT.  [Pakt  IU. 

(u.)    Assignment  of  rights. 

a.   At  common  laiv. 
HEATON  V.   ANGIER. 

7  NEW  HAMPSfflRE,   397.  — 1835. 

Assumpsit  for  a  wagon  sold  and  delivered.  Verdict  for  plain- 
tiff, subject  to  the  opinion  of  the  court  upon  the  following  case. 

The  plaintiff,  on  the  29th  of  March,  1832,  sold  the  wagon  to 
the  defendant  at  auction  for  $30.25.  Immediately  afterwards, 
on  the  same  day,  one  John  Chase  bought  the  wagon  of  the 
defendant  for  $31.25.  Chase  and  the  defendant  then  went  to 
plaintiff,  and  Chase  agreed  to  pay  the  $30.25  to  the  plaintiff  for 
the  defendant,  and  the  plaintiff  agreed  to  take  Chase  as  paymaster 
for  that  sum;  and  thereupon  Chase  took  the  wagon  and  went 
away. 

Green,  J.     In  Tatlock  v.  Harris  (3D.  &  E.  180),  Buller,  J., 

^«!^    said  :  "Suppose  A  owes  B  £100,  and  B  owes  C  £100,  and  the 

three  meet  and  it  is  agreed  between  them  that  A  shall  pay  C 

the  £100,  B's  debt  is  extinguished,  and  C  may  recover  the  sum 

from  A." 

The  case  thus  put  by  Buller  is  the  very  case  now  before  us. 
Heaton,  Angier,  and  Chase  being  together,  it  was  agreed  between 
them  that  the  plaintiff  should  take  Chase  as  his  debtor  for  the 
sum  due  from  the  defendant.  The  debt  due  to  the  plaintiff  from 
the  defendant  was  thus  extinguished.  It  was  an  accord  executed. 
And  Chase,  by  assuming  the  debt  due  to  the  plaintiff,  must  be 
considered  as  having  paid  that  amount  to  the  defendant,  as  part 
of  the  price  he  was  to  pay  the  defendant  for  the  wagon. 

The  agreement  of  the  plaintiff  to  take  Chase  as  his  debtor  was 
olearly  a  discharge  of  the  defendant.  Wilson  v.  Coupland,  o 
B.  &  A.  228;  Wharton  y.  Walker,  4  B.  &  C.  163;  Cuxon  v.  Chad- 
iey,  3  B.  &  C.  591. 

A  new  trial  granted. 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  443 

McKINNEY  V.   ALVIS. 

14  ILLINOIS,  33.  — 1852. 

Action  for  the  value  of  certain  rails.     Judgment  for  plaintiff. 

Trumbull,  J.     One  Piper,   since  deceased,  had  a  claim  on  ( 

McKinney  for  eight  hundred  rails,  which  Alvis,  under  a  claim  ' 

of  purchase  from  Piper,  called  on  McKinney  to  pay  to  him. 
/  McKinney  agreed  to  deliver  the  rails  to  Alvis,  but  failing  to  \ 
comply  with  his  contract,  Alvis  sued  to  recover  their  value.  ''^v^ 

The  important  question  in  this  case,  and  the  only  one  we  deem 
it  necessary  to  notice  is,  can  Alvis  maintain  the  action  in  his 
own  name? 

It  is  a  general  rule  that  choses  in  action,  except  negotiable 
instruments,  are  not  assignable  at  law  so  as  to  authorize  the 
assignee  to  maintain  an  action  in  his  own  name ;  but  it  is  insisted 
that  an  express  promise,  as  in  this  case,  to  pay  the  debt  to  the 
assignee,  forms  an  exception  to  the  rule.  To  constitute  an 
exception,  however,  in  a  case  like  this,  requires  something  more 
than  a  mere  promise  on  the  part  of  the  debtor  to  pay  to  the 
assignee;  there  must  be  a  communication,  and  a  new  arrange- 
ment between  all  the  parties,  by  which  the  assignor's  claim  upon 
his  debtor,  and  his  liability  to  the  assignee,  are  extinguished. 
In  this  case  there  was  no  communication  between  Piper  and 
McKinney;  nor  did  Alvis  agree  to  release  Piper,  and  look  alone 
to  McKinney  for  the  debt.  It  is  not  like  the  case  put  in  the 
books,  where  it  is  said:  "Suppose  A  owes  B  £100,  and  B  owes 
O  £100,  and  the  three  meet,  and  it  is  agreed  between  them  that 
A  shall  pay  C  the  £100,  B's  debt  is  extinguished,  and  C  may 
recover  that  sum  against  A."  Chitty  on  Contracts,  482,  613; 
Wharton  v.  Walker,  4  Barnwell  &  Cresswell,  163;  Butterfield  v. 
Hartshorn,  7  N.  H.  345.  Nor  is  it  a  case  where  one  person  can 
be  said  to  have  withheld  the  money  of  another,  and  thereby  sub- 
jected himself  to  an  action  at  the  suit  of  the  latter  for  money  had 
and  received;  but  it  is  an  attempt  to  maintain  an  action  in  his 
own  name,  by  the  assignee  of  a  contract  for  the  delivery  of  certain 
articles  of  personal  property,  on  the  ground  alone  of  an  express 
parol  promise  by  the  debtor  to  pay  the  property  to  him.     No 


444  OPERATION  OF  CONTRACT.  [Paet  III, 

consideration  for  tlie  promise  is  shown  by  the  record,  for  it  does 
not  appear  that  the  defendant  was  released  by  it  from  his  liability 
to  Piper,  nor  is  there  any  legitimate  evidence  in  the  record  of  a 
transfer  of  the  claim  by  Piper  to  Alvis. 

Judgment  reversed,  and  cause  remanded. 


COMPTON  V.  JONES. 

4  CO  WEN   (N.  Y.),   13.  — 1825. 

Assumpsit.     Demurrer  to  declaration  overruled. 
Defendant  made  a  bond  to  one  Wood,  promising  to  pay  Wood  a 
certain  sum.     Wood  afterward  assigned  the  bond  to  the  plaintiff. 
Plaintiff  gave  notice  of  the  assignment  to  defendant,  who  prom- 
ised to  pay  the  amount  to  plaintiff. 

Savage,  C.  J.,  remarked,  that  what  was  said  by  the  court  in 
the  authority  cited  by  the  defendant's  counsel,  was  intended  of  a 
case  where  the  action  was  brought  by  the  party  to  the  specialty. 
And  the  whole  court  were  clear  that  the  action  was  sustainable, 
being  on  a  promise  to  the  assignee. 

Judgment  for  the  plaintiff.^ 


JESSEL  V.  WILLIAMSBURGH  INS.  CO. 

3  HILL   (N.  Y.),  88.  — 1842. 

Assumpsit  on  a  fire  insurance  policy.  Plaintiff  nonsuited,  and 
judgment  for  defendants. 

The  policy  was  issued  to  S.  and  contained  a  provision  that  it 
should  not  be  assignable  without  the  consent  of  the  company. 
The  company  gave  their  consent  to  the  assignment  to  plaintiff. 

Per  Curiam.  We  know  of  no  principle  upon  which  the 
assignee  of  a  policy  of  insurance  can  be  allowed  to  sue  upon  it  in 
his  own  name.  The  general  rule  applicable  to  personal  contracts 
is,  that,  if  assigned,  the  action  for  a  breach  must  be  brought  in 
the  name  of  the  assignor,  except  where  the  defendant  has 
1  Accord :  Crocker  v.  Whitney,  10  Mass.  316. 


Chap.  II.  §  1.]  ASSIGNMENT   OF  CONTRACT.  445 

expressly  promised  the  assignee  to  respond  to  him.     Compton  v. 

Jones,  4  Cowen,  13;  1  Chitty^s  Plead.  9,  10;  Innes  v.  Dunlop,  8 

Term  Rep.  595;  Currier  v.  Hodgdon,  3  IS".  H.  82;  Wiggin  v.  Dam- 

rell,  4  Id.  69;  Skinner  v.  Somes,  14  Mass.  107;  Mowry  v.  Todd, 

12  Id.  281 ;  Crocker  v.  Whitney,  10  Id.  316 ;  Dubois  v.  Douhleday, 

9  Wend.  317;  and  see  Chit,  on  Cont.  614,  note  1,  5th  Am.  ed.     In 

Changer  v.  The  Howard  Insurance  Company  (5  Wend.  200,  202) 

the   point   now   raised   was   discussed,   and,  we   think,   decided 

against  the  present  plaintiff.     The  argument  that  the  policy  in 

question  originally  contemplated  an  assignment,  would  be  equally 

cogent  in  all  cases,  for  aught  we  see,  of  a  promise  in  form  to  one 

and  his  assigns;  and  yet  it  is  settled  that  the  latter  words  do  not 

impart  a  negotiable  quality  to  the  promise  so  as  to  enable  the 

assignee  to  sue  upon  it  in  his  own  name.     Skinner  v.  Somes,  14 

Mass.  107-8.     The  judgment  below  is  clearly  right  and  should 

not  be  disturbed. 

Judgment  affirmed.^ 


HOUGH  V.  BARTON. 

20  VERMONT,  455.  — 1848. 

Indebitatus  assumpsit  for  money  had  and  received.  Verdict 
for  plaintiff.     Exceptions  by  defendant. 

Defendant  made  and  delivered  a  note  to  Hough,  which  was  by 
him  transferred  to  K.,  and  by  K.  to  Barker,  who  was  the  real 
party  in  interest  in  this  suit.  The  note  was  lost,  and  defendant 
offered  to  prove  that,  after  its  transfer  to  Barker,  Hough,  the 
nominal  plaintiff,  had  admitted  that  it  was  a  negotiable  note. 
This  evidence  was  excluded. 

Davis,  J.  It  was  conceded  on  trial  that  Barker  was  the  owner 
of  the  note  given  by  the  defendant  to  Hough,  and  that  the  suit 
was  commenced  and  prosecuted  by  him,  for  his  own  benefit, 
though  in  the  name  of  the  payee.  Although  the  language  of  the 
record  is  not  perfectly  explicit  on  this  subject,  it  may  reasonably 
be  inferred,  that,  at  the  time  of  bringing  the  action,  and  before, 

^Accord:  Chamberlain  v.  Ins.  Co.,  85  N.  H.  249.  Cf.  Hastings  v.  7ns. 
Co.,  73  N.  Y.  141 ;  Hartford  Ins.  Co.  v.  Olcott,  97  111.  439. 


446  OPERATION  OF  CONTRACT.  [Part  III 

the  defendant  was  apprised  of  the  transfer  to  Kidder,  and  after- 
wards by  him  to  Barker.  Under  such  circumstances,  although  a 
different  rule  prevails  in  England,  yet  in  this  State  and  in  most 
of  the  American  States,  it  is  regarded  as  inequitable  and  unjust 
to  permit  the  defendant  to  avail  himself  of  any  discharge,  release, 
retraxit,  or  admission,  by  the  nominal  plaintiff,  to  defeat  the 
action.  It  was  not  competent  for  Hough  to  make  admissions, 
after  suit  brought,  to  prejudice  the  rights  of  the  real  party  in 
interest.  Sargeant  v.  Sargeant  et  al.,  18  Vt.  371;  Cow.  and 
EilVs  notes  to  Phil.  Ev.  172;  1  Greenl.  Ev.  §  172-3,  and  note  (2). 
«  «  »  «  « 

In  this  very  case,  so  far  as  appears,  the  note  was  neither  payable 
to  order,  or  bearer,  and  yet  Barker,  by  reason  of  the  blank 
indorsement,  obtained  a  legal  right  to  collect  and  appropriate  the 
contents  to  his  own  exclusive  u^e, —  not,  it  is  true,  by  a  suit  in 
his  own  name,  but  by  using  the  name  of  Hough  for  that  purpose. 
To  this  Hough  consented;  but  the  right  would  have  been  the 
same,  had  there  been  no  consent.  Having  transferred  the  note 
for  value,  his  consent  to  the  use  of  his  name,  on  proper  indemnity 
against  costs,  results  by  implication;  and,  as  a  necessary  conse- 
quence, he  is  rendered  incapable  of  impairing  that  right  by 
discharge,  release,  or  other  act. 

«  • «  »  »  » 

The  judgment  of  the  county  court  is  therefore  affirmed.* 

^  "The  general  principle  deducible  from  the  cases  and  from  the  ordinary 
practice  is  that  when  one  person  has  an  equitable  right  or  claim  against  an- 
other, which  he  can  obtain  only  by  a  suit  in  the  name  of  a  third  person,  he 
may  use  the  name  of  that  person  in  an  action  to  enforce  his  right.  And  such 
third  person  cannot  control  the  suit,  nor  will  his  admission,  subsequent  to 
the  time  he  ceased  to  have  an  interest,  be  evidence  to  defeat  it.  Eastman  v. 
Wright,  6  Pick.  322 ;  Jones  v.  Witter,  13  Mass.  304 ;  Hackett  v.  Martin,  8 
Greenl.  77  ;  Matthews  v.  Houghton,  1  Fairf.  420 ;  Frear  v.  Evertson,  20 
Johns.  142.  But  the  holder  must  furnish  to  the  plaintiff  on  the  record  ample 
indemnity  against  costs,  if  required."  — Parker,  C.  J.,  in  Webb  v.  Steele,  13 
N.  H.  230,  236.  See  also  Halloran  v.  Whitcomb,  43  Vt.  306  ;  Fay  v.  Guynon, 
131  Mass.  31 ;  Dazey  v.  Mills,  6  Gilm.  (111.)  67. 


Chap.  H.  §  1.]  ASSIGNMENT  OF  CONTRACT.  447 


ROCHESTEK   LANTERN   CO.  v.   STILES   AND  PARKER 

PRESS   CO. 

135  NEW  YORK,  209.  — 1892. 

Action  for  damages  for  alleged  breach  of  contract.  Judgment 
for  plaintiff  affirmed  at  General  Term.     Defendant  appeals. 

Earl,  C.  J.  .  .  .  In  disposing  of  this  case,  we  must  take  the 
facts  as  found  by  the  referee,  and  they  are  as  follows: 

On  the  19th  day  of  March,  1887,  James  H.  Kelly  entered  into  a  con- 
tract with  the  defendant  whereby  it  was  to  make  and  deliver  to  him 
certain  dies  to  be  used  by  him  in  the  manufacture  of  lanterns ;  that  it 
agreed  to  make  and  deliver  the  dies  within  a  reasonable  time,  that  is, 
within  five  weeks  from  the  time  of  the  order,  to  manufacture  and  deliver 
the  same ;  that  the  plaintiff  was  incorporated  shortly  prior  to  the  27th 
day  of  August,  1887,  and  on  the  twenty-ninth  day  of  that  month  Kelly 
duly  assigned  to  the  plaintiff  his  contract  with  the  defendant,  and  all  his 
rights  and  claims  thereunder;  that  the  plaintiff  failed  to  establish  by 
evidence  that  at  or  prior  to  the  time  of  making  the  contract,  the  defend- 
ant was  informed  that  any  corporation  was  intended  to  be  organized, 
or  that  the  contract  was  made  for  the  use  or  benefit  of  any  other  person 
or  corporation  than  Kelly;  that  the  first  notification  received  by  the 
defendant  that  the  plaintiff  had  any  interest  in  the  contract,  or  that 
such  a  corporation  as  the  plaintiff  existed,  so  far  as  was  proven  upon  the 
trial,  was  given  to  it  by  a  letter  dated  March  22,  1888,  and  signed  '  Roch- 
ester Lantern  Company,  by  James  H.  Kelly,  President ';  that  from  time 
to  time  after  making  the  contract  samples  were  sent  by  Kelly  to  the 
defendant  and  dies  were  shipped  to  him  by  the  defendant;  that  the  last 
sample  for  the  last  die  to  be  made  was  sent  by  Kelly  to  the  defendant 
on  the  29th  day  of  July,  1887 ;  that  by  the  conduct  of  Kelly  and  the 
defendant  performance  of  the  contract  within  the  time  originally  stipu- 
lated was  waived,  and  the  contract  except  as  to  time  of  performance  was 
regarded  as  still  in  force  at  the  date  of  the  assignment  thereof ;  that  a 
reasonable  time  in  which  the  defendant  could  have  carried  out  and  per- 
formed the  contract  after  August  29,  1889,  was  five  weeks,  which  expired 
October  third ;  that  Kelly  was  a  manufacturer  of  lanterns  in  Roches- 
ter and  required  the  dies  for  the  manufacture  of  lanterns  which  he 
designed  to  put  upon  the  market  as  the  defendant  was  informed  and 
well  knew,  and  that  the  plaintiff  after  its  incorporation  succeeded  him 
in  the  business  of  manufacturing  lanterns;  that  the  defendant  failed  to 
carry  out  the  contract  and  to  furnish  dies  as  thereby  required ;  that  the 
plaintiff,  for  the  sole  purpose  of  carrying  on  the  business  of  manufactur- 
ing the  lanterns  which  it  was  intended  that  these  dies  should  make, 


448  OPERATION  OF  CONTRACT.  [Pabt  IU. 

entered  into  certain  obligations  and  incurred  certain  liabilities  as  follows : 
It  paid  one  Butts  for  rent  of  room  from  October  3  to  November  1,  1887, 
the  sum  of  $31.86 ;  it  paid  one  Broad,  an  employe,  for  his  wages  from 
October  3, 1887,  to  March  24, 1888,  the  sum  of  $250;  and  one  Briston,  an 
employe,  for  his  wages  during  the  same  time  the  same  sum ;  it  paid  to 
Crouch  &  Sons  for  the  rent  of  premises  from  November  1, 1887,  to  March 
24,  1888,  $278.46 ;  that  by  reason  of  defendant's  failure  to  perform  the 
contract  as  agreed  by  it  the  plaintiff  was  unable  to  manufacture  any  lan- 
terns for  the  market  until  after  the  commencement  of  this  action  on  the 
24th  day  of  March,  1888,  and  that  the  plaintiff  by  reason  of  such  failure 
sustained  loss  in  the  suras  above  mentioned  which  it  actually  paid,  and  the 
referee  awarded  judgment  for  the  amount  of  the  items  above  specified. 

We  do  not  think  these  facts  sufficient  to  justify  the  recovery 
of  the  items  of  damages  specified.  There  had  been  no  breach  of 
the  contract  at  the  time  of  the  assignment  thereof  to  the  plaintiff, 
and  at  that  time  Kelly  had  no  claim  against  the  defendant  for 
damages.  After  the  assignment  Kelly  had  no  interest  in  the 
contract  and  the  defendant  owed  him  no  duty  and  could  come 
under  no  obligation  to  him  for  damages  on  account  of  a  breach  of 
the  contract  by  it. 

There  is  no  doubt  that  Kelly  could  assign  this  contract  as  he 
could  have  assigned  any  other  chose  in  action,  and  by  the  assign- 
ment the  assignee  became  entitled  to  all  the  benefits  of  the  con- 
tract. Devlin  v.  Mayor  &c.  63  N.  Y.  8.  The  contract  was  not 
purely  personal  in  the  sense  that  Kelly  was  bound  to  perform  in 
person,  as  his  only  obligation  was  to  pay  for  the  dies  when 
delivered,  and  that  obligation  could  be  discharged  by  any  one. 
He  could  not,  however,  by  the  assignment,  absolve  himself  from 
all  obligations  under  the  contract.  The  obligations  of  the  con- 
tract still  rested  upon  him,  and  resort  could  still  be  made  to  him 
for  the  payment  of  the  dies  in  case  the  assignee  did  not  pay  for 
them  when  tendered  to  it.  After  the  assignment  of  the  contract 
to  the  plaintiff  the  defendant's  obligation  to  perform  still  re- 
mained, and  that  obligation  was  due  to  the  plaintiff,  and  for  a 
breach  of  the  obligation  it  became  entitled  to  some  damages,  and 
so  we  are  brought  to  the  measure  of  damages  in  such  a  case  as 
this.^ 

1  '»  We  have  not  overlooked  the  distinction  pointed  out  by  counsel  between 
executory  contracts  and  contracts  which  have  been  executed  on  one  side. 
What  we  have  said  applies  where  something  remains  to  be  done  by  the  party 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  449 

It  is  frequently  difl&cult  in  the  administration  of  the  law  to 
apply  the  proper  rule  of  damages,  and  the  decisions  upon  the 
subject  are  not  harmonious.  The  cardinal  rule  undoubtedly  is 
that  the  one  party  shall  recover  all  the  damage  which  has  been 
occasioned  by  the  breach  of  the  contract  by  the  other  party.  But 
this  rule  is  modified  in  its  application  by  two  others :  The  dam- 
ages must  flow  directly  and  naturally  from  the  breach  of  the  con- 
tract, and  they  must  be  certain,  both  in  their  nature  and  in 
respect  of  the  cause  from  which  they  proceeded.  Under  this 
latter  rule  speculative,  contingent,  and  remote  damages  which 
cannot  be  directly  traced  to  the  breach  complained  of  are 
excluded.  Under  the  former  rule  such  damages  only  are  allowed 
as  the  parties  may  fairly  be  supposed  when  they  made  the  con- 
tract to  have  contemplated  as  naturally  following  its  violation. 
Hadley  v.  Baxendale,  9  Excheq.  341;  Griffin  v.  Colver,  16  N.  Y. 
489;  Leonard  v.  N.  T.  &c.  Tel.  Co.,  41  Id.  544,  566;  Cassidy  v. 
Le  Fevre,  45  Id.  562. 

The  natural  and  obvious  consequence  of  a  breach  of  this  con- 

who  assigns.  And  as  a  matter  of  course  (since  a  party  cannot  release  him- 
self from  an  obligation  by  his  own  act  without  the  consent  of  the  other 
party),  it  is  only  the  benefit  of  a  contract  which  can  be  assigned.  Where 
there  is  a  burden,  it  cannot  be  transferred  without  the  consent  of  the  other 
party.  Civ.  Code,  sec.  1457."  —  Hayne,  C,  in  La  Rue  v.  Groezinger,  84 
Gal.  281. 

"  When  the  contract  is  executory  in  its  nature,  and  an  assignee  or  personal 
representative  can  fairly  and  sufficiently  execute  all  that  the  original  con- 
tractor could  have  done,  the  assignee  or  representative  may  do  so  and  have 
the  benefit  of  the  contract.  ...  In  principle  it  would  not  impair  the  rights 
of  the  assignee,  or  destroy  the  assignable  quality  of  the  contract  or  claim, 
that  the  assignee,  as  between  himself  and  the  assignor,  has  assumed  some 
duty  in  performing  the  conditions  precedent  to  a  perfected  cause  of  action, 
or  is  made  the  agent  or  substitute  of  the  assignor  in  the  performance  of  the 
contract.  If  the  service  to  be  rendered  or  the  condition  to  be  performed  is 
not  necessarily  personal,  and  such  as  can  only  with  due  regard  to  the  intent 
of  the  parties,  and  the  rights  of  the  adverse  party,  be  rendered  or  performed 
by  the  original  contracting  party,  and  the  latter  has  not  disqualified'  himself 
from  the  performance  of  the  contract,  the  mere  fact  that  the  individual 
representing  and  acting  for  him  is  the  assignee,  and  not  a  mere  agent  or 
servant,  will  not  operate  as  a  rescission  of,  or  constitute  a  cause  for,  termi- 
nating the  contract.  Whether  the  agent  for  performing  the  contract  acts 
under  a  naked  power,  or  a  power  coupled  with  an  interest,  cannot  affect  the 
character  or  vary  the  effect  of  the  delegation  of  power  by  the  original  con- 
tractor." —  Allen,  J.,  in  Devlin  v.  Mayor,  63  N.  Y.  8,  17-18,  15-16. 


450  OPERATION   OF  CONTRACT.  [P..kt  III. 

tract  on  the  part  of  the  defendant  would  be  to  compel  Kelly  or 
his  assignee  to  procure  the  dies  from  some  other  manufacturer, 
and  the  increased  cost  of  the  dies,  if  any,  would  be  the  natural 
and  ordinary  measure  of  the  damages;  and  such  would  be  the 
damages  which  it  could  be  fairly  supposed  the  parties  expected, 
when  they  made  the  contract,  would  flow  from  a  breach  thereof. 
It  does  not  appear  that  Kelly  was  engaged  in  the  manufacture  of 
lanterns  when  the  contract  was  made,  or  that  he  contemplated 
engaging  in  the  business  until  dies  were  furnished.  No  fact  is 
found  showing  that  the  defendant  had  any  reason  to  suppose  that 
he  would  hire  any  workmen  or  persons  before  the  dies  were 
furnished,  and  it  cannot  be  said  that  it  was  a  natural  and  proxi- 
mate consequence  of  a  breach  of  the  contract  that  he  would  have 
idle  men  or  unused  real  estate  causing  him  the  expenses  now 
claimed.  Much  less  can  it  be  supposed  that  the  defendant  could, 
when  the  contract  was  made,  anticipate  that  the  contract  would 
be  assigned  and  that  the  assignee  would  employ  men  and  premises 
to  remain  idle  after  the  defendant  had  failed  to  perform  the  con- 
tract and  in  consequence  of  such  failure.  Such  damages  to  the 
assignee  could  not  have  been  contemplated  as  the  natural  and 
proximate  consequence  of  a  breach  pf  the  contract.  If  we  should 
adopt  the  rule  of  damages  contended  for  by  the  plaintiff,  what 
would  be  the  limits  of  its  application?  Suppose  instead  of 
employing  two  men,  the  plaintiff  had  projected  an  extensive  busi- 
ness in  which  the  dies  were  to  be  used,  and  had  employed  one 
hundred  men,  and  had  hired  or  even  constructed  a  large  and 
costly  building  in  which  to  carry  on  the  business,  and  had  kept 
the  men  and  the  building  unemployed  for  months,  and,  perhaps, 
years,  could  the  whole  expense  of  the  men  and  building  be 
visited  on  the  defendant  as  a  consequence  of  its  breach  of  con- 
tract? If  it  could,  we  should  have  a  rule  of  damages  which  might 
cause  ruin  to  parties  unable  from  unforeseen  events  to  perform 
their  contracts. 

The  damages  allowed  by  the  referee  in  this  case  are  special 
damages,  not  flowing  naturally  from  the  breach  of  the  contract, 
and,  we  think,  the  only  damages  such  an  assignee  in  a  case  like 
this  can  recover  is  the  difference  between  the  contract  price  of 
these  dies  and  the  value  or  cost  of  the  dies  if  furnished  according 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  •  461 

to  the  contract.     Even  if  Kelly  could  have  recovered  special 

damages,  we  see  no  ground  for  holding  that  his  assignee,  of  whose 

connection  with  the  contract  the  defendant  had  no  notice,  could 

recover  special  damages  not  contemplated  when  the  contract  was 

made. 

We  are,  therefore,  of  opinion  that  the  award  of  damages  made 

by  this  judgment  was  not  justified  by  the  facts  found,  and  that  the 

judgment  should  be  reversed  and  a  new  trial  granted,  costs  to 

abide  event.     All  concur. 

Judgment  reversed.^ 


HAYES  V.   WILLIO. 

4  DALY    (N.Y.  C.  P.),  259.— 1872. 

Injunction  to  restrain  defendant  from  playing  at  any  other 
theater  than  the  plaintiff's.  Motion  to  vacate  injunction  denied. 
Defendant  appeals.  Also,  appeal  from  an  order  denying  a 
motion  to  vacate  a  writ  of  ne  exeat  against  tlie  defendant. 

K.  engaged  defendant  to  appear  as  a  contortionist,  bird  imita- 
tor, and  pantomimist  under  K.'s  personal  control  at  such  places 
as  K.  might  direct.     K.  assigned  the  contract  to  plaintiff. 

Robinson,  J.  .  .  .  As  a  general  rule,  a  contract  for  the 
performance  of  personal  duties  or  services  is  unassignable,  so  as 
to  vest  in  the  assignee  the  right  to  compel  its  execution.  Ch.  on 
Cont.  739;  Burrill  on  Assignments,  67,  and  cases  cited,  note  3. 
As  to  slaves  it  is  different;  but  as  to  apprentices,  an  assignment 
of  their  indentures  merely  operates  as  a  covenant  that  they  shall 
serve  the  assignees  (NicJcerson  v.  Hoivard,  19  Johns.  113),  except 
as  to  the  indenture  of  an  infant  immigrant  to  pay  his  passage, 
as  authorized  by  2  R.  S.  156,  §§  12,  13,  14;  and  as  to  convicts, 
the  right  of  control  still  remains  in  the  officer  of  the  State. 
Horner  v.   Wood,  23  N.  Y.  350. 

These  considerations  do  not  appear  to  have  been  presented  on 
the  motion  for  the  orders  for  the  injunction  and  ne  exeat,  now 
under  review;  they  are  controlling  as  to  the  merits  of  this  con- 
troversy, and  without  discussing  the  other  questions  presented 

iSee  cases  on  "  Damages,"  posf,  Pt.  V.,  Ch.  III.,  §  3  (i.). 


452  OPERATION  OF  CONTRACT.  [Part  HI. 

on  the  argument  and  in  the  opinion  of  the  judge  who  granted  the 

orders,  these  orders  should  be  reversed,  with  costs,  and  the  we 

exeat  superseded  and  discharged. 

Order  reversed.* 


h.   In  equity. 

CAETER   et  al.   v.    UNITED   INS.    CO. 
1  JOHNSON'S  CHANCERY  (N.  Y.),  463.  — 1815. 

Bill  in  equity  by  plaintiffs  as  assignees  of  an  insurance  policy. 
Demurrer  to  bill  on  the  ground  that  the  plaintiffs  had  an  ade- 
quate remedy  at  law. 

The  policy  was  issued  to  Titus  &  Gibbs  on  500  barrels  of  flour 
from  Newport  to  St,  Jago  de  Cuba  on  board  the  Spanish  brig 
Patriota,  which  was  captured  by  a  Carthagena  privateer.  Titus 
&  Gibbs  assigned  the  policy  to  the  plaintiffs  in  trust  for  credit- 
ors.    Defendants  refused  to  pay  the  loss. 

The  Chancellor.  The  demand  is  properly  cognizable  at 
law,  and  there  is  no  good  reason  for  coming  into  this  court  to 
recover  on  the  contract  of  insurance.  The  plaintiffs  are  entitled 
to  make  use  of  the  names  of  Gibbs  &  Titus,  the  original 
assured,  in  the  suit  at  law ;  and  the  nominal  plaintiffs  would  not 
be  permitted  to  defeat  or  prejudice  the  right  of  action.  It  may 
lae  said  here,  as  was  said  by  the  chancellor  in  the  analogous  case 
of  Dhegetoft  v.  The  London  Assurance  Company  (Mosely,  83), 
that,  at  this  rate,  all  policies  of  insurance  would  be  tried  in  this 
court.  In  that  case  the  policy  stood  in  the  name  of  a  nominal 
trustee;  but  that  was  not  deemed  sufficient  to  change  the  juris- 
diction ;  and  the  demurrer  to  the  bill  was  allowed,  and  the  decree 
was  afterwards  affirmed,  in  Parliament.  3  Bro.  P.  C.  525.  The 
bill  in  this  case  states  no  special  ground  for  equitable  relief; 
nor  is  there  any  discovery  sought  which  requires  an  answer. 

Bill  dismissed  with  costs.* 

1  For  assignment  of  salary,  pension,  or  fees  of  public  office,  see  Bowery  N.  B. 
v.  Wilson,  122  N.  Y.  478  ;  fees  of  executor,  Matter  of  Worthington,  141  N.  Y. 
9.  For  assignment  of  insurance  policies,  see  Warnock  v.  Davis,  104  U.  S. 
775,  ante,  p.  333. 

8  "  We  have  lately  decided,  after  full  consideration  of  the  authorities, 


Chaf.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  463 


^cjCf- 


FIELD   V.    THE   MAYOR  &c.  OF  NEW  YORK  et  al. 

2  SELDEN  (6  N.  Y.),  179.  — 1852. 

Bill  in  equity.  Bill  dismissed  by  trial  court.  Decree  reversed 
in  Supreme  Court.     Defendants  appeal. 

Defendant  Bell  had  certain  contracts  with  defendant  corpora* 
tion  for  printing  to  be  done  by  him  for  the  city.  On  March  14, 
1842,  he  assigned  to  G.  all  bills  that  might  become  due  to  him  for 
job  printing,  paper,  or  stationery  done  or  furnished  the  defendant 
corporation,  to  the  amount  of  $1500,  after  two  other  assignments 
should  be  paid,  viz.,  one  for  $1500  to  L.,  and  one  of  $300  to  C. 
Afterward  on  April  28,  1842,  G.  assigned  the  claim  to  plaintiff. 
Plaintiff  gave  the  city  notice  of  the  claim  on  April  30,  1842. 

Bell  did  work  for  the  city  after  the  assignment,  and  after  the 
notice,  but  the  city  paid  the  amount  due  for  it  to  Bell.  Bell  was 
insolvent. 

The  report  of  the  referee  showed  that  there  became  due  to  Bell 
after  March  14,  1842,  and  after  providing  for  the  claims  of  L. 
and  G.  far  more  than  enough  to  satisfy  plaintiff's  claim. 

"Wells,  J.  By  the  assignment  from  Bell  to  Garread,  of  March 
14,  1842,  it  was  intended  to  transfer  to  and  vest  in  the  latter, 
the  right  and  interest  of  the  former  in  and  to  all  the  bills  which 
might  thereafter  become  due  to  him  from  the  corporation  of  the 
city  of  New  York,  for  job  printing,  paper,  or  stationery,  done  or 
furnished  by  Bell  either  before  or  after  the  date  of  the  assign- 
ment, to  the  amount  of  $1500;  subject  to  the  two  prior  assign- 
ments, to  Lloyd  &  Hopkins,  and  to  Coit.  By  the  assignment  from 
Garread  to  the  respondent  of  April  28th,  and  the  release  from  the 
former  to  the  latter,  of  December  27th,  1842,  the  latter  acquired 
all  the  right  and  interest  of  the  former  in  the  first  assignment. 

The  case  shows,  that  at  the  time  of  the  commencement  of  the 
suit  in  the  court  of  chancery,  bills  of  the  description  mentioned 

that  an  assignee  of  a  chose  in  action  on  which  a  complete  and  adequate 
remedy  exists  at  law  cannot,  merely  because  his  interest  is  an  equitable  one, 
bring  a  suit  in  equity  for  the  recovery  of  the  demand.  Hayward  v.  Andrews, 
106  U.  S.  672.  He  must  bring  an  action  at  law  in  the  name  of  the  assignor 
to  his  own  use." — Mr.  Justice  Bradley,  in  New  York  <&c..  Co.  v.  Memphis 
Water  Co.,  107  U.  S.  205,  214.     See  also  Walker  v.  Brooks,  125  Mass.  241. 


454  OPERATION  OF  CONTRACT.  [Part  HI. 

had  become  due  from  the  corporation  to  Bell,  to  an  amount  more 
than  sufficient  to  satisfy  all  three  of  the  assignments. 

These  bills  appear  to  have  accrued,  and  most  of  the  services 
rv'.ul  materials  upon  which  they  arose  appear  to  have  been  ren- 
(liired  and  delivered,  after  the  date  of  the  assignment  from  Bell  to 
Garread. 

One  of  the  questions  presented  by  this  appeal  is  whether  the 
court  of  chancery  had  jurisdiction  to  decree  payment  by  the 
corporation  of  the  city  of  New  York  to  the  respondent  of  his 
claim.  That  it  had  such  jurisdiction  seems  to  be  in  accordance 
with  reason  and  the  theory  of  equity  jurisprudence. 

1.  The  assignment  of  Bell  to  Garread  was  valid  and  operative 
as  an  agreement,  by  which  Garread  and  his  assigns  became 
entitled  to  receive  payment  of  the  bills  in  question,  when  the 
same  should  become  due,  to  the  amount  indicated  in  the  assign- 
ment subject  to  the  two  prior  assignments.  It  did  not  operate 
as  an  assignment  in  prcesenti  of  the  choses  in  action,  because 
they  were  not  in  existence,  but  remained  in  possibility  merely. 
A  possiblity,  however,  which  the  parties  to  the  agreement  ex- 
pected would,  and  which  afterwards  did  in  fact  ripen  into  an 
actual  reality;  upon  which,  by  force  of  the  agreement,  an 
equitable  title  to  the  benefit  of  the  bills  thus  mature  and  due, 
became  vested  in  the  respondent  as  assignee  of  Garread.  Story^s 
Eg.  Jur.  §§  1040,  1040  6,  1055;  Mitchell  v.  Winslow,  2  Story's 
Kep.  630;  Langton  v.  Horton,  1  Hare,  549. 

It  is  contended  by  the  counsel  for  the  appellants,  that  the 
assignment  of  Bell  to  Garread  did  not  pass  any  interest  which 
was  the  subject  of  an  assignment,  for  the  reason  that  there  was  no 
contract  at  the  time  between  Bell  and  the  corporation  of  the  city 
by  which  the  latter  was  under  any  binding  obligation  to  furnish 
the  former  with  job  printing  or  to  purchase  of  him  paper  or  sta- 
tionery ;  and  that  therefore  the  interest  was  of  too  uncertain  and 
fleeting  a  character  to  pass  by  assignment.  There  was  indeed 
no  present,  actual,  potential  existence  of  the  thing  to  which  the 
assignment  or  grant  related,  and  therefore  it  could  not  and  did 
not  operate  eo  instanti  to  pass  the  claim  which  was  expected 
thereafter  to  accrue  to  Bell  against  the  corporation;  but  it  did 
nevertheless  create  an  equity,  which  would  seize  upon  those  claims 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  455 

as  they  should  arise,  and  would  continue  so  to  operate  until  the 
object  of  the  agreement  was  accomplished.  On  this  principle  an 
assignment  of  freight  to  be  earned  in  future,  will  be  upheld  and 
enforced  against  the  party  from  whom  it  becomes  due.  Story's 
Eq.  Jur.  §  1055,  and  authorities  there  cited;  Langton  v.  Horton, 
and  Mitchell  v.  Winslow,  supra;  Story  on  Bailments,  §  294. 
Whatever  doubts  may  have  existed  heretofore  on  this  subject,  the 
better  opinion,  I  think,  now  is,  that  courts  of  equity  will  support 
assignments,  not  only  of  choses  in  action,  but  of  contingent  in- 
terests and  expectations  and  of  things  which  have  no  present, 
actual  existence,  but  rest  in  possibility  only,  provided  the  agree- 
ments are  fairly  entered  into,  and  it  would  not  be  against  public 
policy  to  uphold  them.  Authorities  may  be  found  which  seem 
to  incline  the  other  way,  but  which  upon  examination  will  be 
found  to  have  been  overruled,  or  to  have  turned  upon  the  ques- 
tion of  public  policy. 

2.  A  bill  in  equity  was  the  proper  remedy  for  the  respondent 
in  this  case  for  the  following  reasons : 

(1)  The  nature  of  the  claim  is  one  peculiarly  of  equitable  cog- 
nizance. It  was  an  equity  only  in  relation  to  things  not  yet  in 
possession,  or  in  being,  in  the  nature  of  a  lien,  which  must  be 
enforced  through  judicial  process  before  it  could  be  enjoyed,  and 
must  therefore  of  necessity  be  adjudicated  in  a  court  of  equity. 
If  the  claims  of  Bell  against  the  city  had  accrued  and  been  in 
being  at  the  time  of  the  assignment,  and  the  assignment  had 
been  of  any  specific  entire  claim,  and  perhaps  if  it  had  been  of 
all  claims  then  due  from  the  city  to  Bell,  the  remedy  of  Garread, 
hio  assignee,  might,  and  perhaps  in  general  must,  have  been  at 
law.  But  all  the  cases  where  the  contract  has  been  in  relation 
to  things  not  in  existence  at  the  time,  and  which  were  in  expec- 
tancy and  possibility  merely,  show  that  their  adjudication  be- 
longs exclusively  to  a  court  of  equity. 

(2)  But  it  seems  to  me  that  in  this  case,  independently  of  the 
preceding  considerations,  there  were  insuperable  difficulties  in 
the  way  of  sustaining  an  action  at  law.  Such  action  must 
necessarily  have  been  brought  in  the  name  of  Bell,  who  had  no 
interest  until  after  all  three  of  the  assignments  should  be  satis- 
fied, of  which  the  one  to  Garread  was  the  last  in  the  order  of 


456  OPERATION  OF  CONTRACT.  [Part  III. 

time,  and  was  not  to  be  satisfied  until  the  others  were  provided 
for.  I  am  aware  that,  as  a  general  rule,  the  assignee  of  a  chose 
in  action  may  use  the  name  of  the  assignor  in  an  action  at  law  to 
recover  the  amount.  But  it  seems  to  me  that  the  rule  should  be 
confined  to  cases  where  the  whole  of  an  entire  demand  is  assigned 
to  one  person  or  party.  Suppose  A  has  an  entire  demand  of 
$1000  against  B,  and  assigns  to  C  f  100,  to  D  $100,  and  to  E 
$100,  out  of  the  $1000.  Whicli  of  the  three  assignees  shall 
institute  an  action  against  the  debtor?  Suppose  we  say  C  shall 
have  the  right,  how  much  shall  he  recover?  Shall  it  be  the 
$1000?  Clearly  it  must  be  that,  or  the  residue  will  be  gone, 
because  the  demand  cannot  be  split  and  several  actions  sustained 
for  the  several  parts  assigned.  But  C  has  no  right,  nor  is  he 
bound  to  litigate  in  relation  to  the  parts  assigned  to  D  and  E,  or 
that  part  not  assigned  at  all.  Here  would  be  four  parties,  hav- 
ing separate  and  distinct  interests,  one  having  as  good  right  to 
commence  an  action,  to  discontinue  it,  and  to  direct  in  relation 
to  it,  as  the  other;  and  in  case  of  disagreement,  who  is  to  decide? 
In  the  case  at  bar,  the  plaintiff  had  no  right  to  sue  in  Bell's  name 
for  what  was  to  be  paid  under  the  two  first  iassignments,  nor  for 
what  would  be  going  to  Bell  after  all  three  were  paid;  and  he 
could  not  carve  out  just  $1500  and  the  interest  upon  it,  from 
the  demands  due  from  the  city  to  Bell  without  splitting  entire 
demands,  which  cannot  be  done.  Smith  v.  Jones,  15  John.  229; 
Guernsey  v.  Carver,  8  Wend.  492;  Stevens  v.  Lockwood,  13  Id. 
644;  Story's  Eq.  Jur.  §  1250. 

«  «  «  «  « 

The  notice  of  the  respondent's  claims  in  this  case,  as  appears 
from  the  evidence,  was  served  upon  the  comptroller,  while  in  his 
office,  engaged  in  the  duties  thereof,  and  was  beyond  all  doubt 
sufficient.     Angell  and  Ames  on  Corporations,  247. 

Upon  all  the  points  raised  upon  the  argument,  therefore,  I  am 
of  the  opinion  that  the  judgment  of  the  Supreme  Court  ought  to 
be  affirmed.  Judgment  affirmed.  *^ 

*  That  the  assignment  of  future  interests  will  be  enforced  in  equity,  see 
Bacon  v.  Bonham,  33  N.  J.  Eq.  614  ;  Kane  v.  Clough,  36  Mich.  436  ;  Patter- 
son V.  Caldwell,  124  Pa.  St.  465  ;  Edwards  v.  Peterson,  80  Me.  367. 

That  the  assignment  of  part  of  a  demand  will  be  enforced  in  equity,  see 


CJhap.  n.  §  1.]  ASSIGNMENT  OF  CONTRACT.  457 

HEERMANS  v.    ELLSWORTH. 

64  NEW  YORK,  159.  — 1876. 

Action  by  plaintiff,  as  trustee  of  Fellows,  to  recover  a  balance 
of  account  for  moneys  loaned  by  Fellows  to  defendant.  Defense, 
payment  to  Fellows.  Judgment  for  defendant.  Plaintiff  ap- 
peals. 

The  plaintiff  gave  evidence  tending  to  show  that  before  the 
payment  to  Fellows,  defendant  had  notice  of  the  trust.  Defend- 
ant testified  he  had  no  notice.     The  court  charged: 

"  The  burden  of  proof  is  upon  the  plaintiff  upon  this  question, 
and  it  is  incumbent  upon  him  to  establish  the  fact  of  notice  by 
a  fair  preponderance  of  evidence.  If  the  testimony  is  simply 
balanced,  the  defendant  is  to  prevail." 

To  this  charge  the  plaintiff  excepted. 

Miller,  J.  There  was  no  error  in  the  charge  of  the  judge 
upon  the  trial,  that  the  burden  of  proof  was  upon  the  plaintiff, 
upon  the  question  of  notice,  and  that  it  was  incumbent  upon  him 
to  establish  the  fact  of  notice;  nor  in  the  refusal  to  charge  that 
the  burden  of  proof  was  upon  the  defendant  to  show  that  the 
payment  was  made  without  notice  and  in  good  faith.  The  debt 
was  due  to  Fellows,  and  he  being  the  creditor,  it  is  a  fair  legal 
presumption  that  such  creditor  was  lawfully  entitled  to  receive 
payment.  If  an  assignment  was  made  by  Fellows  to  the  plain- 
tiff, it  was  the  duty  of  the  assignee  to  establish  that  the  debtor 
was  notified  in  order  to  protect  himself  against  any  payment  to 
the  original  creditor.  This  rule  is  fully  established  by  authority. 
See  Meghan  v.  Mills,  9  J.  R.  64;  Anderson  v.  Van  Alen,  12  Id. 
343;  Bnggs  v.  Dorr,  19  Id.  95;  Say  v.  Dascomb,  1  Hill,  662; 
Field  V.  The  Mayor,  2  Seld.  179.  At  common  law  an  action  to 
recover  upon  an  instrument  not  negotiable,  was  necessarily 
brought  in  the  name  of  the  original  owner  or  payee,  and  if  pay- 
ment was  pleaded  it  was  not  enough  that  the  replication  denied 

Exchange  Bank  v.  McLoon,  73  Me,  498  ;  James  v.  Newton,  142  Mass.  636. 
See  also  Trist  v.  Child,  21  Wall.  441.  That  it  will  not  be  enforced  at  law, 
see  Mandeville  v.  Welch,  5  Wheat.  277  ;  Gibson  v.  Cooke,  20  Pick.  15 ;  Thomas 
V.  Bock  Island  <fcc.  Mining  Co.,  64  Cal.  578 ;  Carter  v.  Nichols,  58  Vt.  563 ; 
Dean  v.  St.  Paul  &  D.  B.  Co.,  53  Minn.  504. 


458  OPERATION  OF  CONTRACT.  [Part  III 

the  payment,  without  averring  botli  the  assignment  and  notice 
of  the  transfer  before  payment.  19  J.  R.  95;  1  Hill,  supra. 
Unless  this  was  done  the  pleading  was  insufficient  and  the  proof 
could  not  be  given. 

Proof  of  payment  to  the  creditor  established  a  complete  de- 
fense, and  when  this  is  made  out  it  belongs  to  the  other  side  to 
answer  or  avoid  it  by  evidence  of  the  assignment  of  the  demand 
and  notice  thereof  to  the  debtor.  As  he  alleges  that  the  pay- 
ment was  not  made  to  the  proper  person,  he  is  bound  to  establish 
it.  It  is  entirely  evident  that  the  onus  is  upon  him  and  he  has 
the  affirmative  upon  such  an  issue.  Hollister  v.  Bender  (1  Hill, 
150)  is  not  in  conflict  with  the  rule  stated.  As  there  said,  the 
substance  of  the  allegation  to  be  tried  determines  where  the  onus 
lies,  and  as  the  assignment  and  notice  were  the  very  essence  of 
the  plaintiff's  right  to  recover,  the  burden  was  upon  him.  There 
is  no  principle  of  pleading  which  can  disturb  or  alter  the  rule 
laid  down.  Nor  is  there  any  ground  for  claiming  that  the  neces- 
sity for  such  a  rule  no  longer  exists,  since  parties  are  allowed  to 
be  witnesses  on  their  own  behalf.  This  furnishes  no  sufficient 
or  satisfactory  reason  for  changing  a  rule  of  evidence  long  estab- 
lished and  which  is  founded  upon  a  settled  principle. 

The  remarks  of  the  learned  judge  who  wrote  the  opinion  in 
Bush  V.  Lathrop  (22  N.  Y.  535),  have  no  direct  bearing  upon  the 
question  considered,  as  that  case  is  not  analogous. 

Nor  was  there  any  error  in  the  refusal  to  charge  the  jury  that 
the  pendency  of  the  action  between  Fellows  and  Heermans  was 
constructive  notice  to  the  defendant  of  the  existence  of  the  deed. 
It  is  not  claimed  that  it  operated  as  a  notice  of  lis  pendens 
strictly,  and  whether  the  defendant  had  notice  of  the  character 
of  the  action  so  as  to  put  him  on  inquiry  from  the  fact  of  his 
being  sworn  as  a  witness  in  the  case,  or  from  any  other  circum- 
stances, was  a  question  of  fact  for  the  jury  to  determine.  The 
discussion  already  had  disposes  of  the  case  and  no  other  question 
is  presented  which  demands  comment. 

The  judgment  was  right  and  should  be  affirmed.     All  concur. 

Judgment  affirmed.^ 

1  "In  Muir  v.  Schenck  (3  Hill,  228)  it  was  held  that  as  between  different 
assignees  of  a  chose  in  action  by  express  assignment  from  the  same  person, 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  459 

c.    By  statute. 
ALLEN  V.   BEOWN. 

44  NEW  YORK,  228.  - 1870.  Oin^j^*^^    ^  ^   ^"^  "  ^  ''  ^ 

Action  by  plaintiff,  as  assignee,  as  for  money  had  and  received 
to  the  use  of  plaintiff's  assignors.  Judgment  for  plaintiff 
affirmed  at  General  Term.     Defendant  appeals. 

Defendant  collecteid  certain  claims  for  the  assignors,  but  re- 
fused to  account  for  the  proceeds.  The  assignors  assigned  all 
their  interests  to  the  plaintiff,  but  no  consideration  was  paid  by 
plaintiff. 

Hunt,  C.  The  appellant  insists  that  the  assignment  from 
Cook,  Clark,  and  Cary  to  the  plaintiff,  conveyed  no  title  upon 
whicli  this  suit  could  be  brought.  This  point  is  based  upon  the 
evidence  given  by  Mr.  Cook,  when  he  testifies,  "  Allen  paid  me 
nothing,  and  I  agreed  with  him  that  I  would  take  care  of  the 
case,  and  if  he  got  beat  it  should  not  trouble  or  cost  him  any- 
thing." 

I  am  of  the  opinion  that  the  assignment  is  sufficient  to  sustain 
this  action. 

The  Code  abolishes  the  distinction  between  actions  at  law  and  ^ 
suits  in  equity,  and  between  the  forms  of  such  actions.     Section 
69  [3339].     It  is  also  provided,  in  section  111  [449],  that  every 
action  must  be  prosecuted  in  the  name  of  the  real  party  in  inter- 

the  one  prior  in  point  of  time  will  be  protected,  though  he  has  given  no  notice 
to  either  the  subsequent  assignees  or  the  debtor,  and  the  question  between 
a  previous  assignee  and  a  subsequent  attaching  creditor  was  considered  the 
same  in  principle  as  that  between  conflicting  assignees.  However  much  that 
case  may  have  been  criticised  elsewhere,  it  has  been  considered  well  decided 
in  this  State.  It  was  cited  with  approval  in  Greentree  v.  Bosenstock,  61 
N.  Y.  683,  and  Freund  v.  The  Imp.  &  Tr.  Nat.  Bank,  7(3  Id.  352."  —  Earl,  J., 
in  Williams  v.  Ingersoll,  89  N.  Y.  508,  523.  Accord:  Thayer  v.  Daniels, 
113  Mass.  129. 

"  The  rule  is  here  well  settled  that,  in  order  to  perfect  an  assignment  of  a 
chose  in  action,  as  against  bona  fide  creditors  and  purchasers  without  notice, 
notice  of  such  assignment  must  be  given  to  the  debtor  within  a  reasonable 
time ;  and  unless  such  notice  is  given,  creditors  may  attach  and  require  a 
valid  lien ;  and  others  may  purchase  the  debt,  and  gain  a  title  superior  to 
that  of  the  first  assignee."  —  Waite,  J.,  in  Van  Buskirk  v.  Hartford  Fire 
Ins.  Co.,  14  Conn.  141,  144.  Accord:  Clodfelter  v.  Cox,  1  Sneed,  330, 
Ward  v.  Morrison,  25  Vt.  593. 


460  OPERATION  OF  CONTRACT.  [Pakt  UU 

est,  except  as  otherwise  provided  in  section  113  [449].  The 
latter  section  provides  that  an  executor,  administrator,  trustee 
of  an  express  trust,  may  sue  in  his  own  name.  These  provisions 
pretended  to  abolish  the  common  law  rule,  which  prohibits  an 
action  at  law  otherwise  than  in  the  name  of  the  original  obligee 
or  covenantee,  although  he  had  transferred  all  his  interest  into 
bond  or  covenant  to  another.  It  accomplishes  fully  that  object, 
although  others  than  the  assignee  may  have  an  ultimate  benefi- 
cial interest  in  the  recovery.  In  a  case  like  the  present,  the 
whole  title  passes  to  the  assignee,  and  he  is  legally  the  real 
party  in  interest,  although  others  may  have  a  claim  upon  him 
for  a  portion  of  the  proceeds.  The  specific  claim,  and  all  of  it, 
belongs  to  him.  Even  if  he  be  liable  to  another  as  a  debtor 
upon  his  contract  for  the  collection  he  may  thus  make,  it  does 
not  alter  the  case.  The  title  to  the  specific  claim  is  his.  Dur- 
gin  V.  Ireland,  4  Kernan,  322 ;  Williams  v.  Brown,  2  Keyes,  486, 
and  cases  cited;  Paddon  v.  Williams,  1.  Robt.  B.  340;  S.  C. 
2  Ab.  R.  N.  S.  88. 

«  «  «  «  « 

The  judgment  should  be  affirmed  with  costs. 

[Leonard,  C,  also  read  for  the  affirmance,]    All  for  affirmance, 

except  Gray,  C,  not  sitting. 

Judgment  affirmed  with  costs.* 


d.   By  the  law  merchant :  negotiability. 

SHAW  V.   EAILROAD   CO. 

101  UNITED  STATES,  657.  — 1879. 

Replevin  by  Merchants'  National  Bank  of  St.  Louis  against 
Shaw  &  Esrey,  of  Philadelphia,  to  recover  possession  of  certain 
cotton  marked  "W.  D.  I."     One  hundred  and  forty-one   bales 

1  "The  effect  of  our  new  code  of  practice,  in  abolishing  the  distinction 
between  law  and  equity,  is  to  allow  the  assignee  of  a  chose  in  action  to  bring 
suit  in  his  own  name  in  cases  where  by  the  common  law  no  assignment 
would  be  recognized.  In  this  respect  the  rules  of  equity  are  to  prevail,  and 
the  assignee  may  sue  in  his  own  name."  — Gamble,  J.,  in  Walker  v.  MaurOy 
18  Mo.  564. 


Chap.  II  §  1.]  ASSIGNMENT  OF  CONTRACT.  461 

thereof  having  been  taken  possession  of  by  the  marshal,  were 
returned  to  the  defendants  upon  their  entering  into  the  proper 
bond.  Judgment  for  plaintiff  for  "the  value  of  goods  eloigned." 
Defendants  bring  error. 

Norvel  &  Co.,  of  St.  Louis,  drew  a  draft  on  M.  Kuhn  & 
Brother,  of  Philadelphia,  attached  thereto  as  collateral  security 
an  original  bill  of  lading  for  one  hundred  and  seventy  bales  of 
cotton  shipped  to  Philadelphia,  and  sold  the  draft,  with  the  bill 
of  lading  attached,  to  plaintiff.  The  duplicate  bill  of  lading  they 
sent  to  Kuhn  &  Brother.  Plaintiff  forwarded  the  draft,  with  bill 
of  lading  attached,  to  the  Bank  of  North  America,  of  Philadel- 
phia, for  presentation  and  acceptance.  The  Bank  of  North 
America  presented  the  draft  to  Kuhn  &  Brother,  who  accepted 
the  draft,  but  secretly  detached  the  original  bill  of  lading  and 
substituted  the  duplicate.  Kuhn  &  Brother  then  indorsed  the 
original  bill  of  lading  to  Miller  &  Brother,  who,  through  a 
broker,  and  with  the  consent  of  Kuhn  &  Brother,  sold  the  cot- 
ton in  controversy  by  sample  to  defendants.  The  original  bill 
of  lading  was  deposited  with  the  Railroad  Company,  and  the 
cotton,  on  its  arrival,  was  delivered  to  defendants. 

Kuhn  &  Brother  subsequently  failed,  their  accepted  draft 
was  protested,  and  the  fact  that  the  plaintiff  held  the  duplicate 
bill  of  lading  was  then  discovered. 

•  Defendants  contend  that  the  bill  of  lading  was  negotiable  in 
the  ordinary  sense  of  that  word ;  that  Miller  &  Brother  purchased 
it  for  value  in  the  usual  course  of  business  and  thereby  acquired 
a  valid  title  to  the  cotton,  which  was  not  impaired  by  proof  of 
Kuhn  and  Brother's  fraud. 

The  jury  found,  (1)  that  plaintiff's  agent  was  not  negligent 
in  parting  with  possession  of  the  bill  of  lading,  and  (2)  that  Miller 
&  Brother  knew  facts  from  which  they  had  reason  to  believe  that 
the  bill  of  lading  was  held  to  secure  payment  of  an  outstanding 
draft. 

Mr.  Justice  Strong.  The  defendants  below,  now  plaintiffs 
in  error,  bought  the  cotton  from  Miller  &  Brother  by  sample, 
through  a  cotton  broker.  No  bill  of  lading  or  other  written  evi- 
dence of  title  in  their  vendors  was  exhibited  to  them.  Hence, 
they  can  have  no  other  or  better  title  than  their  vendors  had. 


462  OPERATION  OF  CONTRACT.  [Pabt  IH. 

The  inquiry,  therefore,  is,  what  title  had  Miller  &  Brother  as 
against  the  bank,  which  confessedly  was  the  owner,  and  which  is 
still  the  owner  unless  it  has  lost  its  ownership  by  the  fraudulent 
act  of  Kuhn  &  Brother.  The  cotton  was  represented  by  the  bill 
of  lading  given  to  Norvel  &  Co.,  at  St.  Louis,  and  by  them 
indorsed  to  the  bank,  to  secure  the  payment  of  an  accompanying 
discounted  time-draft.  That  indorsement  vested  in  the  bank  the 
title  to  the  cotton,  as  well  as  to  the  contract.  While  it  there 
continued,  and  during  the  transit  of  the  cotton  from  St-  Louis  to 
Philadelphia,  the  indorsed  bill  of  lading  was  stolen  by  one  of  the 
firm  of  Kuhn  &  Brother,  and  by  them  indorsed  over  to  Miller  & 
Brother,  for  an  advance  of  $8500.  The  jury  has  found,  however, 
that  there  was  no  negligence  of  the  bank,  or  of  its  agents,  in 
parting  with  possession  of  the  bill  of  lS,ding,  and  that  Miller  & 
Brother  knew  facts  from  which  they  had  reason  to  believe  it  was 
held  to  secure  the  payment  of  an  outstanding  draft;  in  other 
words,  that  Kuhn  &  Brother  were  not  the  lawful  owners  of  it, 
and  had  no  right  to  dispose  of  it. 

It  is  therefore  to  be  determined  whether  Miller  &  Brother, 
by  taking  the  bill  of  lading  from  Kuhn  &  Brother  under  these 
circumstances,  acquired  thereby  a  good  title  to  the  cotton  as 
against  the  bank. 

In  considering  this  question,  it  does  not  appear  to  us  necessary 
to  inquire  whether  the  effect  of  the  bill  of  lading  in  the  hands  of 
Miller  &  Brother  is  to  be  determined  by  the  law  of  Missouri, 
where  the  bill  was  given,  or  by  the  law  of  Pennsylvania,  where 
the  cotton  was  delivered.  The  statutes  of  both  States  enact  that 
bills  of  lading  shall  be  negotiable  by  indorsement  and  delivery. 
The  statute  of  Pennsylvania  declares  simply,  they  "shall  be 
negotiable  and  may  be  transferred  by  indorsement  and  delivery; " 
while  that  of  Missouri  enacts  that  "  they  shall  be  negotiable  by 
written  indorsement  thereon  and  delivery,  in  the  same  manner  as 
bills  of  exchange  and  promissory  notes."  There  is  no  material 
difference  between  these  provisions.  Both  statutes  prescribe 
the  manner  of  negotiation;  i.e.  by  indorsement  and  delivery. 
Neither  undertakes  to  define  the  effect  of  such  a  transfer. 

We  must,  therefore,  look  outside  of  the  statutes  to  learn  what 
they  mean  by  declaring  such  instruments  negotiable.     What  is 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  46S 

negotiability?  It  is  a  technical  term  derived  from  the  usage 
of  merchants  and  bankers,  in  transferring,  primarily,  bills  of 
exchange,  and,  afterwards,  promissory  notes.  At  common  law 
no  contract  was  assignable,  so  as  to  give  to  an  assignee,  a  right 
to  enforce  it  by  suit  in  his  own  name.  To  this  rule  bills  of 
exchange  and  promissory  notes,  payable  to  order  or  bearer,  have 
been  admitted  exceptions,  made  such  by  the  adoption  of  the  law 
merchant.  They  may  be  transferred  by  indorsement  and  de- 
livery, and  such  a  transfer  is  called  negotiation.  It  is  a  mer- 
cantile business  transaction,  and  the  capability  of  being  thus 
transferred,  so  as  to  give  to  the  indorsee  a  right  to  sue  on  the 
contract  in  his  own  name,  is  what  constitutes  negotiability.  The 
term  "negotiable"  expresses,  at  least  primarily,  this  mode  and 
effect  of  a  transfer. 

In  regard  to  bills  and  notes,  certain  other  consequences  gen- 
erally, though  not  always,  follow.  Such  as  a  liability  of  the 
indorser,  if  demand  be  duly  made  of  the  acceptor  or  maker,  and 
seasonable  notice  of  his  default  be  given.  So  if  the  indorsement 
be  made  for  value  to  a  bona  fide  holder,  before  the  maturity  of 
the  bill  or  note,  in  due  course  of  business,  the  maker  or  acceptor 
cannot  set  up  against  the  indorsee  any  defense  which  might  have 
been  set  up  against  the  payee,  had  the  bill  or  note  remained  in 
his  hands. 

So,  also,  if  a  note  or  bill  of  exchange  be  indorsed  in  blank,  if 
payable  to  order,  or  if  it  be  payable  to  bearer,  and  therefore 
negotiable  by  delivery  alone,  and  then  be  lost  or  stolen,  a  bona 
fide  purchaser  for  value  paid  acquires  title  to  it,  even  as  against 
the  true  owner.  This  is  an  exception  from  the  ordinary  rule 
respecting  personal  property.  But  none  of  these  consequences 
are  necessary  attendants  or  constituents  of  negotiability,  or  nego- 
tiation. That  may  exist  without  them.  A  bill  or  note  past  due 
is  negotiable,  if  it  be  payable  to  order,  or  bearer,  but  its  indorse- 
ment or  delivery  does  not  cut  off  the  defenses  of  the  maker  or 
acceptor  against  it,  nor  create  such  a  contract  as  results  from  an 
indorsement  before  maturity,  and  it  does  not  give  to  the  pur- 
chaser of  a  lost  or  stolen  bill  the  rights  of  the  real  owner. 

It  does  not  necessarily  follow,  therefore,  that  because  a  statute 
has  made  bills  of  lading  negotiable  by  indorsement  and  delivery. 


464  OPERATION  OF  CONTRACT.  [Part  IH. 

all  these  consequences  of  an  indorsement  and  delivery  of  bills 
and  notes  before  maturity  ensue  or  are  intended  to  result  from 
such  negotiation. 

Bills  of  exchange  and  promissory  notes  are  exceptional  in  their 
character.  They  are  representatives  of  money,  circulating  in 
the  commercial  world  as  evidence  of  money,  "of  which  any 
person  in  lawful  possession  may  avail  himself  to  pay  debts  or 
make  purchases  or  make  remittances  of  money  from  one  country 
to  another,  or  to  remote  places  in  the  same  country.  Hence,  as 
said  by  Story,  J.,  it  has  become  a  general  rule  of  the  commercial 
world  to  hold  bills  of  exchange,  as  in  some  sort,  sacred  instru- 
ments in  favor  of  bona  fide  holders  for  a  valuable  consideration 
without  notice."  Without  such  a  holding  they  could  not  perform 
their  peculiar  functions.  It  is  for  this  reason  it  is  held  that  if  a 
bill  or  note,  indorsed  in  blank  or  payable  to  bearer,  be  lost  or 
stolen,  and  be  purchased  from  the  finder  or  thief,  without  any 
knowledge  of  want  of  ownership  in  the  vendor,  the  bona  fide 
purchaser  may  hold  it  against  the  true  owner.  He  may  hold  it 
though  he  took  it  negligently,  and  when  there  were  suspicious 
circumstances  attending  the  transfer.  Nothing  short  of  actual 
or  constructive  notice  that  the  instrument  is  not  the  property  of 
the  person  who  offers  to  sell  it;  that  is,  nothing  short  of  mala 
fides  will  defeat  his  right.  The  rule  is  the  same  as  that  which 
protects  the  bond  fide  indorser  of  a  bill  or  note  purchased  for 
value  from  the  true  owner.  The  purchaser  is  not  bound  to  look 
beyond  the  instrument.  Goodman  v.  Harvey,  4  Ad.  &  E.  870; 
Goodman  v.  Simonds,  20  How.  343;  Murray  v.  Lardner,  2  Wall. 
110;  Matthews  v.  Poythress,  4  Ga.  287.  The  rule  was  first  applied- 
to  the  case  of  a  lost  bank-note  {Miller  v.  Race,  1  Burr.  452)  and 
put  upon  the  ground  that  the  interests  of  trade,  the  usual  course 
of  business,  and  the  fact  that  bank-notes  pass  from  hand  to  hand 
as  coin,  require  it.  It  was  subsequently  held  applicable  to 
merchants'  drafts,  and  in  Peacock  v.  Rhodes  (2  Doug.  633)  to  bills 
and  notes,  as  coming  within  the  same  reason. 

The  reason  can  have  no  application  to  the  case  of  a  lost  or 
stolen  bill  of  lading.  The  function  of  that  instrument  is  entirely 
different  from  that  of  a  bill  or  note.  It  is  not  a  representative 
of  money,  used  for  transmission  of  money,  or  for  the  payment  of 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  465 

debts  or  for  purchases.  It  does  not  pass  from  hand  to  hand  as 
bank-notes  or  coin.  It  is  a  contract  for  the  performance  of  a 
certain  duty.  True,  it  is  a  symbol  of  ownership  of  the  goods 
covered  by  it, —  a  representative  of  those  goods.  But  if  the 
goods  themselves  be  lost  or  stolen,  no  sale  of  them  by  the  finder 
or  thief,  though  to  a  bona  fide  purchaser  for  value,  will  divest  the 
ownership  of  the  person  who  lost  them,  or  from  whom  they  were 
stolen.  Why  then  should  the  sale  of  the  symbol  or  mere  repre- 
sentative of  the  goods  have  such  an  effect?  It  may  be  that  the 
true  owner  by  his  negligence  or  carelessness  may  have  put  it  in 
the  power  of  a  finder  or  thief  to  occupy  ostensibly  the  position  of 
a  true  owner,  and  his  carelessness  may  estop  him  from  asserting 
his  right  against  a  purchaser  who  has  been  misled  to  his  hurt  by 
that  carelessness.  But  the  present  is  no  such  case.  It  is  estab- 
lished by  the  verdict  of  the  jury  that  the  bank  did  not  lose  its 
possession  of  the  bill  of  lading  negligently.  There  is  no  estoppel, 
therefore,  against  the  bank's  right. 

Bills  of  lading  are  regarded  as  so  much  cotton,  grain,  iron,  or 
other  articles  of  merchandise.  The  merchandise  is  very  often 
sold  or  pledged  by  the  transfer  of  the  bills  which  cover  it.  They 
are,  in  commerce,  a  very  different  thing  from  bills  of  exchange 
and  promissory  notes,  answering  a  different  purpose  and  per- 
forming different  functions.  It  cannot  be,  therefore,  that  the 
statute  which  made  them  negotiable  by  indorsement  and  delivery, 
or  negotiable  in  the  same  manner  as  bills  of  exchange  and 
promissory  notes  are  negotiable,  intended  to  change  totally  their 
character,  put  them  in  all  respects  on  the  footing  of  instru- 
ments which  are  the  representatives  of  money,  and  charge  the 
negotiation  of  them  with  all  the  consequences  which  usually 
attend  or  follow  the  negotiation  of  bills  and  notes.  Some  of 
these  consequences  would  be  very  strange  if  not  impossible. 
Such  as  liability  of  indorsers,  the  duty  of  demand  ad  diem,  notice 
of  non-delivery  by  the  carrier,  etc.,  or  the  loss  of  the  owner's 
property  by  the  fraudulent  assignment  of  a  thief.  If  these  were 
intended,  surely  the  statute  would  have  said  something  more  than 
merely  make  them  negotiable  by  indorsement.  No  statute  is  to 
be  construed  as  altering  the  common  law,  farther  than  its  words 
import.     It  is  not  to  be  construed  as  making  any  innovation  upon 


466  OPERATION  OF  CONTRACT.  [Pabt  HI. 

the  common  law  which  it  does  not  fairly  express.  Especially  i» 
so  great  an  innovation  as  would  be  placing  bills  of  lading  on  the 
same  footing  in  all  respects  with  bills  of  exchange  not  to  be 
inferred  from  words  that  can  be  fully  satisfied  without  it.  The 
law  has  most  carefully  protected  the  ownership  of  personal 
property,  other  than  money,  against  misappropriation  by  others 
than  the  owner,  even  when  it  is  out  of  his  possession.  This 
protection  would  be  largely  withdrawn  if  the  misappropriation 
of  its  symbol  or  representative  could  avail  to  defeat  the  owner- 
ship, even  when  the  person  who  claims  under  a  misappropriation 
had  reason  to  believe  that  the  person  from  whom  he  took  the 
property  had  no  right  to  it. 

We  think,  therefore,  that  the  rule  asserted  in  Goodman  v. 
Harvey,  Goodman  v.  Simonds,  Murray  v.  Lardner  (supra),  and 
in  Phelan  v.  Moss  (67  Pa.  St.  59),  is  not  applicable  to  a  stolen  bill 
of  lading.  At  least  the  purchaser  of  such  a  bill,  with  reason  to 
believe  that  his  vendor  was  not  the  owner  of  the  bill,  or  that  it 
was  held  to  secure  the  payment  of  an  outstanding  draft,  is  not  a 
honafide  purchaser,  and  he  is  not  entitled  to  hold  the  merchandise 
covered  by  the  bill  against  its  true  owner.  In  the  present  case 
there  was  more  than  mere  negligence  on  the  part  of  Miller  & 
Brother,  more  than  mere  reason  for  suspicion.  There  was  reason 
to  believe  Kuhn  &  Brother  had  no  right  to  negotiate  the  bill. 
This  falls  very  little,  if  any,  short  of  knowledge.  It  may  fairly 
be  assumed  that  one  who  has  reason  to  believe  a  fact  exists, 
knows  it  exists.     Certainly,  if  he  be  a  reasonable  being. 

This  disposes  of  the  principal  objections  urged  against  the 
charge  given  to  the  jury.  They  are  not  sustained.  The  other 
assignments  of  error  are  of  little  importance.  We  cannot  say 
there  was  no  evidence  in  the  case  to  justify  a  submission  to  the 
jury  of  the  question  whether  Miller  &  Brother  knew  any  fact  or 
facts  from  which  they  had  reason  to  believe  that  the  bill  of  lading 
was  held  to  secure  payment  of  an  outstanding  draft.  It  does  not 
appear  that  we  have  before  us  all  the  evidence  that  was  given, 
but  if  we  have,  there  is  enough  to  warrant  a  submission  of  that 
question. 

The  exceptions  to  the  admission  of  testimony,  and  to  the 
cross-examination  of  Andrew  H.  Miller,  are   not   of   sufficient 


Chap.  II.  §  1.]  ASSIGNMENT  OF  CONTRACT.  467 

importance,  even  if  they  could  be  sustained,  to  justify  our  revers- 
ing the  judgment.  Nor  are  we  convinced  that  they  exhibit  any 
error. 

There  was  undoubtedly  a  mistake  in  entering  the  verdict.  It 
was  a  mistake  of  the  clerk  in  using  a  superfluous  word.  The 
jury  found  a  general  verdict  for  the  plaintiff.  But  they  found 
the  value  of  the  goods  "eloigned"  to  have  been  $7015. 97.  The 
word  "  eloigned  "  was  inadvertently  used,  and  it  might  have  been 
stricken  out.  It  should  have  been,  and  it  may  be  here.  The 
judgment  was  entered  properly.  As  the  verdict  was  amendable 
in  the  court  below,  we  will  regard  the  amendment  as  made.  It 
would  be  quite  inadmissible  to  send  the  case  back  for  another 
trial  because  of  such  a  verbal  mistake. 

Judgment  affirmed.* 

1  "The  term  'negotiable,'  in  its  enlarged  signification,  applies  to  any 
written  security  whicii  may  be  transferred  by  indorsement  or  delivery,  so 
as  to  vest  in  the  indorsee  the  legal  title,  so  as  to  enable  him  to  maintain  a 
suit  thereon  in  his  own  name."  —  Scott,  J.,  in  Odell  v.  Gray,  15  Mo.  337,  342. 

"The  word  'negotiation,'  as  used  by  writers  on  mercantile  law,  means 
the  act  by  which  a  bill  of  exchange  or  promissory  note  is  put  into  circulation 
by  being  passed  by  one  of  the  original  parties  to  another  person.  '  Negotia- 
ble '  means  that  which  is  capable  of  being  transferred  by  assignment ;  a. 
thing  which  may  be  transferred  by  a  sale  and  indorsement  or  delivery.  This 
negotiable  quality  transfers  the  debt  from  the  party  to  whom  it  was  originally 
owing  to  the  holder,  when  the  instrument  is  properly  indorsed,  so  as  to 
enable  the  latter  to  sue  in  his  own  name,  either  the  maker  of  a  promissory 
note  or  the  acceptor  of  a  bill  of  exchange,  and  the  other  parties  to  such 
instruments,  such  as  the  drawer  of  a  bill  or  the  indorser  of  a  bill  or  note, 
unless  the  holder  has  been  guilty  of  laches  in  giving  the  required  notice.  It 
must,  however,  be  payable  to  order  or  bearer;  and,  at  all  events,  in  money 
only,  and  not  out  of  any  particular  fund."  — Hanna,  J.,  in  Walker  v.  The 
Ocean  Bank,  19  Ind.  247,  250. 

See  also  on  negotiability.  Walker  v.  Ebert,  29  Wis.  194,  ante,  p.  238 ; 
New  V.  Walker,  108  Ind.  365,  ante,  p.  399 ;  Ford  v.  Mitchell,  16  Wis.  SS4, 
post,  p.  636. 


468  OPERATION  OF  CONTRACT.  [Part  III. 

§  2.  AsBignmeut  of  contractual  rights  and  liabilitieB  by  operation 
of  la'w. 

(t.)   Assignment  of  obligations  upon  the  transfer  of  interests  in  lands. 

a.    Covenants  affecting  leasehold  interests. 

(a)    Assignment  by  lessee. 

GOEDON  V.   GEORGE. 

12  INDIANA,   408.  — 1859. 

Appeal  from  the  Madison  Court  of  Common  Pleas. 

Hanna,  J.  Sarah  George,  the  appellee,  gave  a  written  lease 
to  one  Black,  stipulating  therein  that  Black  should  have  the  use 
of  a  parcel  of  land  for  five  years ;  in  consideration  of  which  Black 
was  to  clear  the  land  and  make  it  ready  for  the  plow,  and  leave 
the  premises  in  good  repair.  It  was  further  agreed  that  Black 
should  build  a  cabin  and  smoke-house,  and  dig  a  well  on  the 
premises,  for  which  Sarah  George  was  to  pay  twenty-five  dollars 
and  thirty-seven  cents.  Before  clearing  the  land  or  building  the 
cabin,  etc..  Black  assigned  the  lease,  by  indorsement,  to  the  said 
James  Gordon,  appellant. 

Gordon  sued  before  a  justice,  alleging  that  he  had  built  the 
house  and  smoke-house  and  dug  the  well;  that  the  time  had 
expired,  and  the  lessor  refused  to  pay  for  said  house,  etc. 

The  plaintiff  recovered  a  judgment  before  the  justice  for  forty- 
two  dollars.  On  appeal  to  the  Common  Pleas,  the  defendant  had 
a  verdict  and  judgment  for  twelve  dollars. 

The  defendant,  among  other  things,  set  up,  by  way  of  counter- 
claim, that  the  plaintiff  had  not  cleared  the  ground  according  to 
the  contract,  etc. 

The  plaintiff  asked  the  court  to  instruct  the  jury,  that,  "  if  the 
jury  find  the  matters  of  counter-claim  of  the  defendant  exceed 
the  amount  which  the  jury  may  find  due  the  plaintiff,  the  jury 
cannot  find  against  the  plaintiff  such  excess,"  which  was  refused. 
Upon  this  ruling  of  the  court,  the  only  point  made,  by  brief  of 
counsel,  is  predicated. 

By  the  statute  (2  R.  S.  p.  120)  plaintiff  may  dismiss  his 
action;  but  by  §  365,  "In  any  case,  where  a  set-off  or  counter- 
claim has  been  presented,  which,  in  another  action,  would  entitle 
the  defendant  to  a  judgment  against  the  plaintiff,  the  defendant 


Chaf.  II.  §  2.]  ASSIGNMENT  OF  CONTRACT.  469 

shall  have  the  right  of  proceeding  to  the  trial  of  his  claim, 
without  notice,  although  the  plaintiff  may  have  dismissed  his 
action,  or  failed  to  appear." 

So,  in  Vassear  v.  Livingston  (3  Kern.  252)  it  is  said  that,  "  a 
counter-claim  must  contain  the  substance  necessary  to  sustain  an 
action  on  behalf  of  the  defendant  against  the  plaintiff,  if  the 
plaintiff  had  not  sued  the  defendant." 

In  Howland  v.  Coffin  (9  Pick.  52)  it  was  held  by  the  Supreme 
Court  of  Massachusetts,  "  that  the  assignee  of  the  lessee  is  liable 
to  the  assignee  of  the  lessor  in  an  action  of  debt  for  the  time  he 
holds;  for  though  there  is  no  privity  of  contract,  there  is  a 
privity  of  estate  which  creates  a  debt  for  the  rent."  See 
authorities  cited. 

In  another  case  between  the  same  parties,  it  is  said  (12  Pick. 
125),  "  the  defendant  took  the  term  subject  to  all  the  advantages 
and  disadvantages  attached  to  it  by  the  terms  of  the  lease.  The 
covenant  for  the  payment  of  the  rent  ran  with  the  land,  and  by 
the  assignment  of  the  term  became  binding  on  the  defendant." 
See  Farmers'  Bank  v.  The  Mutual  Ins.  Soc,  4  Leigh  (Va. ),  69; 
Taylor^ s  Landlord  and  Tenant,  76;  Provost  v.  Colder,  2  Wend. 
617;  23  Id.  506;  21  Id.  32;  Vernon  v.  Smith,  5  Barn,  and  Adol.  1. 

It  resolves  itself  into  the  question,  then,  under  the  above,  and 
§  59,  p.  41,  of  the  same  statute,  and  the  authorities  cited,  whether 
the  plaintiff  was  liable  to  the  defendant  for  the  non-performance 
of  the  contract  of  his  assignor.  We  think,  under  the  circum- 
stances of  this  case,  he  was.  He  became  the  assignee  of  the 
whole  interest  of  Black,  before  any  part  of  the  contract  was  per- 
formed. By  receiving  an  assignment  of  the  lease,  and  taking 
possession  of  the  land  under  it,  he  surely  became  liable  to  per- 
form the  stipulations  of  that  lease,  so  far  as  they  had  reference 
to  improvements  upon  said  land,  if  no  others,  of  which  we  do  not 
decide,  as  it  is  not  necessary  to  do  so. 

The  ruling  of  the  court  upon  the  instruction  was  correct. 

Per  Curiam.  The  judgment  is  affirmed,  with  10  per  cent  dam- 
ages and  costs. ^ 

^Accord:  Hunt  v.  Danforth,  2  Curtis'  C.  C,  Rep.  692;  Salisbury  v. 
Shirley,  66  Cal.  223.  Cf.  Thompson  v.  Rose,  8  Cowen,  266 ;  Jackson  v 
Fort,  17  Johns.  479. 


470  OPERATION   OF   CONTRACT.  [Pabt  lU. 

(/8)  Assignment  by  lessor. 
FISHER  V.   DEERING. 

60  ILLINOIS,   114.— 1871. 

Mb.  Justice  Walker.  It  appears,  from  an  examination  of 
the  authorities,  that  at  the  ancient  common  law  a  lease  was  not 
assignable  so  as  to  invest  the  assignee  with  the  legal  title  to  the 
rent.  Such  instruments  were,  in  that  respect,  on  a  footing  with 
other  agreements  and  choses  in  action.  But  the  32  Hen.  VIII.,  ch. 
34,  §  1,  declared  that  the  assignee  of  the  reversion  should  become 
invested  with  the  rents.  But  notwithstanding  this  enactment, 
the  courts  held  that  the  assignee  of  the  reversion  could  not  sue 
for  and  recover  the  rent  unless  the  tenant  should  attorn,  when 
the  holder  of  the  reversion  might  recover  subsequently  accruing 
rent  in  an  action  of  debt.  Marie  v.  Flake,  3  Salk.  118 ;  Robins 
T.  Cox,  1  Levinz,  22;  Ards  v.  Watkin,  2  Croke's  Eliz.  637; 
Knolles'  Case,  1  Dyer,  5  b;  Allen  v,  Bryan,  5  Barn.  &  Cress.  512, 
and  the  note. 

In  Williams  v.  Hayward  (1  Ellis  &  Ellis,  1040),  after  reviewing 
the  old  decisions  on  this  question,  it  was,  in  substance,  held  that, 
under  the  32  Hen.  VIII. ,  an  assignee  of  the  rent,  without  the 
reversion,  could  recover  when  there  was  an  attornment,  and  that 
such  an  assignee  could,  under  the  4  of  Anne,  recover  without  an 
attornment. 

The  courts  seem  to  have  proceeded  upon  the  ground  that  there 
■  could  be  no  privity  of  contract  unless  the  tenant  should  attorn 
to  the  assignee  of  the  reversion;  that,  whilst  the  assignment  of 
the  reversion  created  a  privity  of  estate  between  the  assignee 
and  the  tenant,  privity  of  contract  could  only  arise  by  an  agree- 
ment between  them.  Some  confusion  seems  to  have  got  into  the 
books  from  calling  the  purchaser  of  the  reversion  an  assignee  of 
the  lease,  by  its  passing  by  the  conveyance  as  appurtenant  to  the 
estate.  But  where  the  tenant  attorned  to  the  assignee  of  the 
reversion  the  assignment  became  complete,  and  then  there  existed 
both  privity  of  estate  and  of  contract  between  the  assignee  and 
the  tenant,  and  by  reason  of  the  privity  of  contract  the  assignee 
might  sue  in  debt,  and  recover  subsequently  accruing,  but  not 
rent  in  arrear  at  the  time  he  acquired  the  reversion. 


Chap.  II.  §  2.]  ASSIGNMENT  OF  CONTRACT.  471 

To  give  the  assignee  of  the  reversion  a  more  complete  remedy, 
the  4  and  5  Anne,  ch,  16,  §  9,  was  adopted,  dispensing  with  the 
necessity  of  an  attornment  which  the  courts  had  held  to  be  neces- 
sary under  the  32  Hen.  VIII.,  to  create  a  privity  of  contract. 
But  this  latter  act  has  never  been  in  force  in  this  State,  and 
hence  the  decisions  of  the  British  courts,  made  under  it,  are  not 
applicable.  In  many  States  of  the  Union  this  latter  act  has  been 
adopted,  and  the  decisions  of  their  courts  conform,  of  course,  to 
its  provisions.  But  we  having  adopted  the  common  law  of 
England,  so  far  as  the  same  is  applicable  and  of  a  general  nature, 
and  all  statutes  or  acts  of  the  British  Parliament  made  in  aid  of, 
and  to  supply  defects  of,  the  common  law,  prior  to  the  fourth 
year  of  James  the  First,  except  certain  enumerated  statutes,  and 
which  are  of  a  general  nature  and  not  local  to  that  kingdom,  they 
are  declared  to  be  the  rule  of  decision,  and  shall  be  considered 
of  full  force  until  repealed  by  legislative  authority.  Gross' 
Comp.  1869,  416.  It  then  follows  that  the  32  Hen.  VIIL,  ch. 
34,  §  1,  is  in  force  in  this  State,  as  it  is  applicable  to  our  condi- 
tion, and  is  unrepealed.  And  we  must  hold,  that  the  construction 
given  to  that  act  by  the  British  courts  was  intended  also  to  be 
adopted. 

The  facts  in  this  case  show  such  a  privity  of  contract  as  brings 
it  fully  within  the  rule  announced  in  the  above  cases.  Appellee 
paid  to  appellant  several  instalments  of  rent  falling  due  under 
the  lease  after  it  was  assigned  to  him.  By  paying  the  rent,  the 
lessee  fully  recognized  the  appellant  as  his  landlord,  and  created 
the  necessary  privity  of  contract  to  maintain  the  action. 

The  case  of  Chapman  v.  McOreio  (20  111.  101)  announces  a 
contrary  doctrine.  In  that  case  this  qiiestion  was  presented, 
and  notwithstanding  the  lessee  had  fully  recognized  the  assignee 
of  the  lease  as  his  landlord,  it  was  held  that  the  lessor  of  the 
premises  might  maintain  an  action  to  recover  the  rent.  In  that 
case,  the  fact  that  the  lessee  had  attorned  to  the  assignee  was 
given  no  weight,  and  the  fact  that  such  privity  was  thereby 
created  as  authorized  the  assignee  of  the  lease  to  sue  for,  and 
recover  the  rent,  was  overlooked.  In  that,  the  decision  was 
wrong.  The  right  of  action  could  not  be  in  both  the  lessor  and 
his  assignee,  and  the  privity  thus  created  gave  it  to  the  latter. 


472  OPERATION  OF  CONTRACT.  [Paet  IIL 

The  subsequent  case  of  Dixon  v.  Buell  (21  111.  203)  only  holds 
that  such  an  assignee,  whether  he  holds  the  legal  or  equitable 
title  to  the  lease,  may  have  a  claim  for  rent  growing  out  of  the 
lease,  probated  and  allowed  against  the  estate  of  the  lessee.  That 
case  has  no  bearing  on  the  case  at  bar. 

The  judgment  of  the  court  below  is  reversed  and  the  cause 

remanded. 

Judgment  reversed.^ 


h.    Covenants  affecting  freehold  interests. 
SHABER  V.   ST.   PAUL  WATER  CO. 

30  MINNESOTA,  179.  — 1883. 

Action  for  breach  of  covenant.  Demurrer  to  complaint  over- 
ruled.    Defendant  appeals. 

Berry,  J.  In  January,  1869,  John  R.  Irvine  and  Nancy  Irvine 
owned  certain  land  (in  the  city  of  St.  Paul)  through  which  ran 
Phalen  Creek,  affording  a  valuable  mill  privilege  thereon. 
Leonard  Schiegel,  as  the  lessee  of  the  Irvines,  had  constructed 
a  dam  and  race  upon  the  land,  by  which  the  mill  privilege  was 
utilized  in  the  running  of  a  flour  mill,  which  he  had  also  erected 
thereon  and  was  operating.  By  sundry  subsequent  conveyances 
the  laAd,  with  the  race,  dam,  mill,  and  privilege,  came  to  Henry 
Shaber,  the  plaintiff's  intestate,  and  the  same  are  now  part  of 
his  estate.  The  defendant  corporation,  the  St.  Paul  Water  Com- 
pany, was  formed  to  supply  the  city  of  St.  Paul  with  water.  In 
January,  1869,  the  company,  in  carrying  out  this  purpose  of  its 
creation,  was  about  to  tap  Lake  Phalen  and  lay  pipes  by  which 
to  divert  and  draw  off  the  water  thereof.  Phalen  Creek  flows 
from  Lake  Phalen,  which  is  the  last  and  lowest  of  a  chain  or 
series  of  lakes,  constituting  a  local  water  system.  The  Irvines 
and  Schiegel  objected  to  the  proposed  diversion  of  water,  re- 
fused to  permit  it,  and  threatened  to  enjoin  it,  because,  unless 
provision  was  made  for  bringing  into  Lake  Phalen,  from  other 
sources  and  by  artificial  means,  as  much  water  over  and  above 

1  The  remedy  has  since  been  extended  to  the  grantee  without  attornment. 
m.  R.  S.  ch.  80,  §  14.     Cf.  Crawford  v.  Chapman,  17  Ohio  St.  449. 


Chap.  II.  §2.]  ASSIGNMENT  OF  CONTRACT.  473 

what  naturally  flowed  into  the  same  as  the  company  should  at 
any  time  draw  out,  the  level  of  the  lake  would  be  lowered,  the 
quantity  of  the  water  flowing  into  the  creek  diminished,  and  the 
mill  privilege  impaired  and  destroyed. 

To  remove  the  opposition,  and  to  induce  them  to  refrain  from 
enjoining  its  proceedings,  the  company  entered  into  a  written 
agreement,  by  which,  "for  a  good  and  valuable  consideration,"  it 
covenanted  and  agreed  with  the  Irvines  and  Schiegel,  "their  heirs 
and  assigns,  severally  and  separately,"  that  it  would  make  certain 
specified  "improvements,"  such  as  dams,  gates,  canals,  and  chan- 
nels, all  within  one  year  from  the  8th  day  of  February,  1869;  that 
it  would  at  all  times  thereafter  keep  and  maintain  the  same  in  a 
"good,  strong,  and  substantial  manner,"  and  that  it  would  do 
and  refrain  from  doing  certain  other  things,  all  having  reference 
to  maintaining  the  supply  of  water  in  the  creek;  and  further, 
that  the  volume  of  water  flowing  out  of  Lake  Phalen  through 
Phalen  Creek  should  never  at  any  time  be  diminished  or  rendered 
less  available  for  the  purpose  of  the  water-power  mill  privilege 
before  mentioned,  by  any  work  or  operation  of  the  company,  than 
it  had  been  before  it  commenced  its  operations;  that  it  would 
never  draw  or  take  out  of  the  lake  at  any  time  any  more  water 
than  such  quantity  as  it  should  introduce  into  the  same  by  its 
said  improvements  and  by  artificial  means  over  and  above  the 
quantity  which  naturally  flowed  into  the  same;  and  that  it 
would,  by  its  said  improvements  and  by  artificial  means,  intro- 
duce and  lead  into  the  lake  at  all  times  as  large  a  volume  of 
water  as  it  should  draw  out,  in  addition  to  what  flowed  into  the 
lake  through  natural  channels.  The  plaintiff  alleges  that  defend- 
ant has  failed  to  make  the  specified  "improvements,"  and  that  it 
has  broken  its  covenants  in  reference  to  maintaining  the  stage 
and  quantity  of  water  in  the  creek,  and  that,  in  consequence  of 
said  failure  and  breaches,  the  flow  of  water  in  the  creek  has  been 
diminished  by  the  drawing  and  diverting  of  water  by  defendant 
from  Lake  Phalen,  and  thereby  the  said  Shaber,  in  his  lifetime, 
and  his  estate  since  his  decease,  has  been  greatly  damaged  (as 
particularly  set  forth)  in  respect  to  the  mill,  water  privilege,  and 
the  use  and  operation  of  the  same,  and  that  he  and  his  estate 
have  been  subjected  to  great  expense  and  loss  on  account  thereof. 


474  OPERATION  OF  CONTRACT.  [Part  in. 

This  appeal  is  taken  from  an  order  overruling  defendant's  general 
demurrer  to  the  complaint. 

Our  examination  of  the  case  has  brought  us  to  the  conclusion 
that  the  appeal  presents  a  single  question,  viz. :  Whether  any  of 
the  covenants  entered  into  by  defendant  run  with  the  land  of  the 
covenantees  to  Shaber  and  his  estate?  This  is  a  pure  common 
law  question,  to  be  decided  upon  the  authorities. 

"VVe  think  the  following  propositions  embody  the  rules  of  law 
applicable  to  the  case,  and  that  they  are  supported  by  the 
authorities  cited:  A  covenant  runs  with  land  when  either  the 
liability  to  perform  it,  i.e.  its  burden,  or  the  right  to  take  advan- 
tage of  it,  i.e.  its  benefit,  passes  to  the  assignee  of  the  land. 
Savage  v.  Mason,  3  Gush.  500;  1  Smith'' s  Lead.  Gas.  120. 

To  enable  a  covenant  to  run  with  land  so  as  to  give  the 
assignee  its  benefit,  the  covenantee  must  be  the  owner  of  the  land 
to  which  the  covenant  relates ;  but  the  covenantor  may  be  either 
a  person  in  privity  of  estate  with  the  covenantee,  or  a  stranger; 
while,  with  reference  to  the  subject  of  the  covenant,  it  is  suffi- 
cient that  it  be  for  something  to  be  done,  or  refrained  from,  about, 
touching,  concerning,  or  affecting  the  covenantee's  land  (though 
not  upon  it),  if  the  thing  covenanted  for  be  for  the  benefit  of  the 
same,  or  tend  to  increase  its  value  in  the  hands  of  the  holder. 
Spencer's  Case  and  notes,  Eng.  &  Artier. ;  1  Smith  Lead.  Gas.  (7th 
Am.  ed.)  115,  where  all  the  learning  upon  the  subject  appears  to 
be  collected;  PaJcenham's  Case,  42  Edw.  III.  3,  abstracted  in 
1  B.  «&  G.  410,  415;  Anson  on  Contracts,  220;  Pollock  on  Con- 
tracts, 219;  Rawle  on  Covenants,  334,  and  notes;  Norman  v. 
Wells,  17  Wend.  136;  NorfleetY.  Cromwell,  70  N.  C.  634;  1  Smith 
Lead.  Gas.  122,  124,  139,  140,  175,  177,  181,  183;  Aliens.  Culver, 
3  Denio,  284;  Van  Rensselaer  v.  Smith,  27  Barb.  104,  146; 
National  Bank  v.  Segur,  39  N.  J.  Law,  173. 

The  case  at  bar  is  controlled  by  these  principles.  The  Irvines 
—  the  covenantees  —  were  the  owners  of  the  land  to  which  the 
defendant's  covenants  related;  that  is  to  say,  they  owned  the 
mill  site  upon  which  was  the  water  privilege  which  it  was 
the  object  and  purpose  of  the  covenants  to  preserve  and  protect; 
and  the  covenants  were  for  something  to  be  done,  and  to  be 
refrained  from,  about,  touching,  concerning,  and  affecting  the 


Chap.  II.  §  2.]  ASSIGNMENT  OF  CONTRACT.  475 

covenantee's  land,  for  the  benefit  thereof,  and  tending  to  increase 
its  value  in  the  hands  of  the  holder.  The  covenants  were  of  a 
character  to  run  with  the  land,  so  as  to  enable  the  assignee  of 
the  covenantees  to  take  advantage  of  them.  When  it  is  con- 
sidered what  it  was  that  the  water  company  proposed  to  do,  and 
for  what  purpose  the  covenants  were  made,  it  would  be  astonish- 
ing if  this  were  not  the  case.  The  diverting  the  water  of  Lake 
Phalen,  without  provision  for  counteracting  it,  would  be  a  per- 
petual injury  to  the  land  of  the  covenantees.  No  protection 
against  such  an  injury  would  be  adequate  unless  it  was  also 
perpetual.  That  nothing  less  could  have  been  fairly  intended  by 
the  parties  to  the  covenants  is  apparent  from  the  allegations  of 
the  complaint. 

It  is  insisted  by  defendant  that  the  breach  of  the  covenants 
was  complete  before  plaintiff  had  acquired  any  interest  in  the 
property  to  which  they  related ;  that  it  had  become  a  right  of 
action,  and  did  not  pass  to  the  plaintiff.  If  the  covenants  to 
make  the  specified  improvements  within  a  year  from  February  8, 
1869,  were  all  the  covenants  entered  into,  this  point  might  pos- 
sibly be  well  taken.  But  such  is  not  the  case.  These  improve- 
ments are  not  only  to  be  made,  but  at  all  times  thereafter  to  be 
kept  and  maintained  in  a  "good,  strong,  and  substantial  manner," 
and  the  volume  of  water  flowing  out  of  Lake  Phalen  through  the 
creek  is  to  be  maintained  undiminished  by  any  of  the  operations 
of  the  defendant,  with  other  covenants  of  similar  import.  These 
are,  therefore,  continuing  covenants,  and  for  that  reason,  and 
because  they  run  with  the  land,  the  damages  from  their  breach 
accrue  to  him  who  holds  the  property  when  the  breach  occurs  — 
or,  in  other  words,  to  the  person  injured  —  and  to  him  the  right 
of  action  therefor  necessarily  belongs.  Jeter  v.  Glenn,  9  Kich. 
(S.  C.)  Law,  374.  In  this  respect  they  are  analogous  to  covenants 
for  quiet  enjoyment  and  warranty,  which  inure  to  the  protection 
of  the  owner  for  the  time  being  of  the  estate  which  they  are 
intended  to  assure.  Raiole  on  Covenants,  352,  and  citations.  The 
covenants  relating  to  the  making  of  the  specified  "improve- 
ments "  provide  for  the  means  by  which  a  certain  result  is  to  be 
accomplished,  while  these  continuing  covenants  provide  for  the 
result  itself.      The   latter   are,  therefore,  the   most   important, 


476  OPERATION  OF  CONTRACT.  [Part  III. 

because  they  go  to  the  substance  rather  than  the  form  in  which 
the  result  in  view  is  to  be  accomplished.  If  the  continuing 
covenants  are  kept,  the  damages  for  the  breach  of  the  others 
would  be  comparatively,  if  not  altogether,  nominal.  For  these 
reasons  we  are  of  opinion  that  the  complaint  states  a  cause  of 
action,  and  that  the  demurrer  was,  therefore,  properly  overruled. 
We  have  not  overlooked  the  case  of  Kimball  v.  Bryant  (25  Minn. 
496),  though  we  have  not  before  adverted  to  it,  as  it  was  not  cited 
or  alluded  to  upon  the  argument.  But  it  seems  to  us  that  the 
principle  of  the  decision  there  made  may  have  an  important 
bearing  upon  the  case  at  bar,  and  in  support  of  the  conclusions 
to  which  we  have  arrived. 


Order  affirmed. 


INHABITANTS   OF   MIDDLEFIELD  v.  CHUECH  MILLS 
KNITTING  CO. 

160  MASSACHUSETTS,  267.  — 1894. 

Contract,  to  recover  expenses  incurred  in  repairing  a  bridge 
which  defendant  was  bound  to  repair.  Demurrer  by  defendant 
sustained.     Plaintiff  appeals. 

The  declaration  alleged  that  the  owners  of  land  on  a  stream 
wishing  to  raise  the  stream  into  a  pond  for  water-power  changed 
and  raised  the  highway  and  built  a  new  bridge  and  approaches 
under  an  arrangement  with  plaintiff  whereby  the  owners  cove- 
nanted for  themselves  and  successors  to  keep  the  same  in  repair^ 
that  the  owners  had  for  many  years  kept  the  same  in  repair ;  that 

1  In  MottY.  Oppenheimer  (135  N.  Y.  312),  it  is  held  that  a  covenant  by  one 
landowner  for  himself,  his  heirs,  or  assigns,  to  pay  for  one-half  a  party  wall 
erected  by  an  adjoining  owner  whenever  he  or  they  should  make  use  of  it, 
coupled  with  a  further  provision  that  the  agreement  should  be  construed  as 
covenants  running  with  the  land,  imposes  a  burden  on  the  land  of  the  cove- 
nantor and  a  benefit  on  the  land  of  the  covenantee  which  run  with  the  land 
of  each  into  the  hands  of  grantees. 

Where  there  is  no  express  stipulation  that  the  covenant  to  pay  for  a  party 
wall  shall  run  with  the  land,  it  will  be  construed  as  a  personal  covenant. 
Cole  V.  Hughes,  54  N.  Y.  444  ;  Scott  v.  McMillan,  76  N.  Y.  144  ;  Block  v. 
Isham,  28  Ind.  37.  But  the  covenant  to  pay  for  future  repairs  runs  with  the 
land.     Hart  v.  Lyon,  90  N.  Y.  663. 


Chap.  II.  §  2.]  ASSIGNMENT  OF  CONTRACT.  477 

defendant  was  now  the  owner  of  said  land,  pond,  and  water-power, 
and  had  succeeded  to  said  prior  owners'  rights  and  obligations, 
but  had  failed  and  refused  to  keep  the  bridge  in  repair;  that 
plaintiff  had  of  necessity  repaired  the  same,  but  defendant  had 
refused  to  repay  plaintiff  the  cost  thereof. 

Holmes,  J.  This  is  an  action  to  recover  the  amount  of 
damages  which  the  plaintiff  has  been  compelled  to  pay  in  con- 
sequence of  a  breach  of  a  duty  alleged  to  rest  primarily  on  the 
defendant.  The  declaration  is  not  in  covenant,  to  speak  in  terms 
of  the  old  forms  of  action,  but  in  assumpsit,  on  the  principle  of 
Lowell  V.  Spaulding  (4  Gush.  277),  Woburn  v.  Henshaw  (101  Mass. 
193),  and  other  cases  of  that  class.  The  mode  in  which  the 
defendant's  duty  originated,  whether  by  prescription  {Regina  v. 
Bucknall,  2  Ld.  Raym.  804;  Bac.  Abr.  Highways  [E.];  Angell  & 
D.  Highways,  §  255),  or  by  grant  or  covenant  having  the  effect 
of  a  grant  (Bronson  v.  Coffin,  108  Mass.  175;  Nora-oss  v.  James, 
140  Mass.  188,  190;  Ladd  v.  Boston,  151  Mass.  585,  588),  or 
otherwise  (Perley  v.  Chandler,  6  Mass.  454,  457,  458;  Lowell  v. 
Proprietors  of  Locks  and  Canals,  104  Mass.  18),  is  one  step  more 
remote  than  when  the  declaration  is  on  the  covenant  directly. 
However  it  might  be  in  the  latter  case,  we  are  of  opinion  that 
the  duty  is  sufl&ciently  alleged  for  the  purposes  of  the  case  at 
bar.  See  Bernard  v.  Cafferty,  11  Gray,  10,  11;  form  of  declara- 
tion for  obstructing  way.  Pub.  Sts.,  c.  167,  §  94. 

It  is  true  that,  in  order  to  overrule  the  demurrer,  we  have  to 
assume  the  possibility  that  the  defendant  might  be  bound  as 
assign  and  tenant  of  a  quasi  servient  estate  to  perform  an  active 
duty  created  by  its  predecessor  in  title;  but  in  view  of  the  fore- 
going and  other  decisions,  we  are  not  prepared  to  deny  that  it 
might  be  bound  in  law  or  in  equity  so  far  as  to  make  it  liable  to 
indemnify  the  plaintiff  to  the  extent  of  simple  damages.  It  is 
true  that,  in  general,  active  duties  cannot  be  attached  to  land, 
and  that  affirmative  covenants  only  bind  the  covenantor,  his 
heirs,  executors,  and  administrators.  But  there  are  some  excep- 
tions, and  most  conspicuous  among  them  is  the  obligation  to 
repair  fences  and  highways.  We  do  not  deem  it  advisable  to 
discuss  the  law  in  detail  until  the  facts  shall  appear  more  exactly 
than  they  do  at  present.     If  such  a  duty  can  be  attached  to  land. 


478  OPERATION  OF  CONTRACT.  [Part  III. 

then,  although  ordinarily  the  corresponding  right  could  not  exist 
in  gross,  yet  in  the  case  of  a  way  which  a  town  is  bound  to  keep 
in  repair  for  the  benefit  of  the  public,  the  town  is  the  natural  and 
convenient  protector  of  the  obligation,  and,  being  immortal  and 
locally  fixed,  may  enforce  a  covenant  originally  made  to  it  with- 
out being  shown  to  be  strictly  the  owner  of  the  highway  as  a 
quasi  dominant  estate,  just  as,  conversely,  a  local  corporation 
was  bound  to  the  terre-tenant  to  perform  active  services  in 
Pakenham's  case,  Y.  B.  42  Edw.  III.,  3,  pi.  14. 

Demurrer  overruled. 


(ii.)  Assignment  of  contractual  obligation  upon  marriage. 
PLATNER  V.   PATCHIN. 

19  WISCONSIN,  333.— 1865. 

Action  against  Patchin  and  wife  on  a  promissory  note  executed 
by  the  latter  dum  sola.  Demurrer  by  wife  that  complaint  shows 
a  former  action  pending  against  her.  Answer  by  Patchin  that 
the  wife  still  retains  and  possesses  all  her  separate  property. 
Motion  for  judgment,  on  the  ground  that  demurrer  and  answer 
were  frivolous,  denied.     Plaintiff  appeals. 

Dixon,  C.  J.  .  .  .  The  wife  being  a  necessary  party  to  the 
action  to  enforce  the  liability  of  the  husband,  and  it  appearing  on 
the  face  of  the  complaint  that  there  is  a  former  action  pending 
against  her,  her  demurrer  was  well  taken,  and  the  motion  for 
judgment  for  the  frivolousness  of  the  demurrer  and  answer 
properly  denied. 

We  see  nothing  in  the  answer  of  the  husband  which  merits 
serious  consideration.  It  is  obviously  frivolous.  The  statute 
for  the  protection  of  the  rights  of  married  women,  whilst  it 
greatly  enlarges  the  privileges  of  the  wife,  does  not  restrict  the 
liability  of  the  husband.  He  must  pay  the  same  as  before,  and 
if  he  does  not,  the  creditors  of  the  wife  can  sue  and  make  him 
pay  if  he  is  able.  In  this  particular  the  modern  husband  is  twice 
happy.     First,  he  is  happy  as  the  quiet  spectator  of  his  wife's 


Chap.  II.  §  2.]  ASSIGNMENT   OF  CONTRACT.  47& 

enjoyment  of  her  property ;  and  again  he  is  happy  in  paying  her 
debts,  or,  if  he  refuses,  in  being  sued  and  compelled  to  pay. 

Order  affirmed.^ 


HOWARTH  V.   WARMSER,  et  al. 
68  ILLINOIS,  48.  — 1871. 

Action  against  Warmser  and  wife  on  a  promissory  note  given 
by  the  wife  dum  sola.  Judgment  against  defendants.  Warmser 
appeals. 

Lawrenck,  C.  J.  We  held  in  Connor  v.  Berry  (46  111.  370) 
and  McMurtry  v.  Webster  (48  111.  123)  that  the  husband  was  still, 
as  at  common  law,  liable  for  the  debts  of  his  wife,  contracted 
before  marriage,  notwithstanding  the  act  of  1851,  because  that  act 
still  left  to  the  husband  the  wife's  earnings.  Since  those  decis- 
ions were  made,  the  legislature,  by  the  act  of  1869,  has  taken 
from  the  husband  all  control  over  the  earnings  of  his  wife,  and 
thus  swept  away  the  last  vestige  of  the  reasons  upon  which  the 
common  law  rule  rested.  The  rule  itself  must  now  cease.  Leg- 
islative action  has  virtually  abolished  it,  by  taking  away  its 
foundations  and  rendering  its  enforcement  unjust. 

The  judgment  must  be  reversed  and  the  cause  remanded. 

Judgment  reversed.* 


(m.)    Assignment  of  contractual  obligation  by  death. 

DICKINSON  V.    CALAHAN'S  ADM'RS. 

19  PENNSYLVANIA  STATE,  227.  — 1852. 

Assumpsit  and  covenant  for  lumber  delivered  by  the  adminis- 
trators of  Calahan  to  the  executors  of  Dickinson  to  apply  on  a 

1  Changed  by  Ch.  155,  L.  1872 ;  1  S.  &  B.  Ann.  St.  of  Wis.  sec.  2346. 
See,  generally,  Stimson's  Am.  St.  Law,  §  6402. 

' '  As  between  the  creditor  of  the  wife  dum  sola  and  the  husband,  the 
common  law  liability  of  the  husband  has  not  been  changed  by  the  legislation 
above  referred  to."  —  Alexander  v.  Morgan,  31  Ohio  St.  646  (1877). 

2  See  also  Madden  v.  Gilmer,  40  Ala.  637  ;  Wood  v.  Or/ord,  62  Cal.  412  ; 
Lennox  v.  JSldred,  65  Barb.  410. 


480  OPERATION  OF  CONTRACT.  [Pabt  HI. 

contract  made  between  Calahan  and  Dickinson.  Defense,  breach 
of  contract  in  not  delivering  the  full  amount  called  for  by  such 
contract.     Verdict  for  plaintiffs  for  full  amount  of  claim. 

LowBiE,  J.  It  seems  to  us  very  doubtful  whether  the  oral 
contract  could  be  rightly  proved  by  the  evidence  that  was  sub- 
mitted to  the  jury.  But  admit  that  it  could.  The  one  party,  a 
lumber  manufacturer,  agreed  to  sell  to  the  other,  a  lumber  mer- 
chant, all  the  lumber  to  be  sawed  at  his  mill  during  five  years, 
and  that  the  quantity  should  be  equal  on  an  average  to  300,000 
feet  in  a  year,  without  stipulating  for  any  given  quantity  in  any 
one  year,  and  the  lumber  was  to  be  paid  for  as  delivered.  Be- 
fore the  five  years  had  expired,  both  parties  died;  and  now  the 
representatives  of  the  vendee  seek  to  hold  those  of  the  vendor 
bound  to  perform  the  contract,  and  to  set  off  damages  for  the 
breach  of  it  against  a  claim  for  part  of  the  lumber  delivered. 

It  will  be  seen  that,  in  thus  stating  the  question,  we  set  aside 
the  alleged  breach  in  the  lifetime  of  Calahan;  and  we  do  this 
because  the  court  properly  instructed  the  jury  that,  under  such 
a  contract,  Calahan  was  guilty  of  no  breach  in  not  manufacturing 
the  full  average  quantity  in  his  lifetime,  and  left  it  to  them  to 
say  whether  in  his  lifetime  he  had  committed  any  other  manner 
of  breach.  The  point  in  controversy  may  be  stated  thus :  Where 
a  lumber  manufacturer  contracts  with  a  lumber  merchant  to  sell 
him  a  certain  quantity  of  lumber,  to  be  made  at  his  mill  during 
five  years,  for  which  he  is  to  be  paid  as  the  lumber  is  delivered, 
and  he  dies  before  the  time  has  elapsed,  are  his  administrators 
bound  to  fulfill  the  contract  for  the  remainder  of  the  time? 

No  one  can  trace  up  this  branch  of  the  law  very  far  without 
becoming  entangled  in  a  thicket,  from  which  he  will  have  diffi- 
culty in  extricating  himself.  Very  much  of  the  embarrassment 
arises  from  the  fact  that  the  liability  of  executors  and  adminis- 
trators has  been  often  made  to  depend  more  upon  the  forms  of 
action  than  upon  the  essential  relations  of  the  parties,  as  will  be 
seen  by  reference  to  the  books.  Piatt  on  Covenants,  453 ;  2  Wms. 
Executors,  1060;  and  Viner's  Ah.,  titles  ^'Covenants,"  D.  E.,  and 
''  Executors,^^  H.  a. ;  Touchstone,  178.  The  simplicity  and  sym- 
metry of  the  law  would  certainly  be  greatly  increased,  and  its 
justice  better  appreciated  if  in  all  cases  where  the  law  undertakes 


Chap.  II.  §  2.]  ASSIGNMENT  OF  CONTRACT.  481 

the  administration  of  estates,  as  in  cases  of  insolvency,  bank- 
ruptcy, lunacy,  and  death,  the  rules  of  distribution  were  the 
same. 

The  contract  in  this  case  established  a  defined  relation,  a  rela- 
tion depending  for  its  origin  and  extent  upon  the  intention  of 
the  parties.  The  question  is,  do  the  administrators  of  a  deceased 
party  succeed  to  that  relation  after  the  death  of  the  party,  or  was 
it  dissolved  by  that  event?  On  this  question  the  books  give  us 
an  uncertain  light.  In  Hyde  v.  Windsor  (Cro.  Eliz.  652)  it  is 
said  that  an  agreement  to  be  performed  by  the  person  of  the 
testator,  and  which  his  executor  cannot  perform,  does  not  sur- 
vive. But  here  the  uncertainty  remains,  for  the  acts  which  an 
executor  cannot  perform  are  undefined.  It  recognizes  the  princi- 
ple, however,  that  an  executor  does  not  fully  succeed  to  the  con- 
tract relations  of  his  testator. 

The  case  of  Bobson  v.  Drummond  (2  Barn.  &  Adol.  303,  22 
Eng.  C.  L.  Rep.  81)  is  more  specific  j  for  in  that  case  it  was 
held  that  an  agreement  by  a  coachmaker  to  furnish  a  carriage  for 
five  years  and  keep  it  in  repair,  was  personal  and  could  not  be 
assigned,  and  executors  and  administrators  are  assigns  in  law 
{Hoh.  9  6.  Cro.  Eliz.  757;  Latch.  261;  Wentw.  Executors  100) ;  that 
being  a  general  term,  applying  to  almost  all  owners  of  property 
or  claims,  whether  their  title  be  derived  by  act  of  law  or  of  the 
parties.  And  it  is  no  objection  that  one  may  take  as  executor  or 
administrator  in  certain  cases  where  the  English  laws  of  main- 
tenance and  forms  of  action  would  not  allow  him  to  take  as 
assignee  in  fact,  for  those  laws  do  not  extend  to  such  a  case,  and 
they  have  no  application  here. 

In  Quick  Y.  Ludburrow  {3  Bnlst.  29)  it  is  said  that  executors  are 
bound  to  perform  their  testator's  contract  to  build  a  house,  but  the 
contrary  is  said  in  Wentw.  Executors,  124,  Vin.  Ab.  "Covenant," 
E.,  pi.  12,  to  have  been  declared  in  Hyde  v.  Windsor,  though  we 
do  not  find  it  in  the  regular  reports  of  the  case.  5  Co.  24;  Cro. 
Eliz.  552.  But  these  are  both  mere  dicta.  The  same  principle 
is  repeated  in  Touchstone,  178,  yet  even  there  a  lessee's  agree- 
ment to  repair  is  not  so  construed ;  and  in  Latch  Rep.  261,  the 
liability  of  executors  on  a  contract  to  build  is  for  a  breach  in 
the  testator's  lifetime.     In  Cooke  v.  Colcrafi  (2  Bl.  Rep.  856),  a 


482  OPERATION  OF  CONTRACT.  [Part  IIL 

covenant  not  to  exercise  a  particular  trade  was  held  to  establish, 
a  mere  personal  relation  and  not  to  bind  executors ;  and  the  con- 
trary is  held  in  Hill  v.  Hawes,  Vin.  Ab.,  title  "Executors,"  Y. 
pi.  4.  And  so  executors  and  administrators  stand  on  the  same 
footing  with  assignees  in  fact  with  regard  to  apprentices;  and 
contracts  of  this  nature  are  held  not  to  pass  to  either,  because 
they  constitute  a  mere  personal  relation,  and  are,  therefore,  not 
transferable;  2  Stra.  126G;  4  Ser.  &  R.  109;  1  Mass.  172;  19 
Johns.  113;  1  Rob.  519;  12  Mod.  553,  650;  5  Co.  97.      ' 

The  case  most  nearly  resembling  this  is  Wentioorth  v.  Cock  (10 
Ad.  &  El.  42,  37  Eng.  G.  L.  R.  33),  where  a  contract  to  deliver 
a  certain  quantity  of  slate,  at  stated  periods,  was  held  to  bind 
the  executors.  This  case  was  decided  without  deliberation,  and 
with  but  little  argument  on  the  part  of  the  executors.  The 
plaintiff  relied  on  the  case  of  Walker  v.  Hull  (1  Lev.  177),  where 
executors  were  held  bound  to  supply  the  place  of  the  testator  in 
teaching  an  apprentice  his  trade.  But  that  case  had  long  ago- 
been  denied  in  England  (2  Stra.  1266),  and  is  rejected  here.  Comr 
monwealth  v.  King,  4  Ser.  &  E.  109.  This  last  case  treats  the 
contract  as  a  mere  personal  one,  that  is  dissolved  by  death,  and 
regards  as  absurd  the  doctrine  in  Wadsworth  v.  Guy  (1  Keb.  820, 
and  1  Sid.  216),  that  the  executors  are  bound  to  maintain  the 
apprentice,  while  he  is  discharged  from  duty. 

But  the  authority  principally  relied  on  by  the  counsel  in  Went- 
toorth  V.  Cock,  is  the  Roman  law.  Code  Just.  8,  38,  15,  and  the 
commentary  on  it  in  1  Pothier  on  Oblig.  639.  Yet  there  are  few 
subjects  in  the  Roman  law  wherein  its  unlikeness  to  ours  is  more 
marked  than  in  the  matter  of  succession  to  personal  estate,  and 
therefore  its  example  herein  is  almost  sure  to  mislead.  The 
difference  is  sufficiently  indicated,  when  we  notice  that  the 
Roman  executor  was  in  all  cases  either  the  testamentary  or  the 
legal  heir,  and  if  he  accepted  the  estate  he  was  considered  as 
standing  exactly  in  the  place  of  the  decedent,  and  was  of  course 
bound  for  all  his  legal  liabilities,  including  even  many  sorts  of 
offenses,  whether  the  estate  was  sufficient  or  not.  He  was  bound 
as  heir  and  by  reason  of  the  estate  given  to  him,  and  not  as  one 
appointed  to  settle  up  the  estate.  If  the  heir  was  unwilling  to 
accept  the  estate  upon  these  terms,  it  became  vacant,  and  the 


Chap.  II.  §  2.]  ASSIGNMENT  OF  CONTRACT.  488 

praetor  appointed  curators  to  administer  for  the  benefit  of  all.  It 
•would  seem  strange  that  such  curators  should  be  bound  to  carry 
on  the  business  of  the  deceased,  where  they  are  appointed  to  set- 
tle it  up;  yet  how  it  really  was  does  not  appear.  Dig.  427. 
Our  statute  recognizes  the  duty  of  the  executor  and  administra- 
tor to  pay  all  debts  owing  by  the  deceased  at  the  time  of  his 
death,  and  this  is  the  common  principle.  In  another  clause  it 
makes  the  executor  and  administrator  liable  to  be  sued  in  any 
action,  except  for  libels  and  slanders  and  wrongs  done  to  the 
person,  which  might  have  been  maintained  against  the  decedent 
if  he  had  lived.  But  this  furnishes  us  no  aid  in  this  case,  and 
was  not  intended  to.  Its  purpose  is  to  enlarge  and  define  the 
rights  of  action,  which,  existing  against  the  individual,  should 
survive  against  his  estate.  Xot  contract  relations  and  duties, 
but  remedies  for  injuries  -already  done,  are  declared  to  survive. 
If  the  decedent  committed  no  breach  of  contract,  he  was  liable  to 
no  action  when  he  died,  and  this  law  cannot  apply. 

We  are  then  without  any  Avell-defined  rule  of  law  directly  ap- 
plicable to  this  case,  and  are  therefore  under  the  necessity  of 
deducing  the  rule  for  ourselves.  The  elements  from  which  this- 
deduction  is  to  be  made  are  the  contract  itself,  the  ordinary 
principles  and  experience  of  human  conduct,  the  decisions  in 
analogous  cases,  and  the  nature  of  the  office  of  administrator. 

We  repeat  the  question :  Does  such  a  contract  establish  any- 
thing more  than  a  personal  relation  between  the  parties?  This 
is  a  mere  question  of  construction,  depending  upon  the  intention 
of  the  parties  {Hoh.  9;  Yelv.  9;  Cro.  Jac.  282;  1  Bing.  225;  8 
Eng.  C.  L.  R.  307)  unless  the  intention  be  such  as  the  law  will 
not  enforce.  Is  it  probable  that  either  party  intended  to  bind 
his  executors  or  administrators  to  such  a  relation?  The  contract 
does  not  say  so,  and  we  think  it  did  not  mean  it;  for  it  would 
involve  the  intention  that  the  administrators  of  one  shall  be 
lumber  merchants  and  those  of  the  other  sawyers.  The  character 
of  the  contract  demands  not  such  a  construction;  for  each  deliv- 
ery under  it  is  necessarily  of  complete  and  independent  articles, 
and  each  delivery  was  to  be  at  once  a  finished  work  on  each  side. 
There  may  be  cases  when  it  is  necessary  that  the  executor  or 
administrator  shall  complete  a  work  already  begun  by  the  decs' 


484  OPERATION   OF  CONTRACT.  [Part  III. 

dent,  and  then  they  may  recover  in  their  representative  charac- 
ter. 1  Crompt.  &  Mees.  403;  3  Mees.  &  W.  350;  2  Id.  190;  3 
W.  &  Ser.  12,.  But  here  every  act  of  both  parties  was  complete 
in  itself.  From  the  contract  itself,  and  from  the  ordinary  prin- 
ciples of  human  conduct,  we  infer  that  neither  party  intended 
the  relation  to  survive. 

A  contrary  view  is  incompatible,  in  the  present  case,  with  the 
office  of  administrator;  for  it  would  require  him  to  have  the 
possession  of  the  saw -mill  in  order  to  fulfill  the  contract ;  and  yet 
administrators  have  nothing  to  do  with  the  real  estate,  unless 
the  personal  estate  is  insufficient  to  pay  the  debts,  and  therefore 
they  cannot  perform.  It  is  incompatible  with  the  general  duties 
of  administrators,  in  that  it  would  require  them  to  carry  on  the 
business  left  by  the  decedent,  instead  of  promptly  settling  it  up; 
it  would  require  him  to  satisfy  claims  of  this  character  within  a 
year,  or  begin  to  do  so,  while  the  law  forbids  him  to  do  so  except 
at  his  own  risk ;  and  it  might  hang  up  the  estate  to  a  very  pro- 
tracted period.  We  are  therefore  forbidden  to  infer  such  an 
intention,  and  possibly  to  enforce  it  even  if  it  appeared. 

The  inference  is  further  forbidden  by  the  spirit  of  analogous 
cases.  It  would  seem  absurd  to  say  that  the  administrator  of  a 
physician,  or  author,  or  musician  could  be  compelled  to  perform 
their  professional  engagements,  no  matter  how  the  contract  might 
be  expressed.  The  idea  is  ludicrous.  Yet  it  has  been  supposed 
that  an  administrator  might  take  the  place  of  his  intestate  in 
teaching  an  apprentice  to  be  a  surgeon,  or  saddler,  or  shoemaker, 
or  mariner,  or  husbandman,  or  in  demanding  services  from  an 
ordinary  laborer ;  but  the  idea  was  rejected  by  the  court.  On  what 
ground?  Most  certainly  not  that  no  one  else  could  be  got  to  take 
the  place  of  the  decedent ;  but  on  the  ground  that  no  such  substi- 
tution was  intended  by  the  contract,  together  perhaps  with  the 
feeling  of  the  incompatibility  of  such  a  substitution  with  the 
duties  imposed  by  law  upon  administrators.  The  law  trusts 
people  to  settle  up  estates  on  account  of  their  honesty  and  gen- 
eral business  capacity,  and  not  for  any  peculiar  scientific  or 
artistic  skill,  and  the  State  does  not  hold  itself  bound  to  furnish 
such  abilities.  Some  people  may  suppose  that  it  requires  no 
great  skill  to  manufacture  boards^  if  one  has  the  material  and 


Chap.  II.  §  2.]  ASSIGNMENT  OF  CONTRACT.  485 

machinery;  but  still  we  cannot  suppose  that  the  deceased  was 
contracting  for  any  kind  of  skill  in  his  administrators.  For 
these  reasons  the  court  below  was  right  in  declaring  in  substance, 
that  the  administrators  were  liable  only  for  breaches  committed 
by  the  intestate  in  his  lifetime,  and  the  same  principle  applies 
to  the  death  of  either  party.  These  views  set  aside  some  of  the 
exceptions  as  entirely  unimportant,  and  in  the  others  we  dis- 
cover no  error,  and  no  principle  that  calls  for  any  special  remarks. 

Judgment  affirmed.^ 

1  See  Lacy  v.  Oetman,  119  N.  Y.  109  (contract  of  service) :  Wade  v.  Kalb- 
fleisch,  58  N.  Y.  282 ;  Chase  v.  Fitz,  132  Mass.  359.  Cf.  Allen  v.  Baker,  86 
N.  C.  91  (breach  of  contract  of  marriage)  :  Siler  v.  Gray,  86  N.  C.  566  (con- 
tract to  care  for  and  support  anotlier).  Cf.  Janin  v.  Browne,  59  Cal.  37. 
See  also  Adams  Badiator  &  Boiler  Co.  v.  Schnader,  156  Pa.  St.  394,  post, 
p.  549. 

For  cases  indicating  a  less  stringent  rule  than  that  applied  in  the  principal 
case,  see  Drummond  v.  Crane,  159  Mass.  677  ;  Billings^  Appeal,  106  Pa. 
St.  56a 


486  OPERATION  OF  CONTRACT.  [Part  m. 


CHAPTER  III. 

JOINT  OBLIGATIONS. 
§  1.   Joint  promises. 

(i . )   Joint  promisors. 
BRAGG  V.   WETZELL. 

6  BLACKFORD  (Ind.),  95.  — 1839. 

Blackford,  J.  This  was  an  action  of  debt  for  money  lent, 
brought  by  Zacheus  Wetzell  against  Wilson  Bragg.  The  suit 
originated  before  a  justice  of  the  peace.  The  justice  gave  judg- 
ment for  the  plaintiff,  and  the  defendant  appealed. 

In  the  Circuit  Court,  the  defendant  moved  to  dismiss  the  cause, 
on  the  ground  that  one  Smith  ought  to  have  been  joined  as  a 
defendant  in  the  suit.  The  motion  was  overruled.  The  cause 
was  submitted  to  the  court,  and  a  judgment  rendered  for  the 
plaintiff. 

The  writ  was  issued  against  Bragg  alone.  The  declaration  is 
as  follows: 

"  The  plaintifE  complains  of  Wilson  Bragg  and  Seneca  Smith,  part- 
ners, trading  under  the  firm  of  Bragg  &  Smith,  of  a  plea  that  they 
render  unto  him  SlOO,  which  to  him  they  owe,  and  from  him  unjustly 
detain ;  for  that  whereas  the  defendants,  heretofore,  to  wit,  on  the  27th 
of  June,  1837,  at,  etc.,  were  justly  indebted  to  the  plaintiff  in  the  sum  of 
1100,  for  so  much  money  lent  to  the  defendants  by  the  plaintiff,  and 
at  their  special  instance  and  request ;  yet  the  defendants,  though  often 
requested,  have  not,  nor  has  either  of  them,  paid  the  said  sum  of  money, 
or  any  part  thei*eof,  to  the  plaintiff ;  but  to  pay  the  same  and  every  part 
thereof,  the  defendants  have  at  all  times  refused,  and  still  do  refuse,  to 
the  damage,"  etc. 

The  plaintiff  here  shows  by  his  declaration,  that  Smith,  who  is 
not  sued,  is  a  joint  party  to  the  contract  with  the  defendant,  and 
that  Smith  is  living.     It  is  impossible,  under  these  circumstances, 


Chap.  III.  §  1.]  JOINT  OBLIGATIONS.  487 

that  t]ie  plaintiff  can  recover.  It  is  true,  that  since  the  case  of 
Mice  V.  Skute  (5  Burrow,  2611),  the  facts  that  there  is  a  joint  con- 
tractor not  sued,  and  that  he  is  alive,  are  generally  required  to 
be  pleaded  in  abatement;  but  that  rule  has  no  application  to  cases 
like  the  one  before  us.  Here  the  plaintiff,  in  his  declaration, 
admits  those  facts,  and  shows  that  he  has  no  right  to  sue  the 
defendant  alone.  The  suit  should  have  been  dismissed.  The 
non- joinder,  in  such  a  case  as  this,  may  be  taken  advantage  of  on 
a  motion  in  arrest  of  judgment.  Saund.  291 6,  note  4.  Or  it 
may  be  assigned  for  error.     Chitty's  Plead.  53. 

The  judgment  is  reversed  and  the  proceedings  subsequent  to 
the  motion  to  dismiss  the  cause  set  aside,  with  costs.  Cause 
remanded,  etc.^ 


HALE  V.   SPAULDING  et  al 

145  MASSACHUSETTS,  482.— 1888. 

Contract  upon  an  instrument  under  seal  by  which  the  defend- 
ants, six  in  number,  agreed  to  pay  the  plaintiff,  on  demand,  six- 
sevenths  of  any  loss  which  he  might  suffer  as  indorser  of  a 
certain  note. 

Defendant  Saltmarsh  filed  an  answer  alleging  that,  since  the 
execution  of  the  instrument  sued  on,  plaintiff  had  executed  and 
delivered  the  following  instrument,  under  seal,  to  one  of  the 
joint  obligors : 

"Received  of  L.  V.  Spaulding  $1060.84,  in  full  satisfaction  for 
his  liability  on  the  document,"  etc.  (describing  it). 

It  appeared  in  evidence  that  plaintiff  had  settled  with  each  of 

1  A  joint  demand  cannot  be  set  off  against  a  separate  demand.  Elliott  v. 
Bell,  37  W.  Va.  834. 

' '  Wherever  an  obligation  is  undertaken  by  two  or  more  persons,  it  is  the 
general  presumption  of  law  that  it  is  a  joint  obligation.  Words  of  express 
joinder  are  not  necessary  for  this  purpose ;  but,  on  the  other  hand;  there 
should  be  words  of  severance,  in  order  to  create  a  several  responsibility." 
—  Alpaugh  v.  Wood,  53  N.  J.  L.  638,  644.  See  also  Elliott  v.  Bell,  37  W. 
Va.  834.  But  contracts  which  would  ba  joint  by  the  common  law  are.  in 
many  States,  required  by  statute  to  be  construed  as  joint  and  several.  Stim- 
son's  Am.  St.  i.,  §  4113. 


488  OPERATION  OF  CONTRACT.  [Pabt  III. 

the  defendants,  except  Saltmarsh,  for  their  proportionate  part 
of  the  liability,  and  executed  the  paper  to  Spaulding.  Plaintiff 
offered  to  prove  that  there  was  no  intention  to  release  Saltmarsh, 
but  the  court  held  the  offer  immaterial,  and  directed  a  verdict 
for  defendant. 

C.  Allen,  J.  The  words  "in  full  satisfaction  for  his  lia- 
bility" import  a  release  and  discharge  to  Spaulding,  and,  the 
instrument  being  under  seal,  it  amounts  to  a  technical  release. 
The  plaintiff  does  not  controvert  the  general  rule,  that  a  release 
to  one  joint  obligor  releases  all.  Wiggin  v.  Tudor,  23  Pick.  434, 
444;  Goodnow  v.  Smith,  18  Pick.  414;  Pond  v.  Williams,  1  Gray, 
630,  636.  But  this  result  is  avoided  when  the  instrument  is  so 
drawn  as  to  show  a  contrary  intention.  1  Lindl.  Part.  433;  2 
Chit.  Con.  (11th  Am.  ed.)  1164  et  seq. ;  Ex  parte  Good,  5  Ch.  D. 
46,  55.  The  difficulty  with  the  plaintiff's  case  is,  that  there  is 
nothing  in  the  instrument  before  us  to  show  such  contrary 
intention.  Usually  a  reservation  of  rights  against  other  parties 
is  inserted  for  that  purpose;  or  the  instrument  is  put  in  the 
form  of  a  covenant  not  to  sue.  See  Kenworthy  v.  Sawyer,  125 
Mass.  28;  Willis  v.  De  Castro,  4  C.  B.  (N.  S.)  216;  North  v. 
Wakefield,  13  Q.  B.  536,  541.  Parol  evidence  to  show  the  actual 
intention  is  incompetent.  Tuckerman  v.  Newhall,  17  Mass.  580, 
585.  The  instrument  given  in  this  case  was  a  mere  receipt  under 
seal  of  money  from  one  of  several  joint  obligors,  in  full  satisfac- 
tion of  his  liability  on  the  document  signed  by  himself  and  others. 
There  is  nothing  to  get  hold  of  to  show  an  intent  to  reserve 
rights  against  the  others.  He  might  already  have  discharged 
each  of  them  by  a  similar  release. 

Exceptions  overruled.* 

1  Nothing  short  of  a  technical  release  under  seal  will  operate  to  discharge 
a  joint  obligor.  Bowley  v.  Stoddard,  7  Johns.  210  ;  Catskill  Bank  v.  Mes- 
senger, 9  Cow.  38 ;  Crane  v.  Ailing,  15  N.  J,  L.  423 ;  Kidder  v.  Kidder,  33 
Pa.  St.  268,  post,  p.  626.  Though  if  the  release  be  upon  payment  in  full  by 
one  of  the  joint  obligors,  the  result  would  seem  to  be  otherwise.  Goss  v. 
Ellison,  136  Mass.  503.  The  rule  has  been  modified  by  statute  in  some 
States.     Stimson's  Am.  St.  L.,  §  5013. 

"  A  covenant  not  to  sue  a  sole  debtor  may  be  pleaded  as  a  general  release 
in  bar,  to  avoid  circuity  of  action.  But  if  he  be  one  of  two  or  more  debtors, 
such  covenant  cannot  be  pleaded  in  bar,  and  if  he  should  be  sued  contrary 


Chap.  III.  §  1.]  JOINT  OBLIGATIONS.  48^ 

JEFFRIES  V.  FERGUSON,  Administrator. 

87  MISSOURI,  244.— 1885. 

Black,  J.  C.  S.  Jeffries  and  James  N.  Inge  were  sureties  on 
a  note  given  by  Chas.  R.  Jeffries  to  one  Roberts.  Before  and 
after  judgment  on  the  note,  C.  S.  Jeffries  paid  off  the  debt,  and 
then  presented  his  demand  to  the  Probate  Court,  asking  to  have 
the  one-half  of  the  amount  so  paid,  first  deducting  the  proceeds 
of  certain  securities,  allowed  against  the  estate  of  Inge,  the  co- 
surety. The  contention  that  plaintiff  could  only  sue  in  a  court 
having  full  and  complete  equity  jurisdiction  is  not  well  taken. 
Courts  of  law  have  adopted  the  equitable  doctrine  of  contribution, 
and  award  relief  to  one  surety  who  has  paid  more  than  his  share. 
The  surety  paying  the  debt  may  have  his  action  at  law  against 
the  other  surety  for  any  excess  which  he  has  paid  over  his  pro- 
portionate share.  Van  Petten  v.  Richardson,  68  Mo.  380.  The 
plaintiff's  demand  was  allowed  by  the  Probate  Court,  and  he 
again  recovered  in  the  Circuit  Court,  to  which  the  case  was. 
appealed.  We  have  examined  the  evidence  and  are  satisfied  the 
estate  received  all  credits  to  which  it  was  entitled. 

The  judgment  is  affirmed.  All  concur.* 

to  the  terms  of  it,  he  must  pursue  his  remedy  by  an  action  upon  the  cove- 
nant." —  Wells,  J.,  in  McAllester  v.  Sprague,  34  Me.  296,  298. 

A  judgment  rendered  against  one  of  several  joint  debtors  in  an  action 
against  him  alone  is  a  bar  to  an  action  against  the  others.  Mason  v.  Eldred, 
6  Wall.  231 ;  Candee  v.  Smith,  93  N.  Y.  349  ;  Heckemann  v.  Young,  134 
N.  Y,  170.     See  Stimson^s  Am.  St.  Z.,  §  5015,  for  statutory  modifications. 

The  death  of  one  of  several  joint  debtors  extinguishes  the  liability  as  to 
him  and  the  survivors  alone  are  liable.  Yorks  v.  Peck,  14  Barb.  (N.  Y.) 
644  ;  Foster  v.  Hooper,  2  Mass.  572.  Contra :  Eldred  v.  Bank,  71  Ind.  643  j 
and  the  common  law  rule  has  now  been  generally  modified  by  statute. 
Stimson's  Am.  St.  L.,  §  4113. 

As  to  revival  of  joint  promises  barred  by  the  statute  of  limitations  upon 
payment  or  promise  by  one  of  the  joint  parties,  see  Shoemaker  v.  Benedict,. 
11  N.  Y.  176. 

^  Accord :  Chipman  v.  Morrill,  20  Cal.  131  ;  Durbin  v.  Kuney,  19  Oregon, 
71 ;  Norton  v.  Coons,  3  Den.  (N.  Y.)  132  ;   Chaffee  v.  Jones,  19  Pick.  260. 

"  Contribution  is  not  founded  upon,  although  it  may  be  modified  by,  con- 
tract. The  right  to  it  is  as  complete  in  the  case  where  the  sureties  are 
unknown  to  each  other,  as  in  any  other.     The  law  following  equity  will 


490  OPERATION  OF  CONTRACT.  [Part  IU. 

(ii.)    Joint  promisees. 

SWEIGART  V.   BERK  et  al. 

8  SERGEANT  &  RAWLE   (Penn.),  308.— 1822. 

Action  of  debt  on  a  bond.     Judgment  for  plaintiffs. 

The  bond  was  given  by  defendant  to  "  the  widow  and  heirs  and 
legal  representatives  of  Peter  Berk,  deceased,"  conditioned  to  be 
void  "if  the  said  Sweigert  should  pay  to  the  said  widow  and  heirs 
and  legal  representatives  of  the  said  Peter  Berk  one  thousand 
pounds,  gold  or  silver  coin,  lawful  money  of  Pennsylvania,  at  or 
immediately  after  the  death  of  Margaret  Berk,  widow  of  the  said 
Peter  Berk,  deceased,  or  to  the  said  deceased's  heirs  or  repre- 
sentatives, in  equal  shares  alike,  with  lawful  interest  for  the 
same  to  be  paid  annually  unto  the  said  Margaret  Berk,  during 
her  natural  life,"  etc. 

The  statement  of  the  cause  of  action  averred  the  death  of 
Margaret  Berk,  and  that  the  plaintiffs  were  seven  of  the  ten 

imply  a  promise  to  contribute,  in  order  to  afford  a  remedy.  But  as  this  is  in 
most  instances  a  fiction,  in  aid  of  an  equitable  right,  it  will  never  be  toler- 
ated where  the  relation  upon  which  the  equity  is  founded  is  wanting." 
—  Gardiner,  C.  J.,  in  Tobias  v.  Rogers,  13  N.  Y.  59,  66. 

"  An  action  at  law  by  a  surety  for  contribution  must  be  against  each  of 
the  sureties  separately  for  his  proportion,  and  no  more  can  be  recovered, 
even  where  one  or  more  are  insolvent.  In  the  latter  case,  the  action  must 
be  in  equity  against  all  the  co-sureties  for  contributions,  and,  upon  proof  of 
the  insolvency  of  one  or  more  of  the  sureties,  the  payment  of  the  amount 
will  be  adjudged  among  the  solvent  parties  in  due  proportion." — Miller,  J,, 
in  Easterly  v.  Barber,  m  N.  Y.  433,  439. 

"  We  have  often  held,  as  between  the  creditor  and  the  estate  of  a  deceased 
surety,  that  the  joint  obligation  of  the  latter  ended  with  his  death.  We  are 
not  yet  prepared  to  decide  that  his  several  obligation,  originating  at  the  date 
of  the  common  signature,  to  contribute  ratably  to  the  payments  compelled 
from  his  associates,  also  terminates  at  his  death.  .  .  .  The  justice  of  such  a 
rule  is  apparent.  Originating  in  equity,  it  has  been  grafted  upon  the  law 
with  the  aid  of  an  implied  promise  to  secure  the  legal  remedy.  We  see  no 
reason  to  reverse  it,  but  every  consideration  of  equity  and  justice  leads  us 
rather  to  maintain  and  enforce  it."  —  Finch,  J.,  in  Johnson  v.  Harvey,  84 
N.  Y.  363,  .366,  367. 

"  It  is  well  settled  that  one  surety  has  a  claim  against  another,  for  contri- 
bution for  any  sum  he  may  be  compelled  to  pay,  although  such  co-surety 
may  have  been  discharged  from  liability  primarily  upon  the  same  contract." 
— Peters,  J.,  in  Hill  v.  Morse,  61  Me.  541,  544. 


Chap.  III.  §  1.]  JOINT  OBLIGATIONS.  491 

children  of  Peter  Berk,  and  each  entitled  to  one  hundred  pounds 
of  the  one  thousand  pounds  promised  by  defendant. 

TiLGHMAN,  C.  J.  It  appears  by  the  plaintiffs'  own  showing, 
that  the  bond  was  given  to  ten  obligees  jointly,  all  of  whom  are 
living,  and  the  action  is  brought  by  only  seven  of  them.  I  am 
at  a  loss  to  conceive  on  what  principle  the  action  can  be  sup- 
ported. It  is  well  settled  that  if  a  bond  be  given  to  several 
obligees  they  must  all  join  in  the  action,  unless  some  be  dead, 
in  which  case  that  fact  should  be  averred  in  the  declaration. 
And  if  it  appear  on  the  face  of  the  pleadings  that  there  are  other 
obligees  living  who  have  not  joined  in  the  action,  it  is  fatal,  on 
demurrer  or  in  arrest  of  judgment.  The  authorities  on  this 
point  are  numerous,  and  will  be  found  collected  in  1  Saund. 
291  f.  The  counsel  for  the  plaintiffs  has  urged  the  inconven- 
ience of  this  principle  when  applied  to  the  bond  in  suit,  where 
it  appears,  by  the  condition,  that  ten  persons  have  separate 
interests,  and  it  may  be  that  some  of  them  have  received  their 
shares  before  the  commencement  of  this  suit.  There  is  very 
little  weight  in  that  argument.  The  acceptance  of  the  bond  was 
the  voluntary  act  of  the  obligees,  and  if  people  will  enter  into 
contracts  which  are  attended  with  difficulties,  they  have  no  right 
to  expect  that  established  principles  of  law  are  to  be  prostrated 
for  their  accommodation.  But  in  truth,  there  is  very  little  diffi- 
culty in  the  case  The  action  may  be  brought  on  the  penalty  of 
the  bond,  in  the  name  of  all  the  obligees,  and  the  judgment 
entered  in  such  a  manner  as  to  secure  the  separate  interest  of 
each.  The  action  may  be  supported  although  some  of  the 
obligees  have  received  their  shares,  because  the  bond  is  forfeited 
unless  they  have  all  been  paid. 

It  was  objected  that  those  who  had  been  paid  might  refuse  to 
join  in  the  action,  or  might  release  the  obligor.  But  the  court 
would  permit  those  who  are  unpaid  to  make  use  of  the  names  of 
the  other  obligees,  against  their  consent;  neither  would  their 
release  be  suffered  to  be  set  up  in  bar  of  the  action.  It  may  be 
resembled  to  the  case  of  an  assigned  chose  in  action,  where  the 
action  is  brought  in  the  name  of  the  assignor,  for  the  use  of  the 
assignee;  there  the  release  of  the  assignor  would  not  be 
regarded.     A  release,  in  such  case,  would  be  a  collusion  between 


492  OPERATION  OF  CONTRACT.  [Part  IH. 

the  assignor  and  assignee  [debtor]  to  defraud  a  third  person,  and 
therefore  void.  It  is  unnecessary  to  decide  whether  each  of  the 
obligees,  in  the  present  case,  could  have  supported  a  separate 
action  for  his  separate  interest,  appearing  on  the  face  of  the 
condition.  I  will  only  say  that  such  an  action  would  be  hazard- 
ous. But  this  action  has  not  been  brought  for  the  separate 
interest  of  any  one.  Seven  of  the  obligees  have  joined  in  it.  So 
that  it  is  neither  joint  nor  several.  On  no  principle,  therefore, 
can  the  action  be  supported.  There  were  several  other  points 
discussed  in  the  argument,  in  which  the  court  will  give  no 
opinion. 

The  judgment  of  the  Court  of  Common  Pleas  must  be  reversed, 
and  restitution  awarded. 

Judgment  reversed  and  restitution  awarded.* 


§  2.    Joint  and  several  promiaea. 

(i.)   Joint  and  several  promisors. 
CUMMINGS  et  al.  v.  THE  PEOPLE,  &o. 

50  ILLINOIS,   132.— 1869. 

Action  of  debt  on  a  sheriff's  bond.     Judgment  for  plaintiff. 

The  declaration  averred  five  obligors,  but  no  process  issued 
against  one  of  them. 

Mk.  Chief  Justice  Breese.  .  .  .  The  next  objection  is, 
that  as  the  bond  in  suit  was  a  joint  and  several  bond,  suit  should 
be  brought  against  all  the  obligors,  or  against  each  co-obligor 
severally,  and  not  against  an  intermediate  number. 

1  Accord :  Ehle  v.  Purdy,  6  Wend.  (N.  Y.)  629 ;  Farni  v.  Tesson,  1  Black 
(U.S.)  309. 

A  release  by  one  of  several  joint  promisees  is,  in  the  absence  of  collusion 
and  fraud,  a  bar  to  an  action  by  the  others.  Pierson  v.  Hooker,  3  Johns. 
(N.  Y.)  68  ;  People  ex  rel.  Eagle  v.  Keyser,  28  N.  Y.  228  ;  Myrick  v.  Dame, 
9  Cush.  (Mass.)  248. 

Upon  the  death  of  a  joint  promisee  the  right  of  action  vests  in  the  sur- 
vivors. Crocker  v.  Seal,  1  Lowell  (U.  S.  C.  C),  416  ;  Murray  v.  Mum/ord, 
6  Cow.  (N.  Y.)  441 ;  Indiana  &c.  By.  v.  Adamson,  114  Ind.  282  ;  Donnell 
v.  Manson,  109  Mass.  676. 


Chap.  III.  §  2.]  JOINT  OBLIGATIONS.  493 

There  is  no  averment  in  the  declaration  that  Argo  was  dead 
at  the  time  of  the  commencement  of  the  suit.  The  rule  is,  if 
one  of  the  joint  obligors  be  dead,  it  is  not  necessary  to  notice 
him  in  the  declaration,  nor  need  the  survivors  be  declared  against 
as  such,  but  they  may  be  sued,  as  if  they  alone  were  primarily 
liable.  1  Ch.  PI.  43.  To  the  same  effect  is  Richards  v.  Heather, 
1  Barn.  &  Aid.  29,  and  Mott  v.  Petrie,  15  Wend.  318.  The  rea- 
son  is  obvious.  The  rule  being  that  on  a  joint  and  several  obli- 
gation, executed  by  more  than  two  persons,  one  may  be  sued, 
or  all,  but  not  an  intermediate  number;  therefore,  if  one  of  the 
co-obligors  be  not  named  in  the  declaration,  those  who  are  sued 
may  plead  the  fact  in  abatement.  To  such  a  plea  the  plaintiff 
could  reply,  that  such  co-obligor  was  dead  before  the  commence- 
ment of  the  suit,  as  that  would  be  a  matter  in  pais. 

It  is  averred,  in  this  declaration,  that  Argo  executed  the  bond 
as  one  of  the  sureties;  but  the  defendants  in  error  say,  in  the 
brief  of  counsel,  that  he  was  dead  at  the  time  the  suit  was  com- 
menced. If  this  was  so,  then  it  should  not  have  been  alleged  in 
the  declaration  that  he  executed  the  bond,  but  having  alleged  it 
the  question  is  presented,  is  not  the  declaration  defective  by 
reason  of  his  non-joinder  in  the  action,  and  cannot  advantage  be 
taken  of  it  by  motion  in  arrest  of  judgment,  or  an  error? 

The  defendants  in  error  contend  that,  though  Argo  might  be 
living,  and  should  have  been  made  a  party,  it  is  too  late  now  to 
make  the  objection  —  it  should  have  been  made  by  plea  in  abate- 
ment, and  cannot  be  raised  on  error. 

It  is  admitted,  if  the  defendants  in  error  had  not  alleged  in 
their  declaration  that  the  defendants  therein,  together  with  Argo, 
executed  the  bond,  the  defendants  would  have  been  required  to 
plead  his  non-joinder  in  abatement.  But  the  fact  appears  on  the 
face  of  the  declaration;  a  plea,  therefore,  was  not  necessary  to 
bring  it  before  the  court.  Why  inform  the  court  by  plea  of  a 
fact  which  the  plaintiff  himself  places  on  the  record?  This  de- 
fect in  the  declaration  could  have  been  reached  by  general 
demurrer,  or  by  motion  in  arrest  of  judgment,  and  can  now  be 
availed  of  on  error. 

Plaintiffs,  by  their  own  showing,  inform  the  court  there  is 
another  joint  obligor,  who  has  not  been  joined  in  the  action ;  it 


494  OPERATION  OF  CONTRACT.  [Part  III. 

was  patent  of  record,  and  no  plea  was  necessary  to  bring  the 
fact  before  the  court.  1  Ch.  PI.  46 ;  2  Sanders  9,  note  10  to  the 
case  of  Jeffreson  v.  Morton  et  al. ;  Cabell  v.  Vaughan,  1  Id.  291, 
in  note;  Whitaker  v.  Young,  2  Cowen,  569;  Horner  y.  Moor,  cited 
in  5  Burrow,  2614;  Leftivich  v.  Berkeley,  1  Hen.  &  Munf.  61 ;  Newell 
V.  Wood,  1  Munf.  655 ;  Harwood  et  al.  v.  Roberts,  5  Maine,  441. 

The  rule  is  well  settled  that  matters  in  pais  only  need  be 
pleaded.     This  is  matter  of  record. 

This  record  shows  a  joint  and  several  bond  executed  by  five 
persons,  four  of  whom  a,ve  sued.  This  appearing  on  the  face  of 
the  declaration,  the  case  is  brought  within  the  principle  of  the 
cases  above  cited,  and  about  which  there  can  be  no  doubt. 

Tor  this  error  the  judgment  must  be  reversed. 

Judgment  reversed.* 


BANGOR  BANK  v.   TREAT   et  al. 
6  GREENLEAF  (6  Maine),  207.  — 1829. 

Mellen,  C.  J.  This  is  an  action  of  assumpsit  and  the  decla- 
ration states  that  the  note  was  signed  by  the  defendants  and  Allen 
Gilman  jointly  and  severally;  and  that  a  judgment  had  been 
recovered  on  the  note  against  Gilman  in  a  several  action  against 
him.  The  defendants  have  moved  in  arrest  of  judgment  on 
account  of  the  joinder  of  them  in  the  present  suit. 

When  three  persons  by  bond,  covenant,  or  note  jointly  and 
severally  contract,  the  creditor  may  treat  the  contract  as  joint 
or  several  at  his  election,  and  may  join  all  in  the  same  action  or 
sue  each  one  severally;  but  he  cannot,  except  in  one  case,  sue  two 
of  the  three,  because  that  is  treating  the  contract  neither  as  joint 
or  several.  But  if  one  of  the  three  be  dead,  and  that  fact  be 
averred  in  the  declaration,  the  surviving  two  may  be  joined. 

In  the  present  case  Gilman  is  living.  The  plaintiffs  contend 
that  as  judgment  had  been  recovered  against  him,  such  judgment 

1  "The  rule  is  elementary  that  when  an  obligation  is  joint  as  well  as 
several,  all  must  be  proceeded  against  jointly,  or  each  severally.  There  is 
no  authority  for  suing  three  out  of  four  joint  makers."  —  Champlin,  J.,  in 
Fay  &  Co.  v.  Jenks  &  Co.,  78  Mich.  312.  See  also  State  v.  Chandler,  79 
Maine,  172. 


Chap.  III.  §  2.]  •         JOINT  OBLIGATIONS.  4P6 

entitled  them  to  join  the  other  two  in  the  same  manner  as  though, 
he  was  dead.  This  is  not  so.  When  they  sued  Gilman  alone, 
they  elected  to  consider  the  promise  or  contract  as  several ;  and 
having  obtained  judgment  they  are  bound  by  such  election.  In 
case  of  death,  the  act  of  God  has  deprived  the  party  of  the  power 
of  joining  all  the  contractors,  but  he  may  still  consider  the  con- 
tract as  joint,  and  sue  the  surviving  two. 

The  plaintiffs  have  disabled  themselves  from  maintaining  this 
action  by  their  former  one.  1  Saund.  291  e.  The  objection  is 
good  on  arrest  of  judgment  where  the  fact  relied  on  by  the  de- 
fendants appears  on  the  record,  as  in  the  present  case. 

Judgment  arrested.^ 

1  "The  rule  that  a  judgment  upon  a  joint  obligation  merges  the  cause  of 
action,  and  works  a  release  of  a  joint  obligor  against  whom  no  judgment  is 
taken,  does  not  apply  to  a  joint  and  several  note."  —  Giles  v.  Canary,  99  Ind. 
116.     See  also  Hix  v.  Davis,  68  N.  C.  231. 

"Even  without  satisfaction,  a  judgment  against  one  of  two  joint  con- 
tractors is  a  bar  to  an  action  against  the  other,  within  the  maxim  transit  in 
rem  judicatum ;  the  cause  of  action  being  changed  into  matter  of  record, 
which  has  the  effect  to  merge  the  inferior  remedy  in  the  higher.  King  v. 
Hoare,  13  M.  &  W.  604. 

"  Judgment  in  such  a  case  is  a  bar  to  subsequent  action  against  the  other 
joint  contrnctor  because,  the  contract  being  merely  joint,  there  can  be  but 
one  recovery,  and  consequently  the  plaintiff,  if  he  proceeds  against  one  only 
of  two  joint  promisors,  loses  his  security  against  the  other,  the  rule  being 
that  by  the  recovery  of  the  judgment  the  contract  is  merged,  and  a  higher 
security  substituted  for  the  debt.  Robertson  v.  Smith,  18  Johns.  (N.  Y.) 
477  ;  Ward  v.  Johnson,  13  Mass.  149  ;  Cowley  v.  Patch,  120  Id.  138  ;  Mason 
V.  Mdred  et  al.,  6  Wall.  231. 

"But  the  rule  is  otherwise  where  the  contract  or  obligation  is  joint  and 
several,  to  the  extent  that  the  promisee  or  obligee  may  elect  to  sue  the  prom- 
isors or  obligors  jointly  or  severally  ;  but  even  in  that  case  the  rule  is  subject 
to  the  limitation,  that  if  the  plaintiff  obtains  a  joint  judgment,  he  cannot 
afterwards  sue  them  separately,  for  the  reason  that  the  contract  or  bond  is 
merged  in  the  judgment ;  nor  can  he  maintain  a  joint  action  after  he  has 
recovered  judgment  against  one  of  the  parties  in  a  separate  action,  as  the 
prior  judgment  is  a  waiver  of  his  right  to  pursue  a  joint  remedy." — Mr. 
Justice  Clifford,  in  Sessions  v.  Johnson,  95  U.  S.  347,  348. 


4}^  OPERATION  OF  CONTRACT.  [Pabt  ni. 

MAY  V.   HANSON  et  ol. 
6  CALIFORNIA,  642.  — 1856. 

Action  against  Hanson  and  Fall  personally,  and  Dewey  as 
administrator  on  a  joint  and  several  bond  executed  by  Hanson, 
Fall,  and  Dewey's  intestate.     Demurrer  sustained. 

Mr.  Chief  Justice  Murray.  The  demurrer  was  properly 
sustained  upon  the  second  ground,  because  the  administrator  of 
Dewey  ought  not  to  have  been  joined.  In  actions  upon  joint  and 
several  contracts  or  obligations,  an  administrator  cannot  be 
joined  with  the  survivors,  because  one  is  joined  de  bonis  testatoris 
and  the  other  de  bonis  propiis.     Humphreys  v.  Yale,  5  Cal.  173. 

It  is  said  the  demurrer  was  sustained  on  a  different  ground  in 

the  court  below.     It  makes  no  difference,  as  this  was  one  of 

the  causes  of  demurrer  assigned  below. 

Judgment  affirmed.^ 


(ii.)  Joint  OT  several  promisees. 
WILLOUGHBY  v.   WILLOUGHBY. 

6  NEW  HAMPSHIRE,  244.  — 1830. 

Assumpsit.  Plaintiff  nonsuited.  The  action  was  on  a  note 
as  follows : 

"  HoLLis,  June  25,  1828. 
"  For  value  received,  I  promise  to  pay  "Washington  or  Joseph  Wil- 
loughby  $200  on  demand,  with  interest. 

"John  Willoughby." 

By  the  Court.  We  are  of  opinion  that  the  note  in  this  case 
is  evidence  of  a  contract  with  W.  and  J.  Willoughby,  and  that 
or  in  the  note  must  be  understood  to  mean  and. 

Such  being  the  purport  of  the  note  upon  the  face  of  it,  this 
action  cannot  be  maintained  upon  it,  and  the  nonsuit  must 
stand.  Blanckenhagen  and  another  v.  Blundell  (2  B.  &  Aid.  417) 
was  an  action  on  a  note  which  was  described  in  the  declaration 

1  See  also  Eggleston  v.  Buck,  31  111.  254. 


Chap.  III.  §  2.]  JOINT  OBLIGATIONS.  497 

as  payable  to  J.  P.  Darner,  or  the  plaintiffs,  and  the  suit  was, 

like  this,  brought  in  the  name  of  the  plaintiffs  without  joining 

J.  P.  Darner.     The  cause  was  decided  in  favor  of  the  defendant 

upon  a  demurrer  to  the  declaration.     But  Bailey,  J.,  intimated 

that  an  action  might  be  maintained  upon  the  note  in  the  name 

of  all  the  payees. 

Judgment  on  the  nonsuit.^ 


BOGGS  V.    CURTIN  et  al. 

10  SERGEANT  &  RAWLE  (Pknn.),  211.  — 1823. 

Assumpsit  for  money  paid  to  the  use  of  defendant  (plaintiff  in 
error).     Judgment  for  plaintiffs  (defendants  in  error). 

Defendant  owed  the  firm  of  Duncan  &  Poster,  and  the  plaintiffs, 
J.  &  D.  Mitchel,  and  Curtin  &  Boggs,  gave  their  joint  note  for 
the  amount,  and  afterwards  paid  it.  Defendant  settled  with 
J.  &  D.  Mitchel,  who  gave  him  a  receipt  in  full. 

Gibson,  J.  The  action  of  assumpsit  must  be  joint  or  several, 
accordingly  as  the  promise  on  which  it  is  founded  is  joint  or 
several.  Where  the  promise  is  express,  there  can  be  little  diffi- 
culty in  determining  to  which  class  it  belongs,  as  its  nature 
necessarily  appears  on  the  face  of  the  contract  itself;  and  if  it 
be  joint,  all  to  whom  it  is  made  must,  or  at  least  may,  sue  on 
it  jointly,  and  after  having  recovered,  settle  among  themselves 

^  "  One  and  the  same  contract,  whether  it  be  a  simple  contract  or  a  contract 
hydeed,  cannot  be  so  framed  as  to  give  the  promisees  or  covenantees  the  right 
to  sue  upon  it  both  jointly  and  separately."  — Dicey  on  Parties,  pp.  110,  111. 

"  Where  a  covenant  is  in  its  terras  expressly  and  positively  joint,  the 
covenantees  must  join  in  an  action  upon  it,  although  as  between  themselves 
their  interest  is  several."  —  Clapp  v.  Pawtucket  Inst,  for  Saving,  16  R.  I. 
489,  494.     See  also  Seymour  v.  Western  B.  Co.,  106  U.  S.  320. 

"  When  the  legal  interest  in  a  covenant  and  in  the  cause  of  action  thereon 
is  joint,  the  covenant  is  joint,  although  it  may,  in  its  terms,  be  several  or  joint 
and  several."  —  Capen  v.  Barrows,  1  Gray  (Mass.),  376,  379. 

"As  the  language  of  the  promise  is  not  expressly  joint,  but,  to  say  the 
least,  may  be  construed  to  be  joint  or  several,  it  should,  according  to  the 
authorities  cited,  be  held  several,  because  the  interest  of  the  promisees  is 
several."  —  Emmeluth  v.  Home  Benefit  Ass'ti,  122  N.  Y.  130,  134.  See  also 
Jacobs  V.  Davis,  34  Md.  204  ;  Ludlow  v.  McCrea,  1  Wend.  (N.  Y.)  228. 

KK 


498  OPERATION  OF  CONTRACT.  [Part  III. 

the  proportion  of  the  damages  to  which  each  is  respectively- 
entitled  :  as  in  the  case  put  in  the  note  to  Coryton  v.  Lithebye  (2 
Saund.  116  a,  note  2),  where  there  was  a  promise  to  two,  in 
consideration  of  £10  to  procure  the  re-delivery  of  their  several 
cattle  which  had  been  distrained.  But  an  implied  promise,  being- 
altogether  ideal  and  raised  out  of  the  consideration  only  by 
intendment  of  law,  follows  the  nature  of  the  consideration;  and 
as  that  is  joint  or  several,  so  will  the  promise  be ;  as  in  the  case 
of  the  implied  promise  to  contribute,  which  arises  in  favor  of 
sureties,  or  persons  who  have  paid  a  debt  for  which,  along  with 
others,  they  were  jointly  liable,  and  on  which  they  cannot  sue 
jointly,  but  each  has  a  separate  action,  for  what  he  has  paid 
beyond  his  aliquot  part,  Graham  v.  Robertson,  2  T.  E.  282; 
Brand  &  Herbert  v.  Boulcott,  3  Bos.  &  P.  235. 

Now,  in  an  action  for  money  paid,  laid  out,  and  expended,  to 
the  defendant's  use,  actual  payment  without  regard  to  the  liability 
under  which  it  was  made  is  the  consideration  of  the  assumpsit. 
It  is  because  the  plaintiff  has  paid,  not  because  he  was  bound  to 
pay,  that  the  law  implies  a  promise,  the  obligation  to  pay  only 
supplying  the  place  of  a  precedent  request,  which  would  other- 
wise be  necessary.  The  criterion,  therefore,  is  not  whether  the 
plaintiffs  were  jointly  liable  to  pay  the  debt,  but  whether  they 
actually  paid  it  jointly.  If  one  has  paid  the  whole,  it  would 
be  clear  that  all  could  not  sue.  But  joint  payment  can  be  made 
only  with  joint  funds;  for  each  must  contribute  to  the  whole,  and 
as  payment  with  the  money  of  the  one  cannot  be  payment  by  the 
other,  there  must  necessarily  be  an  undivided  interest  in  the  fund 
out  of  which  the  money  comes ;  otherwise,  there  will  separately 
be  payment  by  each,  of  particular  parts  of  the  debt. 

Now  there  was  no  evidence  that  the  defendant's  debt  was  paid 
with  funds  held  in  common  by  the  respective  firms  of  Curtin 
&  Boggs,  and  of  J.  &  D.  Mitchel.  The  receipt  of  Duncan 
&  Foster  contains  no  assertion  of  the  fact,  nor  would  it  be  evi- 
dence against  the  defendant  if  it  did.  On  the  other  hand,  the 
receipt  of  J.  &  D.  Mitchel,  to  the  defendant,  for  the  part  which 
they  had  advanced,  shows  that  they  considered  it  to  have  been 
their  separate  property ;  for  had  it  been  the  joint  property  of  the 
two  firms  when  it  was  paid  out,  it  would  hardly  have  been  treated 


Chap.  III.  §  2.]  JOINT  OBLIGATIONS.  499 

as  the  separate  property  of  either  when  it  was  returned,  as  that 
would  have  had  the  effect  of  securing  the  one,  and  of  casting  the 
risk  of  recovering  what  remained  due  on  the  other.  Then,  under 
the  pleadings,  payment  out  of  a  common  fund  was  a  necessary 
part  of  the  plaintiff's  case  and  one  which  they  were  bound  to 
prove;  and  having  failed  to  prove  it,  the  defendant  was  entitled 
to  a  direction  that  they  had  not  made  out  a  case  on  which  they 
ought  to  recover. 

The  remaining  point  was  not  necessarily  involved  in  the  cause, 
and  need  not  have  been  stirred  if  the  court  below  had  given  the 
direction  required.    It  is  unnecessary,  therefore,  to  decide  it  here. 

Judgment  reversed. 


Paet  IV. 

THE   INTERPRETATION   OF  CONTRACT. 

CHAPTER  I. 

RULES  RELATING  TO  EVIDENCE. 
$  1.   Proof  of  document. 

STORY  V.   LOVETT. 

1  E.  D.  SMITH  (N.  Y.  C.  P.),  153.  — 1851. 

Actionfor  conversion.  Judgment^Qi_4ilaiatiff.  Defendant 
appeals. 

Plaintiff  claimed  to  be  the  mortgagee  of  the  property  in  ques- 
tion. The  mortgage  was  produceH^and  the  mortgagor  testified 
that  it  had  been  executed  by  him.  The  execution  was  in  the 
presence  of  a  subscribing  witness,  who_was  not  called.  Defend- 
.ant  objected  to  this  testimony. 

Woodruff,  J.  The  rule  that  the  execution  of  an  instrument 
must  be  proved  by  the  subscribing  witness,  if  there  be  one  liv- 
ing, competent  to  testify,  and  within  the  jurisdiction  of  the 
court,  is  inflexible.  The  adverse  party  has  an  undeniable  right 
to  require  him  who  offers  the  instrument  in  evidence,  to  call  the 
person  who  was  chosen  to  attest  the  fact  of  the  execution,  that 
he  may,  by  cross  examination,  elicit  all  the  attending  circum- 
stances. ^The  oath  of  the  grantor,  obligor,  or  mortgagor,  cannot 
be  substituted.)  Hollenback  v.  Fleming,  6  Hill,  303;  Henry  v. 
Bishop,  2  Wend.  575;  2  Greenl.  Ev.,  §  569. 

It  would  not  be  difficult  to  assign  other  reasons  why  the  plain- 

600 


Chap.  I.  §  1]  RULES  RELATING  TO  EVIDENCB.  501 

tiff  was  not  entitled  to  recover  on  the  case  exhibited  at  the  trial, 
but  the  above  is  a  sufficient  reason  for  reversing  the  judgment. 

The  judgment  must  be  reversed.* 


COLBY   V.    DEARBOKN  et  cU. 

59  NEW  HAMPSHIRE,  32(5.  — 1879. 

Writ  of  entry. 

Clark,  J.  Both  parties  claim  title  to  the  demanded  premises 
under  Kimball  C.  Prescott.  The  plaintiff's  title  is  derived  from 
a  levy  founded  on  an  attachment  made  June  24,  1873.  The 
defendants  are  Jn^  possession,  claiming  title  under  a  mortgage, 
executed  by  Prescott,  February  14,  1873,  and  recorded  February 
20, 1873,  more  than  four  months  prior  to  the  date  of  the  plaintiff's 
attachment ;  and  therefore  if  the  mortgage  is  valid,  the  defendants 
.  are  in  possession  under  a  title  prior  to  the  plaintiff's.  The 
plaintiff  contends  that  the  mortgage  is  void  for  uncertainty  in 
the  description  of  the  note  secured  by  it,  the  amount  of  the  note 
not  being  stated  in  the  condition  of  the  mortgage.     The  consid- 

1  See  N.  Y.  Code  Civ.  Proc,  §§  935-937  ;  for  typical  legislation,  see  Cal. 
Code  Civ.  Proc,  §§  1929-1951  ;  Mass.  Pub.  St.,  c.  167,  §  21  ;  III.  R.  S.,  c. 
110,  §  34. 

"The  English  rule  requires  that  the  execution  of  an  attested  writing  shall 
be  established  by  the  testimony  of  the  attesting  witness,  or,  in  case  of  his 
death,  disability,  or  absence  from  the  jurisdiction,  by  proof  of  his  hand- 
writing. Barnes  v.  Trompowsky,  7  T.  R.  265  ;  Call  v.  Dunning,  4  East, 
63;  The  King  v.  Harringxoorth,  4  M.  &  S.  350;  Whyman  v.  Garth,  8  Exch. 
803.  In  this  country  the  English  rule  has  been  closely  adhered  to  in  some 
States,  while  in  others  it  has  been  variously  modified  and  restricted.  Brig- 
ham  V.  Palmer,  3  Allen,  450  ;  Hall  v.  Phelps,  2  Johns.  451.  It  has  been 
held  in  this  State  that  when  an  attestation  is  not  necessary  to  the  operative 
effect  of  the  instrument,  proof  of  the  handwriting  of  a  witness  who  cannot 
be  produced  may  be  dispensed  with,  and  the  paper  be  received  in  evidence 
upon  proof  of  the  hand  of  the  contracting  party.  Sherman  v.  Transporta- 
tion Co.,  31  Vt.  162."  — Munson,  J.,  in  Sanborn  v.  Cole,  63  Vt.  690,  693. 

"  It  is  an  established  rule  of  evidence,  and  often  recognized,  that  a  deed 
more  than  thirty  years  old  may  be  given  in  evidence  without  proof  of  its 
execution  when  found  in  the  possession  of  the  party  claiming  under  it, 
and  the  possession  of  the  thing  conveyed  has  followed  the  conveyance."  — 
Stockbridge  v.  West  Stockbridge,  14  Mass.  257  ;  Clark  v.  Owens,  18  N.  Y.  434. 


502  INTERPRETATION  OF  CONTRACT.  [Pabt  IV. 

eration  of  the  mortgage  is  $400,  and  the  condition  is  the  payment 
of  a  note  of  even  date  with  the  mortgage,  payable  in  four  months 
from  date,  with  interest.  The  court  received  parol  evidence 
showing  that  the  note  intended  to  be  secured  by  the  mortgage 
was  a  note  for  $400,  bearing  the  same  date  as  the  mortgage,  and 
payable  in  four  months  from  date,  with  interest.  This  evidence 
was  rightfully  received.  Benton  v.  Sumner,  57  N.  H.  117; 
Cushman  v.  Luther,  53  N.  H.  563;  Bank  v.  Roberts,  38  N.  H. 
23;  Melvin  v.  Fellows,  33  N.  H.  401;  Boody  v.  Davis,  20  N.  H. 
/  140.     The  mortgage  being  valid,  there  must  be 

Judgment  for  the  defendants.*  \ 


O'DONNELL  v.   LEEMAK 

43  MAINE,   158.  — 1857. 
[Keported  herein  at  p.  100.] 


%  2.   Evidence  as  to  fact  of  agreement. 

REYNOLDS   v.   ROBINSON   et  al 
110  NEW  YORK,  654.  — 1888. 

Agtion  for_damages  for  breach  of  an  alleged  contract  for  the 
purchase  by  plaintiff,  and  sale  by  defendants,  of  a  quantity  of 
lumber.  Judgment  for  defendants  reversed  at  General  Term. 
Defendants  appeal. 

Andrews,  J.  The  finding  of  the  referee,  which  is  supported 
by  evidence,  to  the  effect  that  the  contract  for  the  purchase  and 
sale  of  the  lumber  on  credit,  contained  in  the  correspondence 
between  the  parties,  proceeded  upon  a  contemporaneous  oral 
understanding  that  the  obligation  of  the  defendants  to  sell  and 
deliver  was  Gg[atiiige.nt  upon  their  obtaining  satisfactory  reports 
from  the  commercial  agencies  as  to  the  pecuniary  responsibility 
of  the  plaintiff,  brings  the  case  within  an  exception  to  the  gen- 
eral  rule   that   a  written   contract   cannot   be  varied  by  parol 

1  Accord :  Wilson  v.  Tucker,  10  R.  I.  578. 


fJHAP.  I.  §  3.]  RULES  RELATING  TO  EVIDENCE.  503 

evidence,  or  rather  it  brings  the  case  within  the  rule,  now  quite 
well  established,  that  parol  evidence  is  admissible  to  show  that 
a  written  paper  which,  in  form,  is  a  complete  contract,  of  which 
there  has  been  a  manual  tradition,  was,  nevertheless,  not  to 
become  a  binding  contract  until  the  performance  of  some  condi- 
tion precedent  resting  in  parol.  Pym  v.  Campbell,  6  El.  &  Bl. 
370;  Wallis  v.  Littell,  11  C.  B.  (N.  S.)  368;  Wilson  v.  Powers,  131 
Mass.  539;  Seymour  y.  Cowing,  4  Abb.  Ct.  App.  Dec.  200;  Benton 
V.  Martin,  52  N.  Y.  570;  Juilliard  v.  Chaffee,  92  Id.  535,  and  cases 
cited;  Taylor  on  Ev.,  §  1038;  Stephen's  Dig.  Ev.,  §  927.  Upon 
this  ground,  we  think  the  evidence  of  the  parol  understanding, 
and  also  that  the  reports  of  the  agencies  were  unsatisfactory,  was 
properly  admitted  by  the  referee  and  sustained  his  report,  and 
that  the  General  Term  erred  in  reversing  his  judgment.  It  is 
perhaps  needless  to  say  that  such  a  defense  is  subject  to  sus- 
picion, and  that  the  rule  stated  should  be  cautiously  applied  to 
avoid  mistake  or  imposition,  and  confined  strictly  to  cases  clearly 
within  its  reason. 

The  order  of  the  General  Term  should  be  reversed,  and  the 
judgment  on  the  report  of  the  referee  affirmed. 

All  concur.  Order  reversed  and  judgment  affirmed.^ 


§  3.   Evidence  as  to  the  terms  of  the  contract. 

a.   Supplementary  and  collateral  terms. 

WOOD  V.   MORIARTY. 

16  RHODE  ISLAND,  518.  — 1887. 

[Reported  herein  at  p.  430.]  ' 


^Accord:  Westman  v.  Krumiceide,  30  Minn.  313;  Blewitt  v.  Boorum, 
142  N.  Y.  357  (sealed  instrument).  See  for  subsequent  parol  agreement, 
Brown  v.  Everhard,  52  Wis.  205;  Homer  v.  Ins.  Co.,  07  N.  Y.  478.  That 
strangers  to  the  contract  may  vary  or  contradict  it  by  parol,  see  Kellogg  v. 
Tompson,  142  Mass.  76. 

*  See  also  Chapin  v.  Dobson,  78  N.  Y.  74 ;  Naumberg  v.  Young,  44  N.  J. 
L.  331 ;  Hale  v.  Spaulding,  145  Mass.  482,  ante,  p.  487  ;  Van  Brunt  v.  Day, 
81  N.  Y.  251 ;   Wood  Mowing  &c.  Co.  v.  Qaertner,  56  Mich.  453 ;   Bradahaw 


504  INTERPRETATION  OF  CONTRACT.  [Pakt  FV. 

THUESTON  V.  ARNOLD. 

43  IOWA,  43.  — 1876. 
[Reported  herein  at  p.  515.] 


6.   Explanation  of  terms. 
GANSON  et  al.    v.   MADIGAN. 

16  WISCONSIN,  144.  — 1862. 

Action  for  price  of  reaper.  Defense,  non-delivery.  Judg- 
ment for  defendant.     Plaintiffs  appeal. 

Defendant  ordered  of  plaintiffs  in  writing  a  reaper,  warranted 
f**to  be  capable,  with  one  man  and  a  good  team,  of  cutting  and 
I  raking  off  and  laying  in  gavels  for  binding,  from  twelve  to  twenty 
/acres  of  grain  in  a  day."  Defendant  was  allowed  to  testify 
against  plaintiffs'  objection  that  the  agent  said  "one  span  of 
horses  "  such  as  defendant's  would  do  the  work,  and  another 
witness  (Gunn)  was  also  allowed  to  testify  to  the  effect  that  in  a 
sale  to  him  the  agent  said  two  horses  would  do  the  work.  The 
evidence  went  to  establish  that  the  machine  plaintiffs  allege 
they  tendered  to  defendant  required  four  horses  to  run  it. 

Dixon,  C.  J.  .  .  .  The  word  "team,"  as  used  in  the  contract, 
is  of  doubtful  signification.  It  may  mean  horses,  mules,  or  oxen, 
and  two,  four,  six,  or  even  more  of  either  kind  of  beasts.  We 
look  upon  the  contract  and  cannot  say  what  it  is.  And  yet  we 
know  very  well  that  the  parties  had  some  definite  purpose  in 
using  the  word.  The  trouble  is  not  that  the  word  is  insensible, 
and  has  no  settled  meaning,  but  that  it  at  the  same  time  admits 
of  several  interpretations,  according  to  the  subject  matter  in 
contemplation  at  the  time.  It  is  an  uncertainty  arising  from  the 
indefinite  and  equivocal  meaning  of  the  word,  when  an  interpre- 
tation is  attempted  without  the  aid  of  surrounding  circumstances. 
It  appears  on  the  face  of  the  instrument,  and  is  in  reality  a 

IV.  Combs,  102  m.  428 ;  Sayre  v.  Wilson,  86  Ala.  151  ;  Greenaicalt  v.  Kohne, 
86  Pa.  St.  369.  For  the  special  rule  applicable  to  deeds,  see  Green  v.  Batson^ 
71  Wis.  64. 


Chap.  I.  §  3.]  RULES  RELATING  TO  EVIDENCE.  505 

patent  ambiguity.  The  question  is,  can  extrinsic  evidence  be 
received  to  explain  it?  We  think  it  can.  There  is  undoubtedly 
some  confusion  in  the  authorities  upon  this  subject,  especially  if 
we  look  to  the  earlier  cases /but  the  later  decisions  seem  to  be 
more  uniform.^  As  observed  by  Chancellor  Desaussure,  in  Dupree 
V.  McDonald  (4  Des.  209),  the  great  distinction  of  ambiguitas 
IcUens,  in  which  parol  evidence  has  been  more  freely  received, 
and  ambiguitas  patens,  in  which  it  has  been  more  cautiously 
received,  has  not  been  sufficient  to  guide  the  minds  of  the  judges 
with  unerring  correctness;  some  of  the  later  cases  show  that 
there  is  a  middle  ground,  furnishing  circumstances  of  extreme 
difficulty.  Judge  Story  was  of  opinion  (Peisch  v.  Dickson,  1 
Mason,  11)  that  there  was  an  intermediate  class  of  cases,  partak- 
ing of  the  nature  both  of.  patent  and  latent  ambiguities,  and 
comprising  those  instances  where  the  words  are  equivocal,  but 
yet  admit  of  precise  and  definite  application  by  resorting  to  the 
circumstances  under  which  the  instrument  was  made,  in  which 
parol  testimony  was  admissible.  As  an  example,  he  put  the  case 
of  a  party  assigning  his  freight  in  a  particular  ship  by  contract 
in  writing;  saying  that  parol  evidence  of  the  circumstances 
attending  the  transaction  would  be  admissible  to  ascertain  whether 
the  word  "  freight "  referred  to  the  goods  on  board  of  the  ship,  or 
an  interest  in  the  earnings  of  the  ship.  This  distinction  seems 
to  be  fully  sustained  by  the  later  authorities,  and  we  can  discover 
no  objection  to  it  on  principle.  Reay  v.  Richardson,  2  C,  M. 
&  R.  422;  Hall  v.  Davis,  36  N".  H.  569;  Emery  v.  Webster,  42 
Maine,  204;  Baldwin  v.  Carter,  17  Ct.  201;  Drake  v.  Ooree,  22 
Ala.  409;  Cowles  v.  Garrett,  30  Ala.  348;  Waterman  v.  Johnson, 
13  Pick.  261;  Mechs.'  Bank  v.  Bayik  of  Columbia,  5  Wheat.  326^ 
Jennings  v.  Sherwood,  8  Ct.  122;  1  Greenl.  Ev.,  §§  286,  287, 
and  288. 

The  general  rule  is  well  stated  by  the  Supreme  Court  of  New 
Hampshire,  in  Hall  v.  Davis,  as  follows : 

"  As  all  written  instruments  are  to  be  interpreted  according  to  their 
subject  matter,  and  such  construction  given  them  as  will  carry  out  the 
intention  of  the  parties,  whenever  it  is  legally  possible  to  do  so,  consist- 
ently with  the  language  of  the  instruments  themselves,  parol  or  verbal 
testimony  may  be  resorted  to,  to  ascertain  the  nature  and  qualities  of  the 


506  INTERPRETATION  OF  CONTRACT.  [Pabt  TV. 

subject  matter  of  those  instruments,  to  explain  the  circumstances  sur- 
rounding the  parties,  and  to  explain  the  instruments  themselves  by  show- 
ing the  situation  of  the  parties  in  all  their  relations  to  persons  and  things 
around  them.  Thus  if  the  language  of  the  instrument  is  applicable  to 
several  persons,  to  several  parcels  of  land,  to  several  species  of  goods,  to 
several  monuments,  boundaries  or  lines,  to  several  writings,  or  the  terms 
be  vague  and  general,  or  have  divers  meanings,  in  all  these  and  the  like 
cases,  parol  evidence  is  admissible  of  any  extrinsic  circumstances  tending 
to  show  what  person  or  persons,  or  what  things,  were  intended  by  the 
party,  or  to  ascertain  his  meaning  in  any  other  respect ;  and  this  without 
any  infringement  of  the  general  rule,  which  only  excludes  parol  evidence 
of  other  language,  declaring  the  meaning  of  the  parties,  than  that  which 
is  contained  in  the  instrument  itself." 

If  evidence  of  surrounding  facts  and  circumstances  is  admitted 
to  explain  the  sense  in  which  the  words  were  used,  certainly- 
proof  of  the  declarations  of  the  parties,  made  at  the  time  of  their 
"understanding  of  them,  ought  not  to  be  excluded.  And  so  it  was 
held  in  several  of  the  cases  above  cited.  2  C,  M.  &  R.  422;  42 
Maine,  204;  13  Pick.  261.  Such  declarations,  if  satisfactorily- 
established,  would  seem  to  be  stronger  and  more  conclusive  evi- 
dence of  the  intention  of  the  parties  than  proof  of  facts  and 
circumstances,  since  they  come  more  nearly  to  direct  evidence 
than  any  to  be  obtained,  whilst  the  other  is  but  circumstantial. 
And  though  in  general  the  construction  of  a  written  instrument 
is  a  matter  of  law  for  the  court  —  the  meaning  to  be  collected 
from  the  instrument  itself;  yet,  where  the  meaning  is  to  be 
judged  of  by  extrinsic  evidence,  the  construction  is  usually  a 
question  for  the  jury.  Jennings  v.  Sherwood,  and  other  cases 
above.  The  circuit  judge  was  therefore  right  in  receiving  parol 
evidence  to  ascertain  the  sense  in  which  the  word  was  used  by 
the  parties,  and  in  submitting  that  question  to  the  decision  of 
the  jury. 

But  he  was  clearly  wrong  in  receiving  evidence  of  the  state- 
ments of  the  plaintiff's  agent  to  the  witness  Gunn,  at  the  time  of 
making  the  contract  with  him.  The  occasions  were  different  — 
the  two  contracts  entirely  disconnected,  and  though  both  con- 
cerned a  machine  of  the  same  pattern  and  manufacture,  yet  what 
was  said  in  the  one  case  was  not  a  part  of  the  transaction  in  the 
other.  It  was  no  part  of  the  res  gestae.  If  the  agent  Chase,  in 
negotiating  with  Gunn,  had  made  an  admission  of  his  represen- 


Chap.  I.  §  3.]  RULES  RELATING  TO  EVIDENCE.  507 

tations  to  the  plaintiff,  evidence  of  such  admission  could  not 
have  been  received.  Mil.  and  Miss.  R.  R.  Go.  v.  Finney,  10  Wis. 
388.  It  would  be  going  much  too  far,  were  we  to  hold  that  it 
was  proper  to  give  the  jury  the  agent's  statement  to  Gunn,  as 
evidence  tending  to  prove  that  a  similar  statement  was  made  to 
the  plaintiff.  If  it  has  any  such  tendency,  it  is  so  remote  that 
the  law  cannot  lay  hold  of  and  apply  it. 

The  question  then  comes  up,  must  the  judgment,  for  this 
reason,  be  reversed?  The  defendant's  counsel  insist  not  —  that 
the  evidence  before  the  jury  was  sufficient  without  this,  and  if  it 
had  been  rejected,  the  verdict  must  have  been  the  same.  We 
are  inclined  to  take  the  same  view.  The  defendant's  testimony 
was  clear  and  positive  as  to  the  kind  of  team  —  that  the  agent 
said  "one  span  of  horses"  would  work  the  machine  up  to  the 
warranty.  In  this  he  was  not  contradicted,  but  rather  cor- 
roborated by  the  agent,  who  was  himself  upon  the  stand.  We 
would  naturally  expect,  if  the  fact  had  been  otherwise,  the  agent 
would  have  said  so.  On  the  other  hand,  he  testifies  very  frankly 
that  the  defendant  said  he  had  but  one  team;  that  he  told  him 
one  good  team  would  work  the  machine.  The  admission  of  the 
improper  evidence  could  not,  therefore,  have  affected  the  finding 
•of  the  jury  upon  this  point;  and  consequently  the  plaintiffs  were 
not  prejudiced  by  it. 

We  can  hardly  believe  that  the  argument  of  the  plaintiff's 
counsel  upon  the  construction  of  the  warranty,  that  it  referred  to 
the  capacity  of  the  machine  without  regard  to  the  kind  of  team 
employed,  and  was  satisfied,  if,  under  any  circumstances,  and 
with  any  number  of  horses,  it  could  be  made  to  perform  as  alleged, 
•was  urged  with  any  real  hope  of  success.  Such  a  construction 
would  be  directly  opposed  to  the  manifest  intention  of  the 
parties. 

The  jury,  upon  proper  evidence,  and  under  proper  instructions 
having  found  that  the  machine  delivered  at  Milwaukee  was  not 
such  as  the  contract  called  for,  the  judgment  upon  their  verdict 
must  be  affirmed.  Ordered  accordingly.^ 

1  That  parol  evidence  may  be  introduced  to  identify  a  person  named  in  an 
instrument,  see  Andrews  v.  Dyer.  81  Me.  104. 


608  INTERPRETATION  OF  CONTRACT.  [Part  IV. 

c.   Usages  of  trade. 
SOUTIER  V.   KELLEEMAN. 

18  MISSOURI,  509.  — 1853. 

Gamble,  J.  The  plaintiff  alleges  that  he  bought  of  the 
defendant  (Kellerman)  4000  shingles,  and  that  he  received  eight 
bundles  or  packs,  which  only  contained  2500,  and  having  paid  for 
4000  brought  this  suit  to  recover  the  value  of  the  number 
I  deficient.  The  defense  made  by  Kellerman  was,  that  by  the 
custom  of  the  lumber  trade,  two  packs  of  a  certain  size  are 
regarded  as  a  thousand  shingles,  and  are  always  bought  and  sold 
as  such,  without  any  count  of  the  number,  and  that  the  eight 
packs  delivered  to  Soutier  were,  according  to  such  custom, 
properly  reckoned  as  four  thousand  shingles. 

1.  The  defendant  asked  the  court  below  to  declare  the  law  in 
relation  to  the  eilect  of  the  usage  of  the  trade,  and  for  that  pur- 
pose presented  two  instructions,  which  the  court  refused.  As 
this  was  a  case  brought  into  the  court  by  appeal  from  a  justice  of 
the  peace,  the  code  of  practice,  which  is  not  applicable  to  pro- 
ceedings before  a  justice,  is  not  applicable  to  the  trial  before  the 
law  commissioner  on  appeal.  Such  case  is  to  be  tried  on  the 
merits  de  novo,  and  the  practice  formerly  prevailing,  in  trials  by 
the  court  without  a  jury,  of  asking  declarations  of  the  law  is,  in 
such  cases,  still  to  be  pursued. 

2.  The  defendant  asked  the  court  to  declare  the  law  as  fol- 
lows :  (1)  That  if  the  shingles  sold  to  the  plaintiff  were  in  ordi- 
nary sized  packs,  and  that  the  price  paid  was  a  reasonable  price 
for  such  kinds  of  packs,  and  that  such  packs  are,  by  common 
custom,  sold  two  for  a  thousand,  then  the  plaintiff  is  not  entitled 
to  recover.  (2)  If  the  common  custom  of  the  lumber  trade  is  to 
sell  two  bunches  of  shingles  as  a  thousand,  without  regard  to 
actual  count,  then  the  plaintiff  must  be  presumed  to  have  had 
notice  of  such  general  custom,  and  to  have  purchased  accordingly. 
The  court  refused  to  make  these  declarations  of  the  law,  and,  on 
the  contrary,  declared :  "  That  if  the  contract  was  at  so  much  per 
thousand,  and  not  so  much  per  bundle,  and  that  no  express  agree- 
ment was  entered  into  that  two  bundles  should  represent  a  thou- 


Chap.  I.  §  3.]      RULES  RELATING  TO  EVIDENCE.  609 

sand,  then  the  defendant  must  deliver  the  four  thousand,  or  else 
account  to  the  plaintiff  for  their  value." 

The  usage  of  a  particular  trade  is  evidence  from  which  the 
intention  and  agreement  of  the  parties  may  be  implied;  and, 
although  it  cannot  control  an  express  contract,  made  in  such 
terms  as  to  be  entirely  inconsistent  with  it,  yet,  in  express  con- 
tracts, the  terms  employed  may  have  their  true  meaning  and  force 
best  understood  by  reference  to  such  usage.  Evidence  of  such  / 
usage  is  admitted,  not  to  vaiy  the  terms  of  an  express  contract!^ 
or  to  change  its  obligation,  but  to  determine  the  meaning  and 
obligation  of  the  contract  as  made.  The  usage  must  appear  to  be 
so  general  and  well  established,  that  knowledge  of  it  may  be 
presumed  to  exist  among  those  dealing  in  the  business  to  which 
it  applies,  so  that  the  contract  of  the  parties  may  be  taken  to 
have  been  made  with  reference  to  it.  In  this  country,  many 
articles  which  are  in  terms  sold  by  the  bushel  (a  dry  measure, 
containing  eight  gallons)  are,  in  fact,  sold  by  weight;  the  bushel 
being  understood  to  mean  a  certain  number  of  pounds,  and  the 
number  of  pounds  differing  in  different  articles,  as  salt,  wheat, 
etc.  When  such  custom  becomes  general  and  well  established, 
so  as  to  be  known  to  the  community,  it  is  obvious  that  a  contract 
for  a  given  number  of  bushels  must  mean  the  bushel  as  ascer- 
tained by  weight,  whether  in  fact  the  number  of  pounds  of  the 
article  sold  would  measure  more  or  less  than  the  real  bushel. 
The  rule  here  stated  is  laid  down  with  great  distinctness,  in 
3  Starkie's  Ev.  1033,  and  applied  in  Smith  v.  Wilso7i  (3  Barn.  & 
Adolph.  728)  to  a  case  where  1000  rabbits  was  held  to  mean  1200. 

In  the  present  case,  there  was  evidence  that  a  general  custom 
prevailed  in  the  lumber  trade  of  estimating  two  packs  of  shingles, 
of  certain  dimensions,  as  a  thousand  shingles,  without  reference 
to  the  number  of  pieces  in  the  pack.  \  If  such  was  the  usage  of 
the  trade,  so  general^and  well  establisned  that  those  buying  and 
selling  might  be  presumed  to  deal  in  reference  to  it,  there  does 
not  appear  to  have  been  any  such  contract  shown  in  this  case  as 
would  prevent  the  \isage  from  applying.  The  law  commissioner 
seems  to  have  thought  that  the  defendant  could  not  escape  from 
liability  "  if  the  contract  was  at  so  much  per  thousand  "  unless 
there  was  "  an  express  agreement  that  two  bundles  should  repre- 


510  INTERPRETATION  OF  CONTRACT.  [Part  IV. 

sent  a  thousand."  This  was  an  incorrect  statement  of  the  law, 
in  a  case  where  evidence  was  given  of  a  general  usage,  that  a 
thousand  shingles  meant  two  packs  of  certain  dimensions. 
Whether  there  was  as  full  evidence  of  the  usage  given  as  ought 
to  have  been  given,  is  not  a  question  upon  which  we  pass,  but 
there  was  evidence  of  the  usage  upon  which  the  party  was  entitled 
to  have  the  law  differently  declared,  if  the  evidence  proved  the 
usage  as  general,  well  established,  and  known,  so  that  contracts 
might  be  presumed  to  be  made  with  reference  to  it.  It  was  not 
necessary  that  the  defendant  should  show  an  express  agreement 
that  two  bundles  should  represent  a  thousand. 

The  judgment  is  reversed,  with  the  concurrence  of  the  other 
judges,  and  the  cause  remanded.^ 

1  Cf.  Sweeney  v.  Thomason,  9  Lea  (Tenn.),  359.    See  also  Walls  v.  Bailey, 
49  N.  Y.  464  ;  Hubble  v.  Cole,  86  Va.  87. 


Chap.  U.  §  1.]       RULES  RELATING  TO  CO>STRUCTION.  611 


CHAPTER   II. 

RULES  RELATING  TO  CONSTRUCTION. 

§  1.    General  rules. 

REED  V.  INSURANCE   CO. 

96  UNITED  STATES,  23.  — 1877. 

Appeal  from  a  decree  of  the  Circuit  Court  of  the  United  States 
for  the  District  of  Maryland,  affirming  a  decree  of  the  District 
Court  dismissing_a  libel. 

Mr.  Justice  Bradley.  This  is  a  cause  of  contract,  civil  and 
maritime,  commenced  by  a  libel  in  personam  by  Samuel  G. 
Reed,  the  appellant,  against  the  Merchants'  Mutual  Insurance 
Company  of  Baltimore,  the  appellee,  to  recover  $5000,  the  amount 
insured  by  the  latter  on  the  ship  Minnehaha,  belonging  to  the 
I  libellant.  The  policy  was  dated  the  fourteenth  day  of  January, 
'1868,  and  insured  said  ship  in  the  amount  named,  lost  or  not  lost, 
at  and  from  Honolulu,  via  Baker's  Island,  to  a  port  of  discharge 
in  the  United  States  not  east  of  Boston,  with  liberty  to  use 
Hampton  Roads  for  orders,  "the  risk  to  be  suspended  while  ves-/ 
sel  is  at  Baker's  Island  loading."  The  ship  was  lost  at  Baker's 
Island,  where  she  had  gone  for  the  purpose  of  loading,  on  the 
third  day  of  Deceniber,  1868.  The  defense  was  that  the  loss 
occurred  whilst  the  risk  was  suspended  under  the  clause  above 
quoted;  also  laches  by  reason  of  the  delay  in  commencing  suit, 
being  more  than  four  years  after  the  cause  of  action  accrued. 

This  case,  upon  the  merits,  depends  solely  upon  the  construc- 
tion to  be  given  to  the  clause  in  the  policy  before  referred  to, 
namely,  "the  risk  to  be- suspended  while  vessel  is  at  Baker's 
^Island  loading;"  and  turns  upon  the  point  whether  the  clause 
means,  while  the  vessel  is  at  Baker's  Island  for  the  purpose  of 
loading,  or  while  it  is  at  said  island  actitally  loading.      If  it 


512  INTERPRETATION  OF  CONTRACT.  [Pabt  IV. 

means  the  former,  the  company  is  not  liable ;  if  the  latter,  it  is 
liable. 

A  strictly  literal  construction  would  favor  the  latter  meaning. 
But  a  rigid  adherence  to  the  letter  often  leads  to  erroneous 
results,  and  misinterprets  the  meaning  of  the  parties.  That  such 
was  not  the  sense  in  which  the  parties  in  this  case  used  the  words 
in  question  is  manifest,  we  think,  from  all  the  circumstances  of 
the  case.  Although  a  written  agreement  cannot  be  varied  (by 
addition  or  subtraction)  by  proof  of  the  circumstances  out  of 
which  it  grew  and  which  surrounded  its  adoption,  yet  such  cir- 
cumstances are  constantly  resorted  to  for  the  purpose  of  ascertain- 
ing the  subject  matter  and  the  standpoint  of  the  parties  in 
relation  thereto.  Without  some  knowledge  derived  from  such 
evidence,  it  would  be  impossible  to  comprehend  the  meaning  of 
an  instrument,  or  the  effect  to  be  given  to  the  words  of  which  it 
is  composed.  This  preliminary  knowledge  is  as  indispensable  as 
that  of  the  language  in  which  the  instrument  is  Avritten.  A 
reference  to  the  actual  condition  of  things  at  the  time,  as  they 
appeared  to  the  parties  themselves,  is  often  necessary  to  prevent 
the  court,  in  construing  their  language,  from  falling  into  mis- 
takes and  even  absurdities.  On  this  subject  Professor  Green- 
leaf  says : 

"  The  writing,  it  is  true,  may  be  read  by  the  light  of  surrounding  cir- 
cumstances, in  order  more  perfectly  to  understand  the  intent  and  meaning 
of  the  parties;  but,  as  they  have  constituted  the  writing  to  be  the  only 
outward  and  visible  expression  of  their  meaning,  no  other  words  are  to 
be  added  to  it,  or  substituted  in  its  stead.  The  duty  of  the  courts  in 
such  cases  is  to  ascertain,  not  what  the  parties  may  have  secratl^ 
inie»ded,  as  contradistinguished  from  what  their  words  express,  bub 
what  is  the  meaning  of  the  words  they  have  used."  1  Greeni  Ev,, 
sec.  277. 

Mr.  Taylor  uses  language  of  similar  purport.     He  says : 

"  Whatever  be  the  nature  of  the  document  under  review,  the  object  is 
to  discover  the  intention  of  the  writer  as  evidenced  by  the  words  he  has 
used ;  and,  in  order  to  do  this,  the  judge  must  put  himself  in  the  writer's 
place,  and  then  see  how  the  terms  of  the  instrument  affect  the  property 
or  subject  matter.  With  this  view,  extrinsic  evidence  must  be  admissible 
of  all  the  circumstances  surrounding  the  author  of  the  instrument." 
Tavlor,  Ev.,  sec.  1082. 


Chap.  II.  §  1.]       RULES  RELATING  TO  CONSTRUCTION.  513 

Again  he  says: 

"  It  may,  and  indeed  it  often  does,  happen,  that,  in  consequence  of  the 
surrounding  circumstances  being  proved  in  evidence,  the  courts  give  to 
the  instrument,  thus  relatively  considered,  an  interpretation  very  differ- 
ent from  what  it  would  have  received  had  it  been  considered  in  the 
abstract.  But  this  is  only  just  and  proper ;  since  the  effect  of  the  evi- 
dence is  not  to  vary  the  language  employed,  but  merely  to  explain  the 
aense  in  which  the  writer  understood  it."    Id.,  sec.  1085. 

See  Thorington  v.  Smith,  8  Wall.  1,  and  remarks  of  Mr.  Justice 
Strong  in  Maryland  v.  Railroad  Company,  22  Id.  105. 

The  principles  announced  in  these  quotations,  with  the  limita- 
tions and  cautions  with  which  they  are  accompanied,  seem  to  us 
indisputable ;  and  availing  ourselves  of  the  light  of  the  surround- 
ing circumstances  in  this  case,  as  they  appeared,  or  must  be 
supposed  to  have  appeared,  to  the  parties  at  the  time  of  making 
the  contract,  we  cannot  doubt  that  the  meaning  of  the  words 
which  are  presented  for  our  consideration  is  that  the  risk  was  to 
be  suspended  while  the  vessel  was  at  Baker's  Island  for  the  pur- 
pose of  loading,  whether  actually  engaged  in  the  process  of  loading 
or  not.  Taking  this  clause  in  absolute  literality,  the  risk  would 
only  be  suspended  when  loading  was  actually  going  on.  It 
would  revive  at  any  time  after  the  loading  was  commenced,  if  it 
had  to  be  discontinued  by  stress  of  weather,  or  any  other  cause. 
It  would  even  revive  at  night,  when  the  men  were  not  at  work. 
This  could  not  have  been  the  intent  of  the  parties.  It  could  not 
have  been  what  they  meant  by  the  words  "while  vessel  is  at 
Baker's  Island  loading."  It  was  the  place,  its  exposure,  its 
unfavorable  moorage,  which  the  insurance  companies  had  to  fear, 
and  the  risk  of  which  they  desired  to  avoid.  The  whole  reason 
of  the  thing  and  the  object  in  view  point  to  the  intent  of  protect- 
ing themselves  whilst  the  vessel  was  in  that  exposed  place  for 
the  purpose  referred  to,  not  merely  to  protect  themselves  whilst 
loading  was  actually  going  on.  Her  visit  to  the  island  was  only 
for  the  purpose  of  loading;  as  between  the  contracting  parties, 
she  had  no  right  to  be  there  for  any  other  purpose ;  and,  suppos- 
ing that  they  intended  that  the  risk  should  be  suspended  whilst 
she  was  there  for  that  purpose,  it  would  not  be  an  unnatural 
form  of  expression  to  say,  "  the  risk  to  be  suspended  while  vessel 


61-4  INTERPRETATION  OF  CONTRACT.  [Part  IV. 

is  at  Baker's  Island  loading."  And  we  think  that  no  violence  is 
done  to  the  language  used,  to  give  it  the  sense  which  all  the  cir- 
cumstances of  the  case  indicate  that  it  must  have  had  in  the 
minds  of  the  parties. 

If  we  are  right  in  this  construction  of  the  contract,  there  can 
be  no  uncertainty  as  to  its  effect  upon  the  liability  of  the  under- 
writers. The  loss  clearly  accrued  at  a  time  when,  by  the  terms 
of  the  policy,  the  risk  \va,9  suspended.  The  ship  sailed  in  ballast 
from  Honolulu  on  or  about  the  7th  of  November,  1867,  and 
arrived  at  Baker's  Island  on  the  afternoon  of  the  twentieth  day 
of  November,  1867.  She  came  to  her  mooring  in  safety,  and  her 
sails  were  furled,  shortly  after  which  a  heavy  gale  and  heavy 
surf  arose.  The  gale  and  surf  continued  with  violence  until  the 
3d  of  December,  1867,  when  the  ship  parted  her  moorings,  and 
was  totally  wrecked  and  lost.  At  no  time  after  her  arrival  at 
Baker's  Island  was  it  possible  to  discharge  ballast  to  receive 
cargo  or  to  commence  the  progress  of  loading.  The  violence 
of  the  winds,  current,  and  waves,  and  their  adverse  course  and 
direction,  prevented  the  ship  from  slipping  her  cables  and  getting 
to  sea,  or  otherwise  escaping  the  perils  that  surrounded  her. 

These  facts  are  indisputable;  and  they  show  that,  when  the 
loss  occurred,  the  vessel  was  at  Baker's  Island  for  the  purpose  of 
loading.  That  the  process  of  loading  had  not  actually  com- 
menced is  of  no  consequence.  The  suspension  of  the  risk  com- 
menced as  soon  as  the  vessel  arrived  at  the  island  and  was  safely 
moored  in  her  proper  station  for  loading. 

The  appellee,  as  a  further  defense,  set  up  laches  in  bringing 
suit.  The  libel  was  not  filed  until  more  than  four  years  had 
elapsed  after  the  cause  of  action  had  accrued.  The  statute  of 
limitations  of  Maryland  requires  actions  of  account,  assumpsit, 
on  the  case,  etc.,  to  be  brought  within  three  years;  and  the 
counsel  for  the  appellee  insists  that  by  analogy  to  this  statute 
the  admiralty  court,  having  concurrent  jurisdiction  with  the 
state  courts  in  this  case,  should  apply  the  same  rule.  We  had 
occasion,  in  the  case  of  The  Key  City  (14  Wall.  653),  to  explain 
the  principles  by  which  courts  of  admiralty  are  governed  when 
laches  in  bringing  suit  is  urged  as  an  exception  in  cases  cognizable 
therein.     In  view  of  the  construction  which  we  have  given  t©  the 


Chap.  II.  §  2.]       RULES  RELATING  TO  CONSTRUCTION.  516 

contract  in  this  case,  it  is  not  necessary  to  pass  upon  the  precise 

question  now  raised  by  the  appellee. 

It  is  also  unnecessary  to  examine  other  questions  which  were 

mooted  on  the  argument. 

Decree  affirmed.^ 


§  2.  Rules  of  law  and  equity  as  to  time  and  penalties.  j 

THURSTOX  V.    ARNOLD. 

43  IOWA,  43.  — 1876. 

(^ Action  in  equity  to  compel  speoiiic  pgrformance.     Ijudgment 
for  defendant.     Plaintiff  appeals. 

Defendant  agreed  to  convey  his  farm  to  plaintiff  in  consider- 
ation that  the  plaintiff  would  pay  $1200  on  or  before  September 
2,  1872,  and  $300  on  taking  possession,  and  convey  or  cause  to- 
be  conveyed  to  defendant  certain  lands  in  Missouri. 

RoTHROCK,  J.  1.  We  have  carefully  read  and  considered  the 
evidence  in  the  case.  It  is  voluminous,  and  the  review  of  it  here 
would  serve  no  useful  purpose.  We  believe  that  the  referee's 
findings  of  fact  are  fully  sustained  by  the  evidence.  It  is  perhaps 
proper  to  say  that  the  written  contract  by  its  terms  did  not  make  I 
time  as  of  its  essence,  but  provided  generally  that  the  $1200  was" 
to  be  paid  on  the  second  day  of  September,  1872.  The  plaintiff 
endeavored  to  show  that  there  was  a  subsequent  parol  extension 
of  time.  The  referee,  as  we  think,  properly  found  that  there 
was  no  such  extension,  but  that  defendant  insisted  on  a  compli- 
ance at  the  time  fixed,  and  that  his  situation  with  reference  to 
other  important  business  interests  required  that  the  payments 
should  be  promptly  made.  It  further  appears  that  the  contract 
on  plaintiff's  part  was  a  mere  speculation ;  that  he  did  not  have 
title  to  the  Missouri  land,  and  did  not  have  any  means  to  pay 
the  $1200,  and  relied  on  a  re-sale  of  defendant's  farm  at  an 
advance  to  pay  for  the  Missouri  land,  and  that  he  did  not  suc- 
ceed in  making  a  re-sale  by  the  time  fixed  for  performance,  but 

*  See  also  Davison  v.  Von  Lingen,  113  U.  S.  40,  ante,  p.  266  ;  Norrington 
V.  Wright,  115  U.  S.  188,  post,  p.  584;  Moore  v.  Ins.   Co.,  62  N.  H.  240,    ■ 
post,  p.  531. 


616  INTERPRETATION  OF  CONTRACT.  [Part  IV. 

afterwards,  by  taking  a  partner  in  the  speculation,  raised  the 
money  and  procured  a  deed,  and  tendered  performance  on  the 
17th  day  of  September,  1872;  which  tender  the  defendant 
refused.  These  are  the  important  features  of  the  case.  There 
are  many  other  facts  which  we  do  not  deem  it  necessary  to 
refer  to. 

Among  the  findings  of  the  referee  is  the  following : 

"  I  further  find  from  the  testimony  in  the  cause,  independent  of  what 
appears  on  the  face  of  the  written  contract  between  Thurston  and  Arnold, 
that  the  time  therein  fixed  for  payment  of  the  consideration  by  Thurston 

(to  Arnold  was  understood  and  intended  by  the  parties  to  be  'of  the 
essence  of  the  contract.'  I  am  of  opinion  that,  as  a  matter  of  law,  evi- 
dence extrinsic  to  the  written  contract  is  competent  to  prove  such  inten- 
tion and  understanding." 

(  Counsel  for  plaintiff  insist  that  extrinsic  evidence  is  not  com- 
Ipetent  for  such  purpose,  for  the  reason  that  it  varies  and  modi- 
/fies  the  terms  of  the  written  contract.  The  contract  provides  for 
'  the  payment  to  be  made  on  a  day  certain,  and  extrinsic  evidence, 
V  consisting  of  the  acts,  statements,  and  the  verbal  negotiations  of 
'the  parties,  showing  that  the  time  was  intended  to  be  essential, 
■does  not  contradict  or  vary  the  writing,  but  rather  confirms  it,  by 
\  showing  that  it  means  just  what  its  terms  provide.  1  Greenleaf 
""^^v.,  §  296;  3  Id.,  §  366,  and  cases  there  cited. 

Time  may  be  made  the  essence  of  the  contract  by  the  express 
stipulation  of  the  parties,  or  it  may  arise  by  implication  from 
the  very  nature  of  the  property,  or  the  avowed  objects  of  the 
seller  or  purchaser.  Taylor  v.  Longworth,  14  Pet.  172,  and  see 
also  Young  v.  Daniels,  2  Iowa,  126. 

Equity  will  not  ordinarily  regard  time  as  of  essence  of  the 
contract  in  a  sale  of  real  estate.  At  law  such  contracts  are 
treated  as  other  contracts,  and  in  order  to  maintain  an  action 
the  plaintiff  must  show  performance  or  readiness  to  perform  at 
the  time  fixed,  unless  performance  be  waived  by  the  other  party. 
Equity  presumes  that  the  time  named  in  the  contract  was  not 
intended  as  essential  by  parties.  This,  however,  is  such  a  pre- 
sumption as  may  be  rebutted  by  parol  evidence. 

2.  An  application  to  enforce  the  specific  performance  of  a 
contract  is  always  addressed  to  the  sound  discretion  of  the  chan- 


Chap.  II.  §  2.]       RULES  RELATING  TO  CONSTRUCTION.  il T 

cellor,  guided  and  governed  by  the  general  rules  and  principles 
of  equity  jurisprudence.  In  such  cases  relief  is  not  a  matter  of 
right  in  either  party,  but  it  is  granted  or  withheld  according  to 
the  circumstances  of  each  case  when  such  rules  or  principles  will 
not  furnish  any  exact  measure  of  justice  between  the  parties. 
If,  in  the  judgment  of  a  court  of  equity,  good  faith  and  justice 
between  the  parties  will  be  attained  by  enforcing  the  contract, 
the  failure  to  perform,  or  of  a  readiness  to  perform,  at  the  pre- 
cise time  fixed,  will  not  prevent  its  enforcement.  In  this  case, 
we  are  satisfied,  equity  will  be  better  subserved  by  denj-ing  spe- 
cific performance  than  by  granting  it;  and  these  considerations 
are  independent  of  any  question  as  to  the  right  of  defendant  to 
show  by  parol  evidence  that  time  was  intended  to  be  the  essence 
of  the  contract. 

The  evidence  satisfies  us  that  it  would  be  grossly  inequitable 
to  compel  defendant,  Arnold,  to  now  perform,  or  to  make  com- 
pensation for  inability  to  do  so,  finding,  as  we  do,  from  the  evi- 
dence, that  on  the  day  fixed  he  was  ready  and  willing  to  perform, 
and  was  prevented  from  doing  so  by  plaintiff's  default. 

Affirmed.^ 


STREEPER  V.    WILLIAMS. 

48  PENNSYLVANIA  STATE,  450.— 1865. 

Assumpsit  to  recover  damages  for  the  non-performance  of  a 
contract  to  purchase  plaintiff's  hotel. 

^  "It  is  a  general  principle  governing  the  construction  of  contracts  that 
stipulations,  as  to  the  time  of  their  performance,  are  not  necessarily  of  their 
essence  unless  it  clearly  appears  in  the  given  case  from  the  expressed  stipu- 
lations of  the  contract,  or  the  nature  of  its  subject  matter,  that  the  parties 
intended  performance  within  the  time  fixed  in  the  contract  to  be  a  condition 
precedent  to  its  enforcement,  and  where  the  intention  of  the  parties  does  not 
so  appear,  performance  shortly  after  the  time  limited  on  the  part  of  either 
party  will  not  justify  a  refusal  to  perform  by  the  party  aggrieved  ;  but  his 
only  remedy  will  be  an  action  or  counter-claim  for  the  damages  he  has  sus- 
tained from  the  breach  of  the  stipulations.  In  the  application  of  this  princi- 
ple to  the  cases  as  they  have  arisen,  in  the  promulgation  of  the  rules  naturally 
deduced  from  it,  and  in  the  assignment  of  the  various  cases  to  the  respective 
classes  in  which  the  stipulation  as  to  the  time  of  performance  is,  or  is  not, 
deemed  of  the  essence  of  the  contract,  the  controlling  consideration  has  been> 


618  INTERPRETATION  OF  CONTRACT.  [Pakt  IV. 

The  court  allowed  the  jury  to  find  the  actual  damage,  which 
hey  fixed  at  $50,  reserving  the  question  whether  judgment 
should  be  entered  for  that  amount  or  for  the  amount  of  $500 
fixed  as  a  "  forfeit "  in  the  contract.  Subsequently  the  court  en- 
tered judgment  for  $500,  the  amount  fixed  in  the  contract.  De- 
fendant appeals. 

Agnew,  J.  This  case  is  very  defectively  stated.  We  find, 
in  our  paper-book,  no  copy  of  the  bill  of  exceptions,  and  no  state- 
ment of  facts.  We  understand,  from  the  argument,  that  it  was 
a  case  of  total  failure  on  the  part  of  the  defendant,  and  we  infer, 
from  the  verdict  against  the  defendant,  that  the  plaintiff  must 
have  tendered  performance  on  his  part. 

Upon  these  facts  and  the  terms  of  the  agreement  we  must 
determine  whether  the  stipulated  sum  is  a  penalty,  or  liquidated 
damages.  Upon  no  question  have  courts  doubted  and  differed 
more.  It  is  unnecessary  to  examine  the  numerous  authorities  in 
detail,  for  they  are  neither  uniform  nor  consistent.  No  definite 
rule  to  determine  the  question  is  furnished  by  them,  each  being 
determined  more  in  direct  reference  to  its  own  facts  than  to  any 
general  rule.  In  the  earlier  cases,  the  courts  gave  more  weight 
to  the  language  of  the  clause  designating  the  sum  as  a  penalty  or 
as  liquidated  damages.     The  modern  authorities  attach  greater 

and  ought  to  be,  so  to  decide  and  classify  the  cases  that  unjust  penalties  may 
not  be  inflicted  or  unreasonable  damages  recovered.  .  .  .  The  cases  just 
referred  to  illustrate  two  well-settled  rules  of  law  which  have  been  deduced 
from  this  general  principle,  and  in  accordance  with  which  this  case  must  be 
determined.  They  are  :  In  contracts  of  merchants  for  the  sale  and  delivery, 
or  for  the  manufacture  and  sale,  of  marketable  commodities  a  statement 
descriptive  of  the  subject  matter  or  some  material  incident,  such  as  the  time 
of  shipment,  is  a  condition  precedent,  upon  the  failure  or  non-performance 
of  which  the  party  aggrieved  may  repudiate  the  whole  contract.  Nornngton 
v.  Wright,  115  U.  S.  188,  203  {post,  p.  584];  Cleveland  Rolling  Mill  v. 
Rhodes,  \i\  U.  S.  255,  261.  But  in  contracts  for  work  or  skill  and  the 
materials  upon  which  it  is  to  be  bestowed,  a  statement  fixing  the  time  of 
performance  of  the  contract  is  not  ordinarily  of  its  essence,  and  a  failure  to 
perform  within  the  time  stipulated  followed  by  substantial  performance  after 
a  short  delay  will  not  justify  the  aggrieved  party  in  repudiating  the  entire 
contract,  but  will  simply  give  him  his  action  for  damages  for  the  breach  of 
the  stipulation.  Tayloe  v.  Sandiford,  7  Wheat.  13,  17  ;  Hambly  v.  Dela- 
teare,  M.  A  V.  R.  Co.,  21  Fed.  Rep.  541,  544,  554,  557." —  Sanborn,  J.,  in 
Beck  <fec.  Co.  V.  Colorado  &c.  Co.,  10  U.  S.  App.  465.  See  also  O'Donnell 
v.  Leeman,  43  Me.  158,  ante,  p.  100. 


Chap.  II.  §  2.]       RULES  RELATING  TO  CONSTRUCTION.  619 

importance  to  the  meaning  and  intention  of  the  parties.  Yet  the 
intention  is  not  all -controlling,  for  in  some  cases  the  subject 
matter  and  surroundings  of  the  contract  will  control  the  inten- 
tion where  equity  absolutely  demands  it.  A  sum  expressly 
stipulated  as  liquidated  damages  will  be  relieved  from,  if  it  is 
obviously  to  secure  payment  of  another  sum  capable  of  being 
compensated  by  interest.  On  the  other  hand,  a  sum  denominated 
a  penalty,  or  forfeiture,  will  be  considered  liquidated  damages 
where  it  is  fixed  upon  by  the  parties  as  the  measure  of  the  dam- 
ages, because  the  nature  of  the  case,  the  uncertainty  of  the 
proof,  or  the  difficulties  of  reaching  the  damages  by  proof,  have 
induced  them  to  make  the  damages  a  subject  of  previous 
adjustment.  In  some  cases  the  magnitude  of  the  sum,  and  its 
proportion  to  the  probable  consequence  of  a  breach,  will  cause  it 
to  be  looked  upon  as  minatory  only.  Upon  the  whole,  the  only 
general  observation  we  can  make  is  that  in  each  case  we  must 
look  at  the  language  of  the  contract,  the  intention  of  the  parties 
as  gathered  from  all  its  provisions,  the  subject  of  the  contract 
and  its  surroundings,  the  ease  or  difficulty  of  measuring  the 
breach  in  damages,  and  the  sura  stipulated,  and  from  the  whole 
gather  the  view  which  good  conscience  and  equity  ought  to  take 
of  the  case.  Equity  lies  at  the  foundation  of  relief  in  the  case 
of  forfeiture  and  penalties,  and  hence  the  difficulty  of  reaching 
any  general  rule  to  govern  all  cases.  The  research  of  counsel 
has  furnished  us  with  many  authorities,  but  I  refer  to  the  fol- 
lowing only  as  containing  these  general  views :  Chase  v.  Allen, 
13  Gray,  42;  Sainter  v.  Ferguson,  7  C.  B.  716;  Chamberlain  v. 
Bagley,  11  N.  H.  234;  Gammon  v.  Hoioe,  2  Shep.  250;  Mead 
V.  Wlieeler,  13  N.  H.  351;  Main  v.  King,  10  Barb.  S.  C.  59; 
Niver  v.  Rossman,  18  Barb.  50;  Lampman  v.  Cochran,  19  Id. 
388;  Cothealv.  Talmage,  5  Seld.  551;  Duffy  v.  Shockey,  11  Ind. 
70;  Jaquith  v.  Hudson,  5  Mich.  123. 

The  agreement  in  this  case  is  a  contract  for  the  sale  of  a  hotel. 
The  plaintiff  agreed  to  make  a  clear  title  to  defendant  on  the 
first  day  of  April  following  its  date,  which  was  in  February,  and 
to  give  immediate  possession  of  the  bar-room  and  fixtures.  The 
defendant  was  to  pay  $3000  on  the  signing  of  the  deed  on  the 
Ist  of  April,  and  agreed  that  plaintiff  should  retain  possession 


620  INTERPRETATION   OF  CONTRACT.  [Pakt  IV. 

of  a  certain  part  of  the  property  four  weeks.  The  price  was  to 
be  $14,000,  but  no  time  was  fixed  for  the  payment  of  any  part 
except  the  $3000.  Then  came  the  clause  in  question:  "The 
parties  to  the  above  agreement  doth  severally  agree  to  forfeit  the 
sum  of  $500  —  say  five  hundred  dollars,  in  case  either  party  fail 
to  comply  with  the  terms  of  this  agreement."  The  first  feature 
striking  our  attention  is  the  great  disproportion  between  this 
sum  and  the  purchase  money,  or  even  the  portion  to  be  paid  on 
the  1st  of  April,  when  the  deed  was  to  be  made.  Clearly,  it 
was  not  intended  to  enforce  payment  of  the  purchase  money, 
or  its  first  instalment  only.  Nor  could  it  be  intended  to  protect 
the  defendant  against  a  failure  to  make  the  title  after  payment 
of  the  first  instalment.  This  leads  obviously  to  the  conclusion 
that  the  only  intention  of  stipulating  this  sum  was  to  protect 
against  a  total  failure  where  the  contract  was  abandoned.  If 
either  party  failed,  the  other  might  abandon  and  demand  the  sum 
stipulated  for  this  contingency.  Were  the  sum  adequate  in  mag- 
nitude to  compel  specific  performance,  we  might  conclude  it  was 
intended  as  a  penalty  only,  against  which  equity  would  relieve 
on  a  full  compliance  with  the  contract.  But  its  manifest  inade- 
quacy, as  compared  with  the  value  or  the  price  of  the  property, 
leaves  no  other  reasonable  conclusion  than  that  it  was  intended 
as  a  compensation  to  either  party,  when  the  other  wholly  aban- 
doned the  contract.  In  this  view,  the  parties  must  have  intended 
the  sum  as  liquidated  damages,  and  not  as  a  penalty. 

But  this  intention  might  not  alone  determine  the  equity,  and 
therefore  we  also  look  at  the  state  of  the  case  as  it  probably 
might  be  in  case  of  abandonment;  for,  if  the  damages  are  definite 
in  their  nature,  and  easily  to  be  ascertained,  it  might  be  uncon- 
scionable to  award  the  whole  sum  as  damages.  This  leads  to  a 
consideration  of  the  subject  matter,  and  the  terms  of  the  con- 
tract. The  property  is  a  hotel  —  the  plaintiff  describes  himself 
to  be  a  hotel-keeper,  and  he  contracts  to  deliver  immediate  pos- 
session of  a  part.  Now,  this  involves  the  breaking  up  of  his  busi- 
ness, the  purchase  or  lease  of  a  new  residence,  and  the  disposal 
of  furniture  needed  for  a  hotel,  but  probably  not  for  a  private 
family.  Relying  on  the  performance  of  the  defendant,  the  plain- 
tiff may  make  many  journeys  in  search  of  a  new  home,  encounter 


Chap.  II.  §2.]        RULES  RELATING  TO  CONSTRUCTION.  521 

difficulties  in  suiting  himself,  involve  himself  in  new  purchases, 
raise  large  sums  of  money,  and  in  many  ways  incur  heavy  losses 
and  expenses,  and  yet  he  may  be  iinable,  or  find  it  very  difficult, 
to  prove  their  extent.  So  the  defendant  might  contract  for  the 
sale  of  his  own  property,  purchase  furniture  and  liquors,  con- 
tract for  loans  of  money  to  perform  his  contract,  and  incur  lia- 
bilities, all  causing  him  losses  very  difficult  to  be  ascertained. 
Now  every  one  knows  how  difficult  it  is  to  reach  and  estimate 
the  real  losses  men  suffer  from  disappointment  iu  their  plans, 
and  many  of  the  subjects  of  loss  cannot  be  put  in  evidence.  An 
accurate  account  can  scarcely  be  stated  in  dollars  and  cents,  and 
yet  but  few,  if  asked  to  name  a  sum  for  a  total  abandonment  of 
such  a  contract,  would  be  willing  to  take  the  risk  much  lower 
than  at  the  sum  stipulated  here. 

From  all  these  circumstances,  added  to  the  intention  deduced 
from  the  contract,  we  conclude  that  the  parties  fixed  the  sum 
stipulated,  as  the  measure  of  the  damages  either  would  probably 
suffer  from  a  total  failure,  and  the  compensation  to  be  made 
therefor.  The  word  "forfeit,"  according  to  many  of  the  author- 
ities, is  therefore  outweighed  by  the  other  elements  of  interpre- 
tation, and  we  must  construe  it  as  meaning  "to  pay." 

But  we  are  told  that  the  jury  assessed  the  damages  at  $50  — 
one-tenth  of  the  stipulated  sum.  This  is  true,  but  it  does  not 
follow  they  had  no  difficulty  in  doing  so,  or  that  the  very  diffi- 
culty of  proving  and  making  the  proof  was  not  the  cause  of  so 
small  a  verdict.  It  establishes  only  that,  as  a  jury  must  find 
upon  the  evidence,  the  proof  was  not  sufficient  to  enable  them  to 
give  more.  But  it  does  not  detract  from  the  nature  of  the  case, 
or  explain  away  the  intention  gathered  from  the  contract. 

The  judgment  is  affirmed.^ 

1  See  also  Cotheal  v.  Talmage,  9  N.  Y.  551  ;  Lansing  v.  Dodd,  45  N.  J.  L. 
625 ;  Diamond  Match  Co.  v.  Boeber,  106  N.  Y.  473,  ante,  p.  362. 


Part  Y. 
DISCHARGE   OF   CONTRACT. 

CHAPTER  I. 

DISCHARGE    OF    CONTRACT   BY    AGREEMENT. 
§  1.    "Waiver. 

COLLYER  &  CO.   v.    MOULTON  et  al. 

9    RHODE    ISLAND,  90.  — 1868. 

Assumpsit.     Plea,  the  general  issue. 

Potter,  J.  The  plaintiffs  made  a  verbal  contract  with  the 
defendants,  then  partners,  to  build  a  machine.  The  work  was 
charged  as  fast  as  done,  and  the  materials  when  furnished.  After 
a  small  part  of  the  work  had  been  done,  the  firm  was  dissolved} 
and  the  defendant  Moulton,  the  same  day,  gave  notice  of  it  to  the 
plaintiffs,  and  told  them  he  could  be  no  longer  responsible  for 
the  machine.  The  defendant  Moulton  claims  that  the  plaintiffs 
released  him  and  agreed  to  look  to  the  other  partner  for  pay- 
ment ;  but  this  the  plaintiffs  deny.  The  plaintiffs  went  on  and 
completed  the  machine,  and  then  sued  Bromley  alone  for  his 
claim,  but  discontinued  the  suit,  and  now  sue  both  the  former 
partners,  the  writ  having  been  served  on  Moulton  only. 

Where  two  parties  contract,  one  to  do  a  particular  piece  of 
work  and  the  other  to  pay  for  it,  the  latter  may,  a^  any  time, 
countermand  the  completion  of  it,  and  in  such  •  case  the  former 
cannot  go  on  and  complete  the  work  and  claim  the  whole  price, 
but  will  be  entitled  only  to  pay  for  his  part  performance,  and  to 
be  compensated  for  his  loss  on  the  remainder  of  the  contract. 

622 


<!hap.  I.  §1.]  BY   AGREEMENT.  628 

Clark  V.  Marsiglia,  1  Denio,  317;  DurJcee  v.  Mott,  8  Barb.  S.  C. 
423;  Hosmer  v.  Wilson,  7  Michigan,  294, 

In  the  present  case,  the  two  defendants,  although  the  partner- 
ship was  dissolved,  still  remain  joint  contractors  so  far  as  the 
plaintiff  was  concerned;  and  we  think  that  either  of  them  had  a 
right  to  countermand  the  order  before  completion,  and  then  the 
joint  contractors  would  have  remained  liable'  as  before  stated. 
But  the  defendant  Moulton  claims  that  he  was  verbally  released 
by  the  plaintiffs  and  that  the  plaintiffs  agreed  to  look  to  the 
other  defendant,  Bromley,  alone  for  their  pay. 

There  is  some  apparent  inconsistency  in  the  language  used  in 
the  reports  and  text  writers,  as  to  the  manner  in  which  a  simple 
contract  may  be  annulled.  We  think  the  rule  is  that  so  long  and 
so  far  as  the  contract  remains  executory  and  before  breach, 
it  may  be  annulled  by  agreement  of  all  parties ;  but  that  when  it 
has  been  broken  and  a  right  of  action  has  accrued,  the  debt  or 
damages  can  only  be  released  for  a  consideration;  and  even 
30  far  as  it  remains  executory,  it  may  be  said  that  the  agreement 
to  annul  on  one  side  may  be  taken  as  the  consideration  for  the 
agreement  to  annul  on  the  other  side.  Dane,  5,  112;  Johnson  v. 
Reed,  9  Mass.  84;  Cummings  v.  Arnold,  3  Met.  486-9;  Richard- 
son V.  Hooper,  13  Pick.  446;  Blood  v.  Enos,  12  Vermont,  625. 

So  far,  therefore,  as  the  contract  in  the  present  case  remained 
unfinished  on  the  10th  of  February,  1865,  when  the  notice  was 
given  and  the  alleged  waiver  was  made,  we  may  consider,  eitheiT^^ 
that_JiIifi_j^ontract,jata6--ftaQlilled  or  waivfid  Vy  ""i^ftnt^^in  whicn 
case  (the  machine,  so  far  as  completed,  being  tendered  or  deliv- 
ered) the  plaintiff  could  claim  only  for  worliL_aad_materialsto 
that  date  without  further  damages, -^^or  that  the  work  was  coun- 
termanded by  the  defendant  Moulton,  without  the  assent  of  the 
plaintiffs,  in  which  case  the  defendant  would  be  liable  for  the 
part  performed  and  for  the  loss  on  the  part  unperformed. 

"We  consider  the  present  case  to  fall  under  the  first  head,  thj^^ 
notice  to,  and  declarations  and  conduct  of  the  plaintiffs  amount- 
ing to  a  waiver  of  the  fulfilment  of  the  contract  as  first  made, 
that  is,  to  a  release  of  the  defendant  Moulton  for  the  part  still 
unperformed. 

But  the  claim  for  payment  for  the  part  performed  stands,  as 


624  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

we  have  seen,  on  a  different  ground.  Was  there  any  agreement 
to  release  Moulton  from  liability  for  this,  i.e.  the  part  performed; 
and  if  so,  was  there  any  agreement  to  take  the  other  partner's 
individual  promise  in  lieu  of  the  promise  of  the  firm,  or  any- 
thing which  would  amount  to  a  consideration  for  the  release  of 
the  firm? 

If,  by  a  mutual  arrangement  between  the  plaintiff  Collyer  and 
the  two  defendants,  Moulton  had  been  released  from  his  liability 
for  the  work  already  done,  and  a  new  promise  made  by  Bromley, 
the  other  defendant,  to  pay  for  it,  this  would  have  been  a  valid 
release  for  a  valuable  consideration  —  one  debt  would  have  been 
substituted  for  the  other.      Thompson  v.  Percival,  o  B.  &  A.  925. 

But  we  cannot  find  sufficient  evidence  of  any  promise  on  the 
part  of  the  other  partner,  Bromley,  to  assume  the  liability;  and 
if  there  was  none,  then  the  release  of  liability  for  the  work 
already  done  was  without  consideration,  as  it  is  not  claimed  that 
there  was  any  other  consideration.  We  cannot  find,  however, 
any  count  in  the  declaration  upon  which,  upon  this  view  of  the 
case,  we  can  allow  for  anything  except  labor  done  before  February 
10th,  the  day  of  the  giving  of  the  notice. 

Judgment  for  plaintiffs  for  amount  so  found  due.* 


§  2.    Substituted  contract. 

McCREERY   et  al.  v.    DAY  et  al. 

119  NEW   YORK,   1.  — 1890. 

Action  to  recover  certain  sums  alleged  to  be  due  under  a  con- 
tract between  plaintiffs,  of  the  first  part,  and  C.  H.  Andrews, 
of  the  second  part,  and  C.  K.  Garrison,  defendants'  testator,  of 
the  third  part.  Judgment  for  defendants  on  the  pleadings. 
Affirmed  at  General  Term.     Plaintiffs  appeal. 

The  complaint  set  out  a  sealed  contract,  dated  March  2,  1882, 
by  which  plaintiffs  sold  to  Garrison  a  fourth  interest  in  a  con- 
tract for  the  construction  of  a  railroad  from  P.  to  A.,  through 
N.,  and  agreed  to  turn  over  to  Garrison  a  fourth  of  all  cash, 
bonds,  and  stocks  which  should  be  received  from  the  railroad 
1  See  also  Alden  v.  Thurber,  149  Mass.  271,  post,  p.  630. 


Chap.  I.  §  2.]  BY  AGREEMENT.  625 

company  as  payment  for  the  work.  Garrison  agreed  to  pay 
plaintiffs  for  the  work  already  done,  and  materi&,ls  furnished 
and  rights  acquired  up  to  the  date  of  the  contract,  the  sum  of 
$150,000,  and  pay  them  from  time  to  time  thereafter  one-fourth 
of  the  amounts  expended  by  them  in  the  further  construction  of 
the  road  under  the  contract.  The  action  is  for  the  amounts- 
so  expended  up  to  the  annulment  of  the  contract  and  for  in- 
terest during  the  time  Garrison  delayed  payment  of  the  sum  of 
$150,000. 

The  answer  set  up  that  on  April  13,  1882,  the  plaintiffs  and 
C.  H.  Andrews  sold  to  the  P.  &  W.  Ry.  a  fourth  interest  in  that 
portion  of  the  road  constructed  between  N.  &  A.,  for  $150,000, 
the  purchaser  agreeing  to  pay  for  all  work  done  up  to  that  date. 
On  November  6, 1882,  defendants'  testator  wrote  to  plaintiffs  and 
Andrews  saying  he  would  sign  the  papers  relative  to  the  comple- 
tion of  the  road  by  the  P.  &  W.  Ry.,  but  only  on  condition 
"that  I  am  not  to  pay  any  more  money  than  Mr.  Humphrey's 
Company  (the  P.  &  W.  Ry.)  pays,  as  provided  in  the  agreement 
you  made  with  him  April  thirteenth  —  that  is,  $150,000  and  one- 
fourth  of  the  cost  of  the  road  to  Newcastle  Junction  after  that 
date."  He  also  stated  that  he  no  longer  desired  any  interest  in 
the  road  from  N.  to  P.,  and  had  given  up  the  contract  of  March 
2d.  Afterwards,  and  in  compliance  with  the  terms  of  that  letter, 
the  plaintiffs,  with  the  said  C.  H.  Andrews  and  the  defendants' 
testator,  caused  an  unsealed  agreement,  signed  by  all  the  parties, 
to  be  indorsed  on  the  sealed  contract  of  March  2, 1882,  as  follows : 

"  It  is  agreed  by  the  parties  hereto  that  the  within  contract  is  annulled 
and  of  no  further  effect,  the  same  having  been  superseded  by  the  agree- 
ment and  arrangement  made  in  lieu  thereof,  as  embodied  in  the  letter  of 
C.  K.  Garrison  .  .  .  dated  November  6, 1882,  and  by  a  certain  agreement 
made  between  C.  H.  Andrews,  W.  C.  Andrews,  W.  McCreery,  James 
Gallery,  Solomon  Humphrey,  and  C.  K.  Garrison,  all  bearing  date  October 
25,  1882." 

The  agreement  last  referred  to  was  fully  carried  out  by  all  the 
parties.  An  order  was  made  requiring  plaintiffs  to  reply,  which 
they  did,  substantially  admitting  the  foregoing  averments  of  the 
answer. 

Andrews,  J.     The^ parties  by  their  agreement  indorsed  on  the 


526  DISCHARGE  OF  CONTRACT.  [Part  V. 

contract  of  March  2,  1882,  in  terms  annulled  that  contract  and 
declared  that  it  should  be  of  no  further  effect.  The  claim  that 
the  annulment  of  the  contract  did  not  discharge  Garrison's 
obligation  under  the  original  contract  to  pay  his  proportion  of 
expenditures  made  by  the  plaintiffs  for  the  construction  of  the 
Pittsburgh,  Youngstown,  and  Chicago  Railroad,  between  the  date 
of  the  contract  and  its  annulment,  depends  on  the  intention  to  be 
deduced  from  the  agreement,  of  annulment,  construed  in  light  of 
the  attending  circumstances.  Where  a  contract  is  rescinded 
while  in  the  course  of  performance,  any  claim  in  respect  of  per- 
formance, or  of  what  has  been  paid  or  received  thereon,  will 
ordinarily  "be  referred  to  the  agreement  of  rescission,  and  in 
general  no  such  claim  can  be  made  unless  expressly  or  impliedly 
reserved  upon  the  rescission."  Leake  on  Contracts,  788,  and 
cases  cited. 

The  agreement  annulling  the  original  contract  recites  that  the 
contract  had  been  "  superseded  by  agreements  and  arrangements 
made  in  lieu  thereof,"  embodied  in  Garrison's  letter  of  November 
6,  1882,  and  the  several  contracts  executed  by  the  parties  to  that 
contract,  and  others,  bearing  date  October  25,  1882.  In  ascer- 
taining the  scope  of  the  agreement  annulling  the  original  contract, 
the  letter  and  the  contracts  of  October  25,  1882,  are  to  be 
deemed  incorporated  into  the  agreement.  Construing  these 
several  writings  together,  they  plainly  show  that  the  parties 
intended  that  Garrison  should  be  discharged  from  all  liability 
under  his  contract  of  March  2,  1882,  for  any  expenditures  there- 
tofore made,  or  thereafter  to  be  made  in  constructing  the  line 
between  Pittsburgh  and  Newcastle  Junction.  The  letter  was 
written  after  Garrison  had  received  the  contracts  dated  October 
25,  1882,  for  execution,  and  declares  that  he  will  sign  them  on 
the  condition  and  understanding  that  he  is  not  to  pay  anything 
more  than  Mr.  tlumphrey's  company  pays,  under  the  plaintiffs' 
agreement  with  him  of  April  13,  1882,  "that  is,  S!150,000,  and 
one-fourth  of  the  cost  of  the  road  to  Newcastle  Junction,  after 
that  date."  The  agreement  with  Mr.  Humphrey,  of  April  13, 
1882,  provided  for  the  construction  of  the  part  of  the  line  of  the 
Pittsburgh,  Youngstown  and  Chicago  Railroad  between  New- 
castle Junction  and  Akron,  by  a  new  corporation  to  be  formed. 


Chap.  I.  §2.]  BY  AGREEMENT.  627 

and  that  Humphrey  should  pay -the  plaintiffs  $150,000  for 
expenditures  incurred  and  rights  acquired  on  that  branch  of  the 
road,  prior  to  the  making  of  the  contract,  and  also  one-fourth  of 
all  expenditures  thereafter  made  in  its  completion.  The  letter 
goes  on  to  state  that  the  agreement  with  Mr.  Humphrey  was  made 
"  after  consulting  with  me,  and,  as  it  insured  my  road  (Wheeling 
and  Lake  Erie  Railroad)  a  line  to  Pittsburgh,  I  was  ready  to 
assent  to  it  in  place  of  the  agreement  of  the  second  of  March, 
and  you  know  I  have  so  considered  it  since,  and  that  I  was  owner 
of  one-fourth  of  the  new  company,  all  previous  agreements 
between  us  being  superseded.  I  do  not  want  any  interest  in  the 
road  from  Newcastle  Junction  to  Pittsburgh.  I  will  pay  what- 
ever Mr.  Humphrey's  company  has  paid  on  the  agreement  of  the 
13th  April." 

The  clear  import  of  the  proposition  of  Mr.  Garrison  in  his  letter 
is,  that  he  would  sign  the  contracts  of  October  25,  1882,  provided 
he  should  be  placed  in  the  same  position  in  respect  to  the  enter- 
prise as  that  occupied  by  the  company  represented  by  Mr. 
Humphrey,  and  be  relieved  from  all  interest  in,  or  obligation  to 
contribute  to  the  construction  of  the  part  of  the  Pittsburgh, 
Youngstown  and  Chicago  Railroad  between  Pittsburgh  and  New- 
castle Junction.  Garrison,  thereafter,  executed  the  contracts  of 
October  25,  1882,  relating  to  the  construction  of  the  road  between 
Newcastle  Junction  and  Akron,  whereby  he  assumed  other  and 
different  obligations  from  those  he  had  assumed  by  his  contract 
with  the  plaintiffs  of  March  2,  1882. 

The  main  claim  in  the  action  is  to  recover  from  Garrison's 
estate,  under  the  contract  of  March  2,  1882,  for  a  share  of 
expenditures  made  by  the  plaintiffs  in  the  construction  of  the 
part  of  the  Pittsburgh,  Youngstown  and  Chicago  Railroad  between 
Pittsburgh  and  Newcastle  Junction,  after  the  date  of  that  con- 
tract, and  before  the  execution  of  the  annulment  agreement. 
The  agreement  annulling  the  prior  contract  is  supported  by  an 
adequate  consideration.  The  new  obligation  which  Garrison 
assumed  under  the  contracts  of  October  25,  1882,  was  alone  a 
sufficient  consideration.  City  of  Memphis  v.  Brown,  20  Wall. 
289.  There  was  a  consideration  also  in  the  mutual  agreement  of 
the  parties  to  the  prior  contract  (which  was  still  executory, 


628  DISCHARGE  OF  CONTRACT.  [Part  V. 

althougli  in  the  course  of  performance)  to  discharge  each  other 
from  reciprocal  obligations  thereunder  and  to  substitute  a  new 
and  different  agreement  in  place  thereof. 

The  contract  of  March  2,  1882,  is  sealed,  while  the  agreement 
annulling  it  is  unsealed.  Upon  this  fact  the  plaintiffs  make  a 
point,  founded  on  the  doctrine  of  the  common  law,  that  a  con- 
tract under  seal  cannot  be  dissolved  by  a  new  parol  executory 
agreement,  although  supported  by  a  good  and  valuable  considera- 
tion, **  for  every  contract  or  agreement  ought  to  be  dissolved  by 
matter  of  as  high  a  nature  as  the  first  deed."  Countess  of  Rut- 
land's Case,  Coke,  Pt.  V.,  25  b.  The  application  of  this  rule 
often  produced  great  inconvenience  and  injustice,  and  the  rule 
itself  has  been  overlaid  with  distinctions  invented  by  the  judges 
of  the  common  law  courts  to  escape  or  mitigate  its  rigor  in  par- 
ticular cases.  But  in  equity  the  form  of  the  new  agreement  is 
not  regarded,  and  under  the  recent  blending  of  the  jurisdiction 
of  law  and  equity  and  the  right  given  by  the  modern  rules  of 
procedure  in  this  country  and  in  England  to  interpose  equitable 
defenses  in  legal  actions,  the  common  law  rule  has  lost  much  of 
its  former  importance.  A  recent  English  writer,  referring  to  the 
effect  of  the  common  law  Procedure  Acts  in  England,  says :  "  The 
ancient  technical  rule  of  the  common  law,  that  a  contract  under 
seal  cannot  be  varied  or  discharged  by  a  parol  agreement,  is  thus 
practically  superseded."  Leake  on  Conti'acts,  802.  Courts  of 
equity  often  interfered  by  injunction  to  restrain  proceedings  at 
law  to  enforce  judgments,  covenants,  or  obligations  equitably 
discharged  by  transactions  of  which  courts  of  law  had  no  cogni- 
zance. 2  Sto.  Eq.,  §  1573.  It  is  a  necessary  consequence  of  our 
changed  system  of  procedure,  that  whatever  formerly  would  have 
constituted  a  good  ground  in  equity  for  restraining  the  enforce- 
ment of  a  covenant,  or  decreeing  its  discharge,  will  now  constitute 
a  good  equitable  defense  to  an  action  on  the  covenant  itself. 

It  was  one  of  the  subtle  distinctions  of  the  common  law  as  to 
the  discharge  of  covenants  by  matter  in  pais,  that  although  a 
specialty  before  breach  could  not  be  discharged  by  a  parol  agree- 
ment, although  founded  on  a  good  consideration,  nor  even  by  an 
accord  and  satisfaction,  yet  after  breach  the  damages,  if  unliqui- 
dated,  could  be   discharged   by  an   executed   parol   agreement, 


Chap.  I.  §  2.]  BY  AGREEMENT.  529 

because,  as  was  said,  in  the  latter  case  the  cause  of  action  is 
founded  "  not  merely  on  the  deed,  but  on  the  deed  and  the  sub- 
sequent wrong."  Broom's  Legal  Maxims,  848,  and  cases  cited. 
The  absurd  results  to  which  the  common  law  doctrine  sometimes 
led  is  illustrated  by  the  case  of  Spence  v.  Healey  (8  Exch.  668), 
in  which  it  was  held  that  a  plea  to  an  action  on  covenant  for  the 
payment  of  a  sum  certain,  that  before  breach  defendant  satisfied 
the  covenant  by  the  delivery  to,  and  acceptance  by  the  plaintiff, 
of  goods,  machinery,  etc.,  in  satisfaction,  was  bad,  Martin,  B., 
saying,  "  I  am  sorry  I  am  compelled  to  agree  in  holding  that  the 
plea  is  bad.  It  is  difficult  to  see  the  correctness  of  the  reason 
upon  which  the  rule  is  founded."  I  suppose  there  can  be  no 
doubt  that  the  facts  presented  by  the  plea  in  the  case  of  Spence 
v.  Healey  would  have  constituted  a  good  ground  for  relief  in 
equity.  The  technical  distinction  between  a  satisfaction  before 
or  after  breach,  seems  to  have  been  disregarded  in  this  State, 
and  a  new  agreement  by  parol,  followed  by  actual  performance  of 
the  substituted  agreement,  whether  made  and  executed  before  or 
after  breach,  is  treated  as  a  good  accord  and  satisfaction  of  the 
covenant.  Fleming  v.  Gilbert,  3  John.  530;  Lattimore  v.  Harsen, 
14  Id.  330;  Dearborn  v.  Cross,  7  Cow.  48;  Allen  v.  Jaquish, 
Cowen,  J.,  21  Wend.  633.  So,  also,  a  new  agreement,  although 
without  performance,  if  based  on  a  good  consideration,  will  be  a 
satisfaction,  if  accepted  as  such.  Kramer  v.  Heim,  75  N.  Y.  574, 
and  cases  cited. 

In  the  present  case  it  may  be  justly  said,  that  when  the 
agreement  annulling  the  contract  of  March  2,  1882,  was  exe- 
cuted, there  had  been  no  breach  by  Garrison  of  his  covenant 
therein,  as  he  had  not  been  called  upon  by  the  plaintiffs  to  pay 
his  share  of  the  construction  account.  But  it  was  the  plain 
intention  of  the  parties  that  the  new  arrangement,  then  entered 
into,  should  be  a  substitute  for  the  liability  of  Garrison,  present 
and  prospective,  under  the  contract  of  March  2,  1882.  The 
transaction  constituted  a  new  agreement  in  satisfaction  of  the 
prior  covenant,  and  was  accepted  as  such.  Moreover,  it  admitted 
by  the  reply  that  the  contracts  of  October  25,  1882,  were  carried 
out.  It  is  a  case,  therefore,  of  an  executory  parol  contract, 
made  in  substitution  of  the  prior  sealed  contract,  afterwards 


530  DISCHARGE  OF  CONTRACT.  [Part  V. 

fully  executed,  which  clearly,  under  the  authorities  in  this  State, 
discharged  the  prior  contract. 

In  respect  to  the  claim  to  recover  interest  during  the  time  the 
payment  of  the  $150,000  was  delayed,  it  is  a  sufficient  answer 
that  the  complaint  admits  that  the  principal  sum  was  fully  paid 
prior  to  September  13,  1882.  The  claim  for  interest  did  not 
survive,  there  being  no  special  circumstances  to  take  the  case  out 
of  the  general  rule.  Cutter  v.  Mayor  &c.,  92  IST.  Y.  166,  and 
cases  cited. 

We  are  of  opinion  that  the  facts  admitted  in  the  pleadings 
disclose  that  there  was  no  right  of  action  and  that  the  complaint, 
for  this  reason,  was  properly  dismissed. 

The  judgment  should  therefore  be  affirmed.     All  concur. 

Judgment  affirmed.* 

1  "We  shall  not  question  the  rule  that  a  contract  or  covenant  under  seal 
cannot  be  modified  by  a  parol  unexecuted  contract.  Coe  v.  Hobby,  72  N.  Y. 
141  ;  Smith  v.  Kerr,  33  Hun,  567-571  ;  108  N.  Y.  31.  .  .  .  The  reason  of 
the  rule  was  founded  upon  public  policy.  It  was  not  regarded  as  safe  or 
prudent  to  permit  the  contract  of  parties  which  had  been  carefully  reduced 
to  writing  and  executed  under  seal  to  be  modified  or  changed  by  the  testi- 
mony of  witnesses  as  to  parol  statements  or  agreements  of  parties.  Hence 
the  rule  that  testimony  of  parol  agreements  shall  not  be  competent  as  evi- 
dence to  impeach,  vary,  or  modify  written  agreements  or  covenants  under 
seal.  But  the  parties  may  waive  this  rule  and  carry  out  and  perform  the 
agreements  under  seal  as  changed  or  modified  by  the  parol  agreement,  thus 
executing  both  agreements ;  and  where  this  has  been  done,  and  the  parties 
have  settled  with  a  full  knowledge  of  the  facts  and  in  the  absence  of  fraud, 
there  is  no  power  to  revoke  or  remedy  reserved  to  either  party.  Munroe  v. 
Perkins,  9  Pick.  298  ;  Lattimore  v.  Harsen,  14  Johns.  329  ;  McCree.ry  v.  Day, 
28  N.  Y.  S.  R.  597."  — Haight,  J.,  in  McKemie  v.  Harrison,  120  N.  Y.  260, 
263,  264.     See  also  Canal  Co.  v.  Bay,  101  U.  S.  522. 

On  substituted  contracts,  see  also  the  cases  under  "Promise  to  perform 
existing  Contract,"  ante,  Ch.  II.,  §  4,  p.  177  et  seq.  Also  Heaton  v.  AngieVy 
7  N.  H.  397,  ante,  p.  442. 


Chap.  I.  §  3.]  BY  AGREEMENT.  631 

§  3.    Provisions  for  discharge. 

MOOKE  V.  PHCENIX   INS.   CO. 

62  NEW  HAMPSHIRE,  240.  — 1882. 

Assumpsit  on  a  policy  of  insurance.  Defense,  discharge  of 
policy  before  loss  accrued.  Verdict  for  plaintiff.  Defendant* 
appeal. 

Smith,  J.  The  defendants  are  liable  only  in  accordance  with 
the  terms  and  stipulations  expressed  in  their  contract  as  the 
conditions  of  their  liability.  The  contract  is  in  writing,  and  is 
contained  in  the  policy  of  insurance.  In  consideration  of  $8.50 
paid  by  the  plaintiff,  the  defendants  covenanted  to  insure  his 
property  against  loss  or  damage  by  fire  for  the  term  of  three 
years,  commencing  August  15,  1876.  The  policy  contained  this, 
condition : 

"  If  the  above-mentioned  premises  shall  be  occupied  or  used  so  as  tO' 
increase  the  risk,  or  become  vacant  and  unoccupied  for  a  period  of  more^ 
than  ten  days,  or  the  risk  be  increased  by  any  means  whatever  withiu 
the  control  of  the  assured,  without  the  assent  of  this  company  indorsed 
hereon  .  .  .  then,  and  in  every  such  case,  this  policy  shall  be  void." 

The  premises  remained  unoccupied  from  August  24th  until 
December  11,  1876,  and  on  the  18th  or  19th  of  that  month  were 
destroyed  by  fire.  The  contract  was,  not  that  the  policy  should 
be  void  in  case  of  loss  or  damage  by  fire  during  the  period  of 
unoccupancy,  but  that  vacancy  and  unoccupancy  should  terminate 
the  policy.  There  is  no  occasion  to  inquire  what  distinction 
there  may  be  between  a  vacant  and  an  unoccupied  building  {Herr- 
man  v.  Merchants'  Ins.  Co.,  81  N.  Y.  184;  Herrman  v.  AdricUic 
Ins.  Co.,  85  IT.  Y.  162;  N.  A.  Fire  Ins.  Co.  v.  Zaenger,  63  111. 
464;  American  Ins.  Co.  v.  Padfield,  78  111.  167),  for  no  point  was 
made  at  the  trial  that  the  plaintiff's  buildings  were  not  both 
vacant  and  unoccupied  from  August  24  until  December  11. 
Nor  is  it  necessary  to  go  into  an  inquiry  of  the  reasons  for  exact- 
ing this  condition.  It  is  enough  that  the  parties  entered  into  the 
covenant.  It  was  a  condition  that  would  afford  protection  of  a 
substantial  character  against  fraudulent  incendiarism,  of  which 
insurers  may  well  avail  themselves.     Hill  v.  Ins.  Co.,  58  N.  H. 


632  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

82  J  Sleeper  v.  Ins.  Co.,  56  X.  H.  406,  The  insurers  had  a  right, 
by  the  terms  of  the  policy,  to  the  care  and  supervision  which  are 
involved  in  the  occupancy  of  the  buildings.  Ashworth  v.  7ns. 
Co.,  112  Mass.  422. 

There  was  no  waiver  by  the  defendants  of  the  condition,  nor 
any  assent  to  the  changed  conditions  of  the  premises  insured,  for 
they  had  no  notice  or  knowledge  that  the  buildings  were  unoccu- 
pied until  the  plaintiff  furnished  his  proofs  of  loss.  A  waiver, 
to  be  effectual,  must  be  intentional.  The  premises  were  left 
unoccupied  more  than  ten  days;  and  if  the  non-occupation  had 
continued  to  the  time  of  the  fire,  the  plaintiff  could  not  recover. 
Fahyan  v.  Ins.  Co.,  33  N.  H.  206;  Shepherd  v.  Ins.  Co.,  38  N.  H. 
240;  Sleeper  v.  Ins.  Co.,  56  N.  H.  406;  Hill  v.  Ins.  Co.,  58  N.  H. 
82;  Baldwin  v.  Ins.  Co.,  60  N.  H.  164;  Lyman  v.  Ins.  Co.,  14 
Allen,  329;  Merriam  v.  Ins.  Co.,  21  Pick.  162;  Herrman  v.  Ins. 
Co.,  So  X.  Y.  162 ;  Harrison  v.  Ins.  Co.,  9  Allen,  231 ;  Wustum  v. 
Ins.  Co.,  15  Wis.  138;  Mead  v.  7ns.  Co.,  7  N.Y.530;  May  Ins. 
(ed.  1873)  §  248. 

It  is  contended  by  the  plaintiff,  upon  the  authority  of  State  v. 
Hichmond  (26  N.  H.  232),  that  the  policy  had  not  become  abso- 
lutely void  at  the  expiration  of  ten  days  from  the  time  the  house 
became  unoccupied,  but  was  voidable  only  at  the  election  of  the 
defendants.  In  the  construction  of  contracts  words  are  to  be 
iinderstood  in  their  ordinary  and  popular  sense,  except  in  those 
cases  in  which  the  words  used  have  acquired  by  usage  a  peculiar 
sense  different  from  the  ordinary  and  popular  one.  In  this  case 
the  word  "  void  "  has  not  acquired  by  usage  a  different  significa- 
tion from  the  ordinary  and  popular  one  of  a  contract  that  has 
come  to  have  no  legal  or  binding  force.  Whether  the  cessation 
of  the  executory  contract  of  insurance  was  temporary  and  con- 
ditional, or  perpetual  and  absolute,  is  a  question ;  but  "  void " 
means  that  on  the  eleventh  day  of  continuous  non-occupation  the 
plaintiff  was  not  insured.  The  defendants  might  have  waived 
their  condition  altogether,  or  might  have  waived  its  breach;  but 
having  had  no  opportunity  before  the  loss  to  make  their  election 
to  waive  the  breach,  their  refusal  to  pay,  when  notified  of  the 
loss  and  unoccupancy,  was  an  effectual  election  that  they  insisted 
upon  the  condition  in  the  policy. 


Chap.  I.  §  3.]  BY  AGREEMENT.  533 

The  duty  of  obtaining  the  consent  of  the  defendants  to  the 
changed  condition  of  the  buildings  rested  with  the  plaintiff.  By 
his  neglect  to  comply  with  this  requirement  of  the  contract,  it 
came  to  an  end  by  force  of  its  own  terms.  Girard  Ins.  Co.  v. 
Hebard,  95  Pa.  St.  45.  If,  when  the  unoccupancy  commenced, 
he  had  requested  the  assent  of  the  defendants,  they  would  have 
had  their  option  to  continue  the  policy  upon  payment  of  such 
additional  premium  as  the  increased  risk  called  for,  or  to  cancel 
the  policy,  refunding  the  unearned  premium.  Lyman  v.  Ins.  Co., 
14  Allen,  329.  There  is  no  presumption  that  they  would  have 
given  their  assent  to  the  unoccupancy  of  the  buildings  without 
the  payment  of  a  premium  commensurate  with  the  additional 
hazard. 

The  contract  being  once  terminated,  it  could  not  be  revived 
without  the  consent  of  both  of  the  contracting  parties.  It  is 
immaterial,  then,  whether  the  loss  of  the  buildings  is  due  to 
unoccupancy  or  to  some  other  cause.  Mead  v.  N.  W.  Ins.  Co.,  7 
N.  Y.  530,  535,  536;  Lyman  v.  State  M.  F.  Ins.  Co.,  14  Allen, 
329,  335;  Merriam  v.  7ns.  Co.,  21  Pick.  162;  Jennings  v.  Ins.  Co., 
2  Denio,  81;  Shepherd  v.  Ins.  Co.,  38  N.  H.  232,  239,  240;  Poor 
V.  7ns.  Co.,  125  Mass.  274;  Alexander  v.  7ns.  Co.,  66  N.  Y.  464, 
468;    Sleeper  v.  7ns.   Co.,  56   N.  H.  401;   Hill  v.    7ns.   Co.,   58 

N.  H.  82. 

•  «  «  »  « 

[After  discussing  the  cases  cited  above.]  The  strict  and 
literal  meaning  of  the  stipulation  that  the  policy  shall  be  void  if 
the  premises  remain  unoccupied  more  than  ten  days  is  not  that 
the  insurance  will  be  suspended  merely  during  non-occupation 
after  the  ten  days,  and  will  revive  Avhen  occupation  is  resumed. 
In  ordinary  speech,  a  void  policy  is  one  that  does  not  and  will 
not  insure  the  holder  if  the  insurer  seasonably  asserts  its 
invalidity.  It  might  be  argued  that  this  clause  should  be  so 
construed  as  to  accomplish  no  more  than  the  purpose  for  which 
it  was  inserted;  that  its  sole  purpose  was  to  protect  the  in- 
surer against  the  risk  resulting  from  non-occupation;  and  that 
if  this  risk  was  terminated  by  reoccupation,  the  parties  in- 
tended the  insurance  should  be  suspended  only  during  the 
existence  of  the  cause  of  a   risk    which   the   company  did   not 


634  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

assume.  On  the  other  hand,  it  might  be  argued  that  such  an 
intention  would  have  been  manifested  by  words  specially  and 
expressly  providing  for  a  suspension  and  resumption  of  the 
insurance,  and  would  not  have  been  left  to  be  inferred  from  the 
general  agreement  that  the  policy  should  be  void;  that  a  final 
termination  of  the  insurance  at  the  end  of  ten  days  of  non- 
occupation  is  plainly  expressed  by  the  provision  that  the  policy 
shall  then  be  void;  and  that  the  parties  would  not  think  it  neces- 
sary to  go  further,  and  provide  that  the  void  policy  should  not 
become  valid  on  reoccupation. 

Without  determining  the  true  construction,  or  what  the  result 
would  be  if  there  were  no  authority  in  this  State,  we  are  inclined 
to  follow  the  decision  in  Fahyan  v.  Insurance  Company  (33  N. 
H.  203),  although  in  that  case  the  question  of  suspension  seems 
not  to  have  been  presented  by  the  plaintiff  or  considered  by  the 
court.  It  was  apparently  assumed  that  "void"  meant  finally 
extinguished,  and  not  temporarily  suspended;  and  in  the  present 
state  of  the  authorities  we  are  not  prepared  to  hold  that  the 

assumption  was  erroneous. 

Verdict  set  aside.' 

Blodgett  and  Carpenteb,  JJ.,  did  not  sit;  Stanley,  J., 
dissented;  and  the  others  concurred. 


RAY  V.    THOMPSOI^. 

12  GUSHING  (Mass.),  281.  — 1853. 

Assumpsit  for  the  price  of  a  horse  sold  to  defendant.  Defense, 
sale  on  condition  that  defendant  might  return  the  horse,  and  that 
he  had  returned  it.     Verdict  for  defendant. 

1  "  An  increase  of  risk  which  is  substantial,  and  which  is  continued  for  a 
considerable  period  of  time,  is  a  direct  and  certain  injury  to  the  insurer,  and 
changes  the  basis  upon  which  the  contract  of  insurance  rests  ;  and  since 
there  is  a  provision  that,  in  case  of  an  increase  of  risk  which  is  consented  to 
or  known  by  the  assured,  and  not  disclosed,  and  the  assent  of  the  insurer 
obtained,  the  policy  shall  be  void,  we  do  not  feel  at  liberty  to  qualify  the 
meaning  of  these  words  by  holding  that  the  policy  is  only  suspended  during 
the  continuance  of  such  increase  of  risk."  —  C.  Allen,  J.,  in  Kyte  v.  Com. 
Un.  Ins.  Co.,  149  Mass.  116,  123. 


Chap.  I.  §  3.J  BY  AGREEMENT.  536 

Plaintiff  offered  to  prove  that  defendant  has  so  abused  the 
horse  that  it  was  materially  injured  and  lessened  in  value  and 
the  plaintiff  had  refused  in  consequence  to  receive  it  back.  This 
evidence  was  excluded  and  plaintiff  excepted  to  the  ruling. 

By  the  Court.  The  evidence  offered  by  the  plaintiff  ought  to 
have  been  admitted,  to  prove,  if  he  could,  that  the  horse  had  been 
abused  and  injured  by  the  defendant,  and  so  to  show  that  the 
defendant  had  put  it  out  of  his  power  to  comply  with  the  condi- 
tion, by  returning  the  horse.  The  sale  was  on  a  condition  sub- 
sequent; that  is,  on  condition  he  did  not  elect  to  keep  the  horse, 
to  return  him  within  the  time  limited.  Being  on  a  condition 
subsequent,  the  property  vested  presently 'in  the  vendee,  defeasi- 
ble only  on  the  performance  of  the  condition.  If  the  defendant, 
in  the  meantime,  disabled  himself  from  performing  the  condition, 
—  and  if  the  horse  was  substantially  injured  by  the  defendant  by 
such  abuse,  he  would  be  so  disabled, —  then  the  sale  became  abso- 
lute, the  obligation  to  pay  the  price  became  unconditional,  and 
the  plaintiff  might  declare  as  upon  an  indebitatus  assumpsit,  with- 
out setting  out  the  conditional  contract.  Moss  v.  Sweet,  3  Eng. 
Law  &  Eq.  311;  16  Ad.  &  EL  N.  S.  493. 

New  trial  ordered. 


686  DISCHARGE  OF  CONTRACT.  [Part  V. 


CHAPTER  II. 

DISCHARGE   OF  CONTRACT  BY  PERFORMANCE.  . 
§  1.    Payment. 

FOKD  V.   MITCHELL. 

16  WISCONSIN,  304.-1862. 

Action  against  defendant  as  guarantor  of  an  instrument  set 
out  in  the  complaint,  or  for  the  price  agreed  to  be  paid  for  a 
debt  sold  by  plaintiff  to  defendant.  Defense,  that  defendant  was 
indorser  of  the  instrument  sued  on  and  had  received  no  notice  of 
protest.     Judgment  for  defendant.     Plaintiff  appeals. 

Dixon,  C.  J.  The  complaint  in  this  action  was  several  times 
amended.  The  original  does  not  appear.  The  first  amended 
complaint  was  against  the  defendant  as  guarantor  upon  an  in- 
strument as  follows : 

"No.  9092.  $176.  Janesville  City  Bank,  Wisconsin.  Certificate  of 
Deposit.  Janesville,  April  15,  1858.  Mr.  Wm.  L.  Mitchell  has  deposited 
in  this  bank  one  hundred  and  seventy-six  dollars,  payable  to  the  order 
of  himself,  60  days  after  date,  in  currency,  upon  return  of  this  certificate 
properly  indorsed.  Interest  —  per  cent,  if  left  60  days.  Jas.  Fraser, 
A.  Cash." 

The  plaintiff  was  the  holder  of  a  debt  against  the  Badger  State 
Bank  for  $234,  which  the  defendant  applied  to  purchase.  A 
sale  was  agreed  upon  at  $176,  to  be  paid  in  money  by  the  defend- 
ant. Unable  to  raise  the  money,  he  requested  the  plaintiff  to 
accept  the  certificate  in  lieu  thereof,  to  which  the  plaintiff 
assented,  provided  the  defendant  would  guarantee  its  payment. 
The  defendant  agreed  to  this,  and  writing  his  name  across  the 
back  of  the  certificate,  delivered  it  to  the  plaintiff.  The  bank 
refused  payment,  and  the  plaintiff  caused  the  certificate  to  be 
protested  and  notice  given  defendant.  Judgment  was  demanded 
for  the  amount  of  the  certificate  and  interest  from  the  time  it 


Chap.  U.  §  1.]  BY  PERFORMANCE.  537 

became  due.  The  defendant  answered,  insisting  that  he  was 
not  a  guarantor  but  an  indorser,  as  alleged  in  a  former  complaint, 
and  denied  service  of  notice  of  protest. 

The  cause  came  on  for  trial  before  the  judge  without  a  jury, 
when  the  judge,  conceiving  that  the  pleadings  did  not  conform 
to  the  facts  proved,  ordered  them  to  be  amended. 

The  complaint,  as  amended  under  this  order,  is  for  the  $176 
agreed  to  be  paid  for  the  debt  against  the  Badger  State  Bank. 
It  sets  out  the  transaction  substantially  as  before,  and  avers  the 
organization  of  the  banks  under  the  statute;  that  the  Janesville 
City  Bank  was,  at  the  time  of  issuing  the  certificate,  and  has 
since  remained,  hopelessly  insolvent,  and  that  the  plaintiff  did  not 
take  nor  agree  to  take  the  certificate,  "  guaranteed  or  indorsed  or 
not  guaranteed  or  indorsed,"  in  payment  for  the  debt  sold,  nor 
of  the  $176,  the  price  agreed.  The  latter  allegation  is  very  ver- 
bose and  awkward,  but  this  is  the  substance  of  it.  Judgment  is 
demanded  for  $176  and  interest  from  maturity  of  the  drafts 
The  answer,  protesting  that  there  is  an  entire  departure  from 
the  cause  of  action  first  stated,  denies  nearly  all  the  material  alle- 
gations, and  especially  that  notice  of  non-payment  was  properly 
given. 

The  case  made  by  the  complaint  is  fully  sustained  by  the 
proof,  except  the  giving  of  notice  of  protest.  The  judge  below 
80  found,  but  supposing  the  plaintiff  was  still  proceeding  upon 
the  guaranty,  he  held  that  he  was  precluded  by  his  own  allega- 
tions from  recovering.  He  refers  to  those  already  noticed  — 
that  the  certificate  was  not  received  as  payment  for  the  debt  or 
price  —  and  understanding  from  them  that  the  plaintiff  did  not 
agree  to  accept  the  defendant's  guaranty,  he  says  that  it  is  an 
end  of  the  action.  The  last  mistake  is  not  very  surprising.  The 
intention  of  the  pleader  is  masked  by  such  an  impenetrable 
thicket  of  words,  that  it  is  hazardous  for  any  one  to  attempt  to 
get  at  it.     The  certificate  was  produced  at  the  trial. 

The  case  as  stated  in  either  complaint  is  very  plain  on  author- 
ity, and  it  was  immaterial  which  was  pursued.  The  certificate 
was  payable  in  currency,  and  therefore  not  negotiable.  See 
authorities  cited  by  plaintiff's  counsel  under  this  point.  Protest 
and  notice  of  non-payment  were  therefore  unnecessary  to  charge 


538  DISCHARGE  OF  CONTRACT.  [Part  V. 

the  defendant.  The  party  -writing  his  name  across  the  back  of 
a  negotiable  instrument  can  only  be  holden  as  an  indorser,  and 
unless  the  proper  steps  are  taken  to  charge  him  as  such,  he  will 
not  be  liable.  Cady  v.  Shephard,  12  Wis.  639.  But  with  non- 
negotiable  paper  the  case  is  quite  different.  The  liability  there 
is  absolute  and  unconditional.  The  party  is  entitled  to  none  of 
the  privileges  of  a  common  indorser.  It  is  a  guaranty,  an  agree- 
ment to  pay  at  all  events  which  nothing  will  discharge  except 
some  act  which  would  discharge  a  surety.  Josselyn  v.  Ames,  3 
Mass.  274;  Moies  v.  Bird,  11  Id.  436;  Oxford  Bank  v.  Haynes, 
8  Pick.  423;  Seabury  v.  Hungerford,  2  Hill,  80;  Hall  v.  New- 
comb,  3  Id.  233;  Seymour  v.  Van  Slick,  8  Wend.  403;  Oriswold 
V.  Slocum,  10  Barb.  402;  Story  on  Prom.  Notes,  §  473,  and  note. 
The  payee  may  write  out  the  guaranty  over  the  signature.  And 
in  this  case  it  would  have  been  sufficient  if  the  plaintiff  had 
written  the  guaranty  in  due  form  before  offering  the  certificate 
in  evidence. 

It  being  established  that  the  certificate  was  not  received  as 
payment  for  the  debt  transferred,  it  follows  that  the  plaintiff  can 
maintain  his  action  for  the  price  upon  surrender  of  certificate. 
The  principle  is  elementary,  that  the  taking  of  the  promissory 
note  or  bill  of  the  debtor  himself,  either  for  a  precedent  liability 
or  a  debt  incurred  at  the  time,  is  no  payment,  unless  it  be  ex- 
pressly so  agreed;  but  that,  after  the  expiration  of  the  credit,  an 
action  may  be  maintained  upon  the  original  consideration,  upon 
producing  the  note  or  bill  to  be  canceled. 

The  acceptance  suspends  the  remedy  during  its  currency,  and 
the  burden  of  showing  that  it  was  received  in  payment  lies  on 
the  debtor.  Drake  v.  De  Camp,  1  Johns.  34;  Hughes  v.  Wheeler,  8 
Cow.  77 ;  Jaffrey  v.  Cornish,  10  N.  H.  505 ;  Puckford  v.  Maxwell, 
6  Term,  52;  Clark  v.  Noel,  3  Camp.  411;  Chitty  on  Con.,  660. 

So,  too,  of  the  acceptance  by  the  creditor  of  the  note  of  a  third 
person  for  a  precedent  debt.  Prima  facie  it  is  no  discharge  and 
it  is  for  the  debtor  to  show  that  it  was  so  intended,  unless  the 
creditor  makes  the  note  his  own  by  laches,  or  by  parting  with  it. 
Tobey  Y.  Barber,  5  Johns.  68;  Whitbeck  y.  Van  Ness,  11  Johns. 
409;  Booth  v.  Smith,  3  Wend.  66;  Batik  v.  Fletcher,  5  Wend.  85; 
Smith  V.  Rogers,  17  Johns.  340;    Waydell  v.  Luer,  3  Denio,  410; 


€hap.  II.  §  1.]  BY  PERFORMANCE.  539 

Mays  V.  Stone,  7  Hill,  128;  Frisbie  v.  Lamed,  21  Wend.  450; 

Vail  V.  Foster,  4  Corns.  312. 

But  where  the  note  of  a  third  person  is  received  upon  the 
sale  of  goods,  or  for  an  indebtedness  contracted  at  the  time,  the 
rule  is  reversed.  The  note  will  then  be  deemed  to  have  been 
taken  by  the  vendor  of  the  goods  in  satisfaction,  unless  the  con- 
trary be  expressly  proved;  or  unless  the  note  be  void,  and  there  be 
fraud  and  misrepresentation  on  the  part  of  the  vendee  respecting 
it.      Wilso7i  V.  Foree,  6  Johns.  110;  Johnson  v.   Weed,  9  Id.  310; 

^Vhitbeck  v.  Vayi  Ness,  supra;  Breed  v.  Cook,  15  Johns.  241;  Reid 
V.  Hutchinson,  3  Camp.  351.  In  such  cases  it  is  regarded  as  an 
<ixchauge  of  commodities  —  that  it  was  part  of  the  original  con- 
tract that  the  note  should  be  taken  in  payment  for  the  goods. 
If  the  purchaser  indorsed  the  note,  there  being  no  agreement  that 
he  shall  otherwise  be  answerable  for  the  goods,  he  will  be  liable 
in  the  character  of  an  indorser  only,  and  cannot  be  sued  for  goods 
sold  and  delivered.  Booth  v.  Smith,  and  Frisbie  v.  Lamed, 
supra;  Whitney  v.  Ooin,  20  N.  H.  354;  Soffe  v.  Gallagher,  3 
E.  D.  Smith,  507.  The  subject  is  particularly  well  considered 
in  the  last  case.  The  indorsement  is,  of  course,  conclusive  evi- 
dence that  the  vendor  did  not  intend  to  take  the  note  at  his  own 
risk,  or  to  part  with  the  goods  without  holding  the  purchaser 
liable  for  the  price;  but  having  accepted  it,  he  assumes  the 
obligation  incident  to  such  a  contract;  he  must  see  that  the 
indorser  has  notice  of  the  dishonor,  or  the  indorser  will  be 
released. 

But  when  the  purchaser  undertakes  to  answer  for  the  note  in 
some  other  form,  as  if  he  guarantee  or  agree  to  guarantee  its  pay- 
ment or  collection,  it  seems  that  the  seller  may  recover  in  an 
action  for  goods  sold.  Monroe  v.  Hoff,  5  Denio,  360.  In  that 
case  it  was  held  that  he  might  do  so,  though  the  guaranty  was 
void  by  the  statute  of  frauds  for  not  expressing  the  considera- 
tion. The  attempt  to  guarantee  was  considered  very  strong,  if 
not  conclusive  evidence,  that  the  note  was  not  received  in  pay- 
ment. 

All  these  were  cases  where  the  note  was  negotiable.  Whether 
a  different  rule  would  apply  to  the  transfer  of  a  non-negotiable 
note,  on  the  purchase  of  goods,  as  to  burden  of  proof,  we  need 


640  DISCHARGE  OF  COXTRACT.  [Part  V. 

not  inquire.  In  Plimley  v.  Westley  (2  Bing.  N.  C.  249  [29  E.  C. 
L.  322]),  the  plaintiff  having  received  from  the  defendant,  in 
payment  for  goods,  a  promissory  note  indorsed  by  the  defendant, 
but  not  made  payable  to  order,  it  was  held  that  he  was  entitled 
to  recover  the  price  of  the  goods,  notwithstanding  he  had  omitted 
to  give  full  notice.  In  the  case  at  bar,  I  think,  aside  from  the 
other  proof,  that  the  signature  of  the  defendant  upon  the  back 
of  the  certificate  furnishes  indisputable  evidence  that  it  was  not 
received  in  payment,  and  hence  that  a  suit  for  the  price  may  be 
maintained.  The  certificate  not  being  negotiable,  the  plaintiff 
could  be  guilty  of  no  laches  in  not  presenting  it  or  notifying  the 
defendant  of  its  dishonor.  The  case  is  very  like  that  of  Mon- 
roe V.  Hoff,  above  cited.  As  observed  by  the  court  in  Soffe  v. 
Gallagher,  it  seems  clear  that  the  taking  of  an  absolute  and  un- 
qualified guaranty  that  the  note  or  other  evidence  of  debt  shall 
be  paid,  will  not  operate  as  payment  but  only  as  a  security  ex- 
tending the  term  of  credit.  Such  absolute  liability  is  inconsist- 
ent with  the  idea  of  payment;  for  the  guarantor,  if  liable,  is  so 
in  respect  of  the  original  consideration,  whether  sued  upon  his 
guaranty  or  for  the  goods.  Where  there  is  a  sale  of  goods  and  in 
consideration  thereof  an  absolute  undertaking  for  the  payment  of 
the  price,  the  consideration  may  be  resorted  to  as  well  as  the 
express  agreement.  And  in  such  cases  it  is  immaterial  whether 
the  express  contract  be  the  note  of  the  buyer  or  his  absolute 
guaranty  that  the  price  shall  be  paid  upon  the  note  of  a  third 
person. 

The  plaintiff  was,  therefore,  entitled  to  judgment  upon  the 
complaint  as  last  amended.  It  was  no  departure,  the  cause  of 
action  being  the  very  same,  whether  it  was  pursued  in  one  form 
or  the  other. 

The  judgment  must  be  reversed,  and  the  cause  remanded  with 
directions  that  the  judgment  be  entered  for  the  plaintiff  accord- 
ing to  the  demand  of  the  complaint. 

Paine,  J.  I  concur  in  the  opinion  of  the  chief  justice,  that 
upon  the  authorities,  the  action  could  be  maintained  for  the 
original  consideration;  but  do  not  wish  to  commit  myself  to  the 
position  that  under  our  statute  of  frauds,  and  the  decisions  of 
this  court,  the  action  could,  under  any  circumstances,  be  sus- 
tained on  the  guaranty. 


Chap.  II.  §  2.]  BY  PERFORMANCE.  541 

Cole,  J.  I  think  the  plaintiff  can  recover  on  the  original 
consideration,  but  express  no  opinion  upon  the  other  questions 
discussed  by  the  chief  justice. 

Judgment  reversed,  and  cause  remanded.^ 


§  2.    Tender. 

KNIGHT   V.    ABBOTT. 

30  VERMONT,  577.  — 1858. 

Book  account.  Defense,  tender.  Judgment  for  defendant. 
Plaintiff  appeals. 

Bennett,  J.  We  think  no  valid  tender  was  made.  It  seems 
all  that  was  done  was  that  the  defendant  remarked  to  the  plain- 
tiff, as  the  latter  was  passing  by  him,  "  I  want  to  tender  you  this 
money  before  Mr.  Dodge  (at  the  same  time  holding  in  his  hands 
thirty-five  dollars  and  fifty  cents),  for  labor  you  have  done  for 
me,"  but  the  plaintiff  kept  along  with  his  team,  making  no  reply. 
The  defendant  named  no  sum  which  he  wished  to  tender,  nor  the 
amount  he  held  in  his  hands,  although  it  appeared  subsequently 
that  he  had  thirty-five  dollars  and  fifty  cents  in  his  hands.  It 
was  for  the  defendant  to  make  out  affirmatively  that  he  made  a 
legal  tender.  The  plaintiff  was  under  no  obligation  to  stop  his 
team  to  make  inquiries,  or  to  have  a  sum  of  money  tendered  him ; 
and  unless  the  defendant  specified  the  amount  which  he  wished 
to  tender,  the  plaintiff  could  not  determine  as  to  the  sufficiency 
of  the  sum,  and  no  refusal  by  the  plaintiff  to  receive  any  specific 
sum  of  money  could  be  predicated  upon  such  an  offer  as  the  case 
shows  was  made.  All  that  the  case  legally  shows,  is  an  inten- 
tion on  the  part  of  the  defendant,  or  rather  a  willingness,  to 
make  a  tender.  If  no  tender  was  made  at  the  time  suggested, 
there  is  no  occasion  to  inquire  about  its  being  kept  good. 

1  "The  distinction  by  the  late  learned  Chief  Justice  Dixon,  in  his  opinion 
in  the  case  of  Ford  v.  Mitchell^  supra,  as  to  the  burden  of  proof  where  the 
note  of  a  third  person  is  received  upon  the  sale  of  goods,  or  for  an  indebted- 
ness contracted  at  the  time,  I  am  inclined  to  think  is  not  supported  by  the 
weight  of  authority."  —  Taylor,  J.,  in  Hoeflingerv.  Wells,  47  Wis.  628,  631. 

See  Tayloe  v.  Merchants'  Fire  Ins.  Co.,  9  How.  390,  ante,  pp.  29,  34,  35 ; 
The  Kimball,  3  Wall.  37. 


542  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

Tlie  judgment  of  the  County  Court  is  reversed,  and  judgment 
for  the  plaintiff,  for  the  sum  reported  by  the  auditors,  and  in- 
terest. 


§  3.    Substsintial  performance. 

NOLAN   et  al.   v.   WHITNEY. 

88  NEW  YORK,  648.  — 1882. 

In  July,  1877,  Michael  Nolan,  the  plaintiffs'  testator,  entered 
into  an  agreement  with  the  defendant  to  do  the  mason  work  in 
the  erection  of  two  buildings  in  the  city  of  Brooklyn  for  the  sum 
of  ^1,700,  to  be  paid  to  him  by  her  in  instalments  as  the  work 
progressed.  The  last  instalment  of  $2700  was  to  be  paid  thirty 
days  after  completion  and  acceptance  of  the  work.  The  work 
was  to  be  performed  to  the  satisfaction  and  under  the  direction 
i  of  M.  J.  Morrill,  architect,  to  be  testified  by  his  certificate,  and 
that  was  to  be  obtained  before  any  payment  could  be  required  to 
be  made.  As  the  work  progressed,  all  the  instalments  were  paid 
except  the  last,  and  Nolan,  claiming  that  he  had  fully  performed 
his  agreement,  commenced  this  action  to  recover  that  instalment. 
The  defendant  defended  the  action  upon  the  ground  that  Nolan 
had  not  fully  performed  his  agreement  according  to  its  terms  and 
requirements,  and  also  upon  the  ground  that  he  had  nptjobtained 
the  architect's  certificate,  as  required  by  the  agreement. 

Upon  the  trial  the  defendant  gave  evidence  tending  to  show 
that  much  of  the  work  was  imperfectly  done,  and  that  the  agree- 
ment had  not  been  fully  kept  and  performed  on  the  part  of  Nolan; 
the  latter  gave  evidence  tending  to  show  that  the  work  was 
properly  done,  that  he  had  fairly  and  substantially  performed 
his  agreement,  and  that  the  architect  had  refused  to  give  him  the 
certificate,  which,  by  the  terms  of  his  agreement,  would  entitle 
him  to  the  final  payment.  The  referee  found  that  Nolan  com- 
pleted the  mason  work  required  by  the  agreement  according  to  its 
terms ;  that  he  in  good  faith  intended  to  comply  with,  and  did 
substantially  comply  with,  and  perform  the  requirements  of  his 
agreement;  but  that  there  were  trivial  defects  in  the  plastering 


Chap.  n.  §  3.]  BY  PERFORMANCE.  54^ 

for  which  a  deduction  of  $200  should  be  made  from  the  last 
instalment,  and  he  ordered  judgment  in  favor  of  Kolan  for  the 
last  instalment,  less  $200. 

Earl,  J.  It  is  a  general  rale  of  law  that  a  party  must  perform 
his  contract  before  he  can  claim  the  consideration  due  him  upon 
performance ;  but  the  performance  need  not  in  all  cases  be  literal 
and  exact.  It  is  sufficient  if  the  party  bound  to  perform,  acting 
in  good  faith,  and  intending  and  attempting  to  perform  his  con- 
tract, does  so  substantially,  and  then  he  may  recover  for  his 
work,  notwithstanding  slight  or  trivial  defects  in  performance, 
for  which  compensation  may  be  made  by  an  allowance  to  the 
other  party.  Whether  a  contract  has  been  substantially  per- 
formed is  a  question  of  fact  depending  upon  all  the  circumstances 
of  the  case  to  be  determined  by  the  trial  court.  Smith  v.  Brady, 
17  N.  Y.  189;  Thomas  v.  Fleury,  26  Id.  26;  Glacius  v.  Black,  50 
Id.  145 ;  Johnson  v.  De  Peyster,  50  Id.  666 ;  Phillip  v.  Gallant,  62 
Id.  256;  Bowery  Nat.  Bank  v.  The  Mayor,  63  Id.  336.  Accord- 
ing to  the  authorities  cited,  under  an  allegation  of  substantial 
performance,  upon  the  facts  found  by  the  referee,  Nolan  was 
entitled  to  recover  unless  he  is  barred  because  he  failed  to  get  the 
architect's  certificate,  which  the  referee  found  was  unreasonably 
and  improperly  refused.  But  when  he  had  substantially  per- 
formed his  contract,  the  architect  was  bound  to  give  him  the  cer- 
tificate, and  his  refusal  to  give  it  was  unreasonable,  and  it  is  held, 
that  an  unreasonable  refusal  on  the  part  of  an  architect  in  such  a^ 
case  to  give  the  certificate  dispenses  with  its  necessity.  All 
concur. 

Judgment  affirmed.^ 

1  Accord  :  Katz  v.  Bedford,  77  Cal.  319 ;  Hayward  v.  Leonard,  7  Pick. 
180 ;  Kelly  &  Bragg  v.  Bradford,  33  Vt.  35  ;  Crouch  v.  Gutmann,  134  N.  Y. 
45,  where  Follett,  C.  J.,  dissenting,  says:  "The  tendency,  called  equitable, 
of  courts  to  relieve  persons  from  the  performance  of  engagements  deliberately 
entered  into,  and  in  legal  effect  to  make  for  litigants  new  contracts  which 
they  never  entered  into,  and  which  it  cannot  be  supposed  they  ever  would 
have  entered  into,  has  been  and  is  being  carried  to  a  length  which  cannot  b& 
justified  in  reason." 


644  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

GILLESPIE  TOOL  CO.  v.  WILSON  et  al. 

123  PENNSYLVANIA  STATE,   19.  — 1888. 

Assumpsit  on  a  contract  for  drilling  a  well.     Defense,  non- 
performance.    Nonsuit.     Plaintiff  appeals. 

Plaintiff  agreed  to  drill  for  defendants  a  gas-well  2000  feet  deep 
and  five  and  five-eighths  inches  in  diameter.  In  case  salt  water 
was  struck,  the  well  was  to  be  eight  inches  in  diameter  in  order 
to  shut  off  the  salt  water.  A  well  was  dug  to  the  depth  of 
between  1500  and  1600  feet,  when,  owing  to  an  accident,  it  had 
to  be  abandoned.  Another  well  was  then  begun,  and  when  at  a 
depth  of  800  feet  plaintiff  was  notified  that  defendants  held  the 
contract  was  for  the  first  well  and  would  not  be  responsible  for 
the  second.  Plaintiff  continued  and  drilled  the  second  well  to  a 
depth  of  2204  feet,  but  struck  salt  water  at  a  depth  of  1729  feet, 
and  to  case  this  off  reduced  the  hole  to  admit  of  casing  four  and 
one-quarter  inch  size.  Plaintiff  claimed  a  substantial  perform- 
ance on  the  ground  that  the  well  was  for  testing  the  territory,  and 
that  for  this  purpose  a  four  and  one-quarter  inch  hole  was  as 
good  as  a  five  and  five-eighths  inch,  and  that  it  would  have  been 
a  useless  expense  to  ream  it  out  to  the  latter  diameter  when  the 
experiment  proved  that  the  territory  did  not  produce  gas. 
-  Mr.  Justice  Stbrbett.  Plaintiff  company  neither  proved  nor 
offered  to  prove  such  facts  as  would  have  warranted  the  jury  in 
finding  substantial  performance  of  the  contract  embodied  in  the 
written  proposition  submitted  to  and  accepted  by  the  defendants. 
In  several  particulars  the  work  contracted  for  was  not  done 
according  to  the  plain  terms  of  the  contract.  Nearly  one-half  of 
the  well  was  not  reamed  out,  as  required,  to  an  eight-inch 
diameter  so  as  to  admit  five  and  five-eighths  inch  casing  in  the 
clear.  About  180  feet  of  the  lower  section  of  the  well  also  was 
bored  four  or  four  and  one-quarter  inches  instead  of  five  and 
five-eighths  inches  in  diameter.  In  neither  of  these  particulars, 
nor  in  any  other  respect,  was  there  any  serious  difficulty  in  the 
way  of  completing  the  work  in  strict  accordance  with  the  terms 
of  the  agreement.  To  have  done  so  would  have  involved  nothing 
more  than  additional  time  and  increased  expense.     The  fact  was 


Chap.  II.  §  3.]  BY  PERFORMANCE.  545 

patent,  as  well  as  proved  by  undisputed  evidence,  that  a  four  and 
one-quarter  inch  well  would  not  discharge  as  much  gas  as  one  five 
and  five-eighths  inches  in  diameter.  It  is  no  answer  to  say  that 
for  the  purpose  of  testing  the  territory  a  four  and  one-quarter 
inch  well  was  as  good  as  a  five  and  five-eighths  inch  well;  nor 
that  reaming  out  the  well  to  the  width  and  depth  required  by 
the  contract  would  have  subjected  defendants  to  additional 
expense  without  any  corresponding  benefit.  That  was  their  own 
affair.  They  contracted  for  the  boring  of  a  well  of  specified 
depth,  dimensions,  etc.,  and  they  had  a  right  to  insist  on  at  least 
a  substantial  performance  of  the  contract  according  to  its  terms. 
That  was  not  done,  and  the  court  was  clearly  right  in  refusing  to 
submit  the  case  to  the  jury  on  evidence  that  would  not  have 
warranted  them  in  finding  substantial  performance  of  the  contract. 

The  equitable  doctrine  of  substantial  performance  is  intended 
for  the  protection  and  relief  of  those  who  have  faithfully  and  ! 
honestly  endeavored  to  perform  their  contracts  in  all  material, 
and  substantial  particulars,  so  that  their  right  to  compensation! 
may  not  be  forfeited  by  reason  of  mere  technical,  inadvertent, 
or  unimportant  omissions  or  defects.     It  is  incumbent  on  him 
who  invokes  its  protection  to  present  a  case  in  which  there  has 
been  no  wilful  omission  or  departure  from  the  terms  of  his  con- 
tract.    If  he  fails  to  do  so,  the  question   of  substantial  per- 
formance should  not  be  submitted  to  the  jury. 

The  offers  specified  in  the  third,  fourth,  and  fifth  assignments 

were   rightly  rejected.     The  proposed  evidence  was  irrelevant 

and  incompetent.     There  is  nothing  in  the  record  that  requires  a 

reversal  of  the  judgment. 

Judgment  affirmed.* 

^  "  To  justify  a  recovery  upon  the  contract  as  substantially  performed, 
the  omissions  or  deviations  must  be  the  result  of  mistake  or  inadvertence, 
and  not  intentional,  much  less  fraudulent ;  and  they  must  be  slight  or  sus- 
ceptible of  remedy,  so  that  an  allowance  out  of  the  contract  price  will  give 
the  other  party  substantially  what  he  contracted  for.  They  must  not  be 
substantial  and  running  through  the  whole  work,  so  as  to  be  remediless,  and 
defeat  the  object  of  having  the  work  done  in  a  particular  manner.  And 
these  are  questions  of  fact  for  the  jury  or  trial  court.  Olmstead  v.  Beale, 
19  Pick.  628  ;  Woodward  v.  Fuller,  80  N.  Y.  312.  It  may  seem  a  harsh  doc- 
trine to  hold  that  a  man  who  has  built  a  house  shall  have  no  pay  for  it,  but 
the  other  party  can  well  say  :  '  I  never  made  any  such  agreement.     I  agreed 


546  DISCHARGE  OF  CONTRACT.  [Part  V. 

DUPLEX   SAFETY  EOILER  CO.   v.   GARDEN   et  al. 

101  NEW  YORK,  387.  — 1886. 

Appeal  from  a  judgment  of  the  Supreme  Court  at  General 
Term  in  the  second  department,  affirming  a  judgment  for  plain- 
tiff, and  from  an  order  denying  defendants'  motion  for  a  new  trial. 

Danforth,  J.  The  plaintiff  sued  to  recover  $700,  the  agreed 
price,  as  it  alleged,  for  materials  furnished  and  Avork  done  for  the 
defendants  at  their  request.  The  defense  set  up  was  that  the 
work  was  done  under  a  written  contract  for  the  alteration  of  cer- 
tain boilers,  and  to  be  paid  for  only  when  the  defendants  "  were 
satisfied  that  the  boilers  as  changed  were  a  success."  Upon  the 
trial  it  appeared  that  the  agreement  between  the  parties  was 
contained  in  letters,  by  the  first  of  which  the  defendants  said  to 
plaintiff: 

"You  may  alter  our  boilers,  changing  all  the  old  sections  for  your 
new  pattern ;  changing  our  fire  front,  raising  both  boilers  enough  to  give 
ample  fire  space;  you  doing  all  disconnecting  and  connecting,  also  all 
necessary  mason  work  and  turning  boilers  over  to  us  ready  to  steam  up. 
Work  to  be  done  by  tenth  of  May  next.  For  above  changes  we  are  to 
pay  you  ^700,  as  soon  as  we  are  satisfied  that  the  boilers  as  changed  are 
a  success,  and  will  not  leak  under  a  pressure  of  one  hundred  pounds  of 
steam." 

The  plaintiff  answered,  "accepting  the  proposition,"  and  as 
the  evidence  tended  to  show,  and  as  the  jury  found,  completed 
the  required  work  in  all  particulars  by  the  10th  of  May,  1881,  at 
which  time  the  defendants  began  and  thereafter  continued  the 
use  of  the  boilers. 

The  contention  on  the  part  of  the  appellants  is  that  the  plain- 
to  pay  you  if  you  would  build  my  house  in  a  certain  manner,  which  you 
have  not  done.'  The  fault  is  with  the  one  who  voluntarily  violates  his 
contract."  —  Mitchell,  J.,  in  Elliott  v.  Caldwell,  43  Minn.  357,  ^60. 

Accord:  Van  Cliefy.  Van  Vechten,  130  N.  Y.  571,  where  the  court  says: 
*' While  slight  and  insignificant  imperfections  or  deviations  may  be  over- 
looked on  the  principle  of  de  minimis  non  curat  lex,  the  contract  in  other 
respects  must  be  performed  according  to  its  terms.  When  the  refusal  to 
proceed  is  wilful,  the  difference  between  substantial  and  literal  performance 
is  bounded  by  the  line  of  de  minimis^  As  to  mercantile  contracts,  see 
Norrington  v.  Wright,  115  U.  S.  18S,  post,  p.  584 


Chap.  II.  §  3.]  BY  PERFORMANCE.  547 

tiff  was  entitled  to  no  compensation,  unless  the  defendants 
"were  satisfied  that  the  boilers  as  repaired  were  a  success,  and 
that  this  question  was  for  the  defendants  alone  to  determine," 
thus  making  their  obligation  depend  upon  the  mental  condition 
of  the  defendants,  which  they  alone  could  disclose.  Performance 
must  of  course  accord  with  the  terms  of  the  contract,  but  if  the 
defendants  are  at  liberty  to  determine  for  themselves  when  they 
are  satisfied,  there  would  be  no  obligation,  and  consequently  no 
agreement  which  could  be  enforced.  It  cannot  be  presumed  that 
the  plaintiff  entered  upon  its  work  with  this  understanding,  nor 
that  the  defendants  supposed  they  were  to  be  the  sole  judge  in 
their  own  cause.  On  the  contrary,  not  only  does  the  law  presume 
that  for  services  rendered,  remuneration  shall  be  paid,  but  here 
the  parties  have  so  agreed.  The  amount  and  manner  of  compen- 
sation are  fixed;  time  of  payment  is  alone  uncertain.  The 
boilers  were  changed.  Were  they,  as  changed,  satisfactory  to 
the  defendants?  In  Folliard  v.  Wallace  (2  Johns.  395)  W.  cov- 
enanted that  in  case  the  title  to  a  lot  of  land  conveyed  to  him  by 
F.  should  prove  good  and  sufficient  in  law  against  all  other 
claims,  he  would  pay  to  F,  $150,  three  months  after  he  should 
be  "well  satisfied"  that  the  title  was  undisputed.  Upon  suit 
brought  the  defendant  set  up  that  he  was  "not  satisfied,"  and  the 
pfea  was  held  bad,  the  court  saying,  "a  simple  allegation  of 
dissatisfaction,  without  some  good  reason  assigned  for  it,  might 
be  a  mere  pretext  and  cannot  be  regarded."  This  decision  was 
folowed  in  City  of  Brooklyn  v.  Brooklyn  City  R.  R.  Co.  (47  N.  Y. 
475)  and  Miesell  v.  Globe  Mut.  L.  Ins.  Co.  (76  Id.  115). 

In  the  case  before  us  the  work  required  was  specified,  and  was 
completed ;  the  defendants  made  it  available  and  continued  to  use 
the  boilers  without  objection  or  complaint.  If  there  was  full 
performance  on  the  plaintiff's  part,  nothing  more  could  be 
required,  and  the  time  for  payment  had  arrived;  for  according 
to  the  doctrine  of  the  above  cases,  "  that  which  the  law  will  say 
a  contracting  party  ought  in  reason  to  be  satisfied  with,  that  the 
law  will  say  he  is  satisfied  with." 

Another  rule  has  prevailed,  where  the  object  of  a  contract  was 
to  gratify  taste,  serve  personal  convenience,  or  satisfy  individual 
preference.     In  either  of  these  cases  the  person  for  whom  the 


548  DISCHARGE  OF  CONTRACT.  [Part  V. 

article  is  made,  or  the  "work  done,  may  properly  determine  for 
himself  —  if  the  other  party  so  agree  —  whether  it  shall  be 
accepted.  Such  instances  are  cited  by  the  appellants.  One  who 
makes  a  suit  of  clothes  (Brown  v.  Foster,  113  Mass.  136),  or 
undertakes  to  fill  a  particular  place  as  agent  (Tyler  v.  Ames,  6 
Lans.  280),  mold  a  bust  (Zaleski  v.  Clark,  44  Conn.  218),  or  paint 
a  portrait  (Gibson  v.  Cranage,  39  Mich.  49;  Hoffman  v.  Gallaher, 
6  Daly,  42),  may  not  unreasonably  be  expected  to  be  bound  by 
the  opinion  of  his  employer,  honestly  entertained.  A  different 
case  is  before  us,  and  in  regard  to  it  no  error  has  been  shown. 
The  judgment  appealed  from  should  be  affirmed.     All  concur. 

Judgment  affirmed.* 

1  "The  only  question  in  this  case  is  whether  the  written  agreement 
lietween  the  parties  left  the  right  of  the  plaintiff  to  recover  the  price  of  the 
work  and  materials  furnished  by  him  dependent  upon  the  actual  satisfaction 
of  the  defendant.  Such  agreements  usually  are  construed  not  as  making 
the  defendant's  declaration  of  dissatisfaction  conclusive,  in  which  case  it 
would  be  difficult  to  say  that  they  amounted  to  contracts  (Hunt  v.  Liver- 
more,  5  Pick.  395,  397),  but  as  requiring  an  honest  expression.  In  view  of 
modern  modes  of  business,  it  is  not  surprising  that  in  some  cases  eager 
sellers  or  selling  agents  should  be  found  taking  that  degree  of  risk  with 
unwilling  purchasers,  especially  where  taste  is  involved.  Brown  v.  Foster, 
113  Mass.  136  ;  Gibson  v.  Cranage,  39  Mich.  49  ;  Wood  Beaping  &  Mowing 
Machine  Co.  v.  Smith,  60  Mich.  665 ;  Zaleski  v.  Clark,  44  Conn.  218 ; 
McClure  Bros.  v.  Briggs,  68  Vt.  82 ;  Exhaust  Ventilator  Co.  v.  Chicago, 
Milwaukee  &  St.  Paul  Railway,  66  Wis.  218 ;  Seeley  v.  Welles,  120  Penn. 
St.  69 ;  Singerly  v.  Thayer,  108  Penn,  St.  291 ;  Andrews  v.  Belfield,  2  C.  B. 
.(N.  S.)  779. 

"  Still  when  the  consideration  furnished  is  of  such  a  nature  that  its  value 
will  be  lost  to  the  plaintiff,  either  wholly  or  in  great  part,  unless  paid  for,  a 
just  hesitation  must  be  felt,  and  clear  language  required,  before  deciding 
that  payment  is  left  to  the  will,  or  even  to  the  idiosyncrasies,  of  the  inter- 
ested party.  In  doubtful  cases  courts  have  been  inclined  to  construe  agree- 
ments of  this  class  as  agreements  to  do  the  thing  in  such  a  way  as  reason- 
ably ought  to  satisfy  the  defendant.  Sloan  v.  Hayden,  110  Mass.  141,  143 ; 
Braunstein  v.  Accidental  Death  Ins.  Co.,  1  B.  &.S.  782,  799;  Dallmanv. 
King,  4  Bing.  N.  C.  105."  —  Holmes,  J.,  in  Hawkins  v.  Graham,  149  Mass. 
284,  287,  288. 


Chap.  II.  §  3.]  BY  PERFORMANCE.  549 

ADAMS  RADIATOR  &  BOILER  WORKS  v.  SCHNADER. 

155  PENNSYLVANIA  STATE,  394.  — 1893. 

Assumpsit  for  heater  sold  and  delivered.  Defense,  non-per- 
formance. Verdict  and  judgment  for  plaintiff.  Defendant 
appeals. 

Mr.  Justice  Dean.  Davis  C.  Schnader,  defendant's  testator, 
the  owner  of  a  dwelling-house  then  being  built,  on  the  24th  of 
August,  1889,  made  a  written  contract  with  plaintiffs  that  they 
should  furnish  this  house  with  a  steam  heater.  Among  other 
stipulations  is  this  one : 

"  We  (plaintiffs)  guarantee  this  appai-atus  for  heating  by  steam  to  be 
constructed  in  a  good,  thorough,  and  workmanlike  manner,  to  give  entire 
satisfaction  in  its  operation,  and  to  work  entirely  noiseless.  Should  it 
prove  unsatisfactory  after  a  thorough  and  reasonable  trial,  we  will  remove 
it  at  our  expense,  refund  the  moneys  paid  to  us  on  account  of  it,  and  wiU 
place  the  building  in  as  good  a  condition  as  it  was  when  we  received  it 
for  the  purpose  of  erecting  our  steam-heating  apparatus.  We  will  fur- 
nish said  steam-heating  apparatus  complete  in  all  its  details  for  the  sum 
of  four  hundred  and  eighty-two  dollars  ($482.00) ;  one-half  to  be  paid 
on  completion  of  the  work,  and  the  remainder  in  sixty  days  thereafter." 

The  specifications  of  kind  and  size  of  materials  to  be  used  in 
the  constructions  are  elaborate.  We  do  not  deem  them,  so  far  as 
this  issue  is  concerned,  very  material,  for  the  case  turns  on  the 
construction  to  be  given  that  stipulation  in  the  agreement  just 
quoted. 

Mr.  Schnader  moved  into  his  house  on  Tuesday  of  the  last 
week  in  March,  1890,  and  died  on  the  following  Saturday.  By 
his  last  will,  duly  proven,  he  devised  the  dwelling-house  to  his 
son,  Milton  H.  Schnader,  his  executor  and  this  defendant,  subject 
to  a  life  estate  in  his  widow.  Before  his  death,  and  before  the 
heater,  by  use  for  a  reasonable  time,  had  been  tested,  he  paid  to 
plaintiffs  about  one-half  the  price. 

Milton  H.  Schnader,  son,  executor,  and  devisee,  was  in  the 
house  with  his  father  for  the  four  days  of  his  last  illness,  and 
continued  to  live  there  with  his  mother.  He  testified  that  the 
heater  was  wholly  unsatisfactory  to  him  from  the  day  it  was  first 


550  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

started;  failed  to  heat  the  rooms.  He  notified  plaintiffs  of  this 
when  they  demanded  payment  of  the  last  instalment  of  the  price, 
and  asked  them  to  defer  collection  until  the  following  December, 
when  the  weather  would  be  colder  and  a  better  test  could  be 
made.  This  they  declined  to  do,  and  proposed  that  James  N. 
Scheible,  a  plumber,  should  make  an  examination  of  the  heater; 
this  was  concurred  in  by  Schnader,  and  the  last  of  June  or  the 
first  of  July  Scheible  fired  it  up,  and  it  worked  satisfactorily  to 
him,  Scheible,  on  that  day,  at  that  season  of  the  year.  But 
Schnader  was  not  satisfied,  and  on  the  6th  of  September,  in 
response  to  plaintiffs'  written  demand  of  August  25th,  for  im- 
mediate payment,  requested  them  to  remove  the  heater  from  his 
premises.  The  plaintiffs  then  brought  suit  for  $274.03,  the 
unpaid  balance  of  their  contract  price. 

At  the  trial,  plaintiffs  averred  complete  performance  of  their 
contract  according  to  its  terms;  defendant  denied  this.  There 
was  considerable  evidence  adduced  on  both  sides  as  to  the  quality 
and  capability  of  the  heater,  which  was  submitted  to  the  jury  by 
the  learned  court  below,  on  the  theory  or  construction  of  the 
agreement,  that  if  plaintiffs  performed  their  contract  according 
to  the  specifications,  to  their  own  satisfaction  and  that  of  the 
jury,  then  they  should  have  a  verdict.  This  instruction  the 
appellant's  seven  assignments  of  error  complain  of. 

What  is  a  reasonable  interpretation  of  the  contract  of  plaintiffs 
when  they  say,  "We  guarantee  this  apparatus  to  give  entire 
satisfaction  in  its  operation,  and  should  it  prove  unsatisfactory 
after  a  thorough  and  reasonable  trial,  we  will  remove  it  at  our 
expense."  It  must  be  kept  in  mind,  that  this  was  not  a  piece  of 
machinery  designed  to  accomplish  some  single  or  particular  pur- 
pose in  which  power  and  durability  alone  constitute  desirability 
or  satisfactoriness.  A  saw-mill  may  be  warranted  as  of  a 
capacity  to  cut  a  certain  quantity  of  lumber  per  day;  a  loco- 
motive may  be  warranted  to  draw  a  certain  number  of  tons  up 
a  certain  grade,  or  around  a  certain  curve;  and  if  there  be  a 
guaranty  that  they  shall  give  satisfaction,  it  can  reasonably  be 
presumed  that  the  specified  power  was  all  that  was  within  the 
mind  of  the  parties  when  they  contracted.  But  when  the  subject 
of  the  contract  is  household  furniture,  as  in  McCarren  v.  McNulty 


Chap.  U.  §  3.]  BY  PERFORMANCE.  551 

(7  Gray,  139) ;  or  for  a  suit  of  clothes,  as  in  Brown  v.  Foster  (113 
Mass.  136);  or  for  a  work  of  art,  as  in  Hoffman  v.  Gallaher 
(6  Daly,  42)  and  Zaleski  v.  Clark  (44  Conn.  218),  the  question  is 
not  whether  the  thing  contracted  for  had  a  certain  strength  or  a 
particular  dimension  as  specified  in  the  contract,  but  there  come 
in  to  make  up  satisfaction  or  dissatisfaction  those  qualities  Avhich 
please,  or  those  defects  which  are  nothing  more  than  annoying. 
A  dwelling-house  heater  is  in  use  every  hour  of  the  day  and 
night;  is  absolutely  indispensable  to  the  health  and  comfort  of 
the  householder  and  his  family;  if  all  the  iron  and  brickwork  be 
made  as  specified;  the  valves,  gauge-cocks,  radiators, boilers,  and 
all  other  parts,  measure  as  set  out  in  the  contract ;  and  if,  even  on 
one  day  in  the  middle  of  summer  on  being  fired  up  and  operated 
by  an  expert  plumber,  a  degree  of  heat  is  attained  which,  in  his 
opinion,  comes  up  to  the  point  fixed  in  the  contract,  these  facts 
would  not  of  themselves  determine  that  it  was  satisfactory  to  the 
man  who  was  to  use  it  in  zero  weather.  If  in  its  ordinary  every- 
day use  in  heating  his  house,  instead  of  satisfying  him,  it  was, 
as  he  testifies,  a  constant  vexation,  we  think  he  was  not  bound 
to  keep  and  pay  for  it. 

The  reasonable  interpretation  of  the  contract  is,  that  Schnader 
was  to  be  satisfied  with  the  heater;  not  the  plaintiffs;  not  the 
plumber,  nor  other  witnesses;  not  the  jury.  As  is  said  in 
Zaleski  v.  Clark :  "  It  is  not  enough  to  say  she  (the  defendant) 
ought  to  be  satisfied  with  it,  and  that  her  dissatisfaction  is 
unreasonable.  She,  not  the  court,  is  entitled  to  judge  of  that. 
The  contract  was  not  to  make  one  she  ought  to  be  satisfied  with, 
but  one  she  would  be  satisfied  with." 

The  rule  laid  down  by  this  court  in  Singerly  v.  Thayer  (108 
Pa.  291)  is  to  the  same  effect,  and  is  clearly  applicable  to  this 
contract  and  this  evidence.  The  court  says:  "He  (the  defend- 
ant) therefore  was  the  person  to  decide,  and  to  declare  whether  it 
was  satisfactory.  He  did  not  agree  to  accept  what  might  be 
satisfactory  to  others,  but  what  was  satisfactory  to  himself.  This 
was  the  fact  which  the  contract  gave  him  the  right  to  decide. 
He  was  the  person  who  was  to  test  and  use  it.  No  other  persons 
could  intelligently  determine  whether  in  every  respect  he  was 
satisfied  therewith." 


552  DISCHARGE  OF  CONTRACT.  [Part  V. 

The  appellees'  counsel  argue  that  there  is  a  distinction  between 
this  contract  and  the  one  in  Singerly  v.  Thayer.  In  the  contract 
before  us,  plaintiffs  agree  to  remove  the  heater  "  should  it  prove 
unsatisfactory  after  a  thorough  and  reasonable  trial,"  while  there 
are  no  such  words  in  the  Singerly  and  Thayer  contract.  But  the 
plaintiffs  on  the  trial  alleged,  and  offered  evidence  to  prove,  that 
at  their  suggestion  and  by  consent  of  defendant  a  test  trial  was 
given  this  heater  in  June  or  July.  Mr.  Adams,  for  the  plaintiff, 
testified  that  the  trial  demonstrated  he  had  complied  with  his 
contract;  that  is  his  opinion.  He  admits  that  a  trial  at  that 
time  of  the  year  would  be  a  theoretical,  not  a  practical  one. 

The  defendant  concedes  that  on  the  trial  it  worked  better  than 
it  usually  did,  but  he  was  not  convinced  it  would  work  satisfac- 
torily to  him  in  cold  weather.  The  fair  presumption  is,  that  the 
"thorough  and  reasonable  trial"  contemplated  by  the  parties, 
was  its  use  by  the  householder  under  the  supervision  and  attend- 
ance of  the  ordinary  household  servants.  It  was  not  expected 
the  purchaser  would  daily  employ  skilled  plumbers  or  engineers 
to  operate  it.  In  this  ordinary  and  expected  use  of  it  from 
March  until  June  it  was  unsatisfactory  to  Schnader;  after  the 
trial  test  made  by  the  expert  Scheible,  in  presence  of  Adams  and 
Schnader  in  summer,  it  still  was  not  satisfactory;  was  so  unsat- 
isfactory that  Schnader  offered  to  forfeit  all  he  had  paid  if 
plaintiffs  would  take  the  heater  out. 

Of  course  defendant's  dissatisfaction  miast  be  genuine,  as 
distinguished  from  mere  caprice  or  dishonesty;  he  could  not  have 
ordered  the  heater  taken  out  without  a  trial  by  the  ordinary 
methods  and  service  of  the  householder;  nor,  for  the  purpose  of 
evading  payment  of  the  balance  of  the  price,  could  a  dishonest 
declaration  of  dissatisfaction  have  been  an  effectual  defense.  But 
there  is  no  evidence  of  want  of  good  faith  in  his  conduct;  he  has 
a  right  to  defend  on  the  ground  that  the  heater  does  not  work 
satisfactorily  to  him,  after  what  he  considered  a  thorough  and 
reasonable  trial  by  the  ordinary  use  of  it  for  more  than  two 
months,  and  especially  after  the  test  trial  proposed  by  plaintiffs. 

In  substance,  the  court  below  submitted  it  as  a  question  of  fact 
to  the  jury  to  find  from  the  evidence  whether  he  ought  to  have 
been  satisfied;  this  was  an  erroneous  interpretation  of  the  con- 


Chap.  II.  §  3.]  BY  PERFORMANCE.  55S 

tract.  The  proper  interpretation  is :  (1)  Was  there  a  thorough 
and  reasonable  trial  of  the  heater  by  the  ordinary  daily  use  of' 
it?  (2)  Was  the  defendant  then  dissatisfied  with  it?  If  he  was' 
dissatisfied  after  such  trial,  the  plaintiff  cannot  recover.  Neither 
the  plaintiff,  jury,  nor  witnesses  ought  to  be  permitted  to  make 
a  contract  for  him ;  his  contract  was,  that  he  was  to  be  satisfied, 
and  the  plaintiffs  must  perform  their  contract  in  this  particular 
the  same  as  in  the  item  of  putting  in  boilers. 

Plaintiffs'  counsel  further  argue  that  the  judgment  should  be  \ 
af&rmed,  because  this  contract  was  personal  alone  to  D,  C. 
Schnader,  defendant's  father,  who  died  four  days  after  the  heater 
was  put  in  the  house;  as  he  does  not  survive  to  indicate  dissatis- 
faction, the  defendant  has  no  authority  to  do  so.  The  plaintiffs 
raised  no  such  question  in  the  court  below,  so  far  as  can  be 
learned  from  the  charge  or  the  points  presented;  but  as  the  case 
goes  back  for  retrial,  it  is  best  we  should  here  briefly  pass  upon  it. 

It  would  rather  lack  equality  to  hold  that  the  contract 
liability  for  the  price  passed  to  the  executor  and  devisee,  but 
the  right  to  insist  on  performance  died  with  the  testator;  neither 
reason  nor  law  imposes  upon  us  such  a  decision.  If  D,  C. 
Schnader  had  lived  to  make  such  trial  of  the  heater  as  was 
intended  by  the  contract,  and  had  expressed  no  dissatisfaction 
with  it,  there  would  be  a  conclusive  presumption  of  plaintiffs' 
complete  performance;  but  as  he  died  almost  immediately  after 
it  was  put  in,  his  executor  and  devisee  has  the  right  to  set  up  the 
same  defense  as  the  testator  might  have  done  had  he  lived.  It 
was  not  a  contract  for  a  suit  of  clothes,  or  for  a  set  of  artificial 
teeth,  which  could  be  satisfactory  to  but  one  person,  but  for  a 
heater,  which  was  to  be  satisfactory  to  the  occupant  of  the  house 
where  it  was  to  be  put;  death  and  the  last  will  have  made  this 
defendant  the  occupant,  and  he  has  the  right  to  insist  that  the 
heater  shall  woi'k  satisfactorily  to  him  as  he  has  succeeded  not 
only  to  the  property,  but  to  the  personal  use  of  it. 

The  defendant's  first  assignment  of  error  to  the  refusal  of  the 
court  to  instruct  as  requested  in  first  point:  "That  under  the 
law  the  contract  of  August  24,  1889,  is  a  guaranty  or  warranty 
that  the  apparatus  would  work  to  the  satisfaction  of  Davis  C. 
Schnader,  deceased,  and  that,  if  the  evidence  is  believed  that  as 


564  DISCHARGE  OF  CONTRACT.  [Part  V. 

€xecutor  he  fairly  and  reasonably  tried  and  tested  the  apparatus 
and  was  dissatisfied  with  it,  and  So  notified  plaintiffs,  there  can 
be  no  recovery,"  is  sustained.  This  in  effect  disposes  of  all  the 
other  assignments. 

The  judgment  is  reversed  and  a  venire  facias  de  novo  awarded.* 

1  "  The  cases  where  the  parties  provide  that  the  promisor  is  to  be  satisfied, 
or  to  that  effect,  are  of  two  classes  ;  and  whether  the  particular  case  at  any 
time  falls  within  the  one  or  the  other  must  depend  on  the  special  circum- 
stances, and  the  question  must  be  one  of  construction. 

"  In  the  one  class  the  right  of  decision  is  completely  reserved  to  the  prom- 
isor, and  without  ^being  liable  to  disclose  reasons  or  account  for  his  course, 
and  a  right  to  inquire  into  the  grounds  of  his  action  and  overhaul  his  deter- 
mination, is  absolutely  excluded  from  the  promisee  and  from  all  tribunals. 
It  is  sufficient  for  the  result  that  he  willed  it.  The  law  regards  the  parties 
as  competent  to  contract  in  that  manner,  and  if  the  facts  are  sufficient  to 
show  that  they  did  so,  their  stipulation  is  the  law  of  the  case.  The  promisee 
is  excluded  from  ^tting  up  any  claim  for  remuneration,  and  is  likewise 
debarred  from  questioning  the  grounds  of  decision  on  the  part  of  the  prom- 
isor, or  the  fitness  or  propriety  of  the  decision  itself.  The  cases  of  this  class 
are  generally  such  as  involve  the  feelings,  taste,  or  sensibility  of  the  promisor, 
and  not  those  gross  considerations  of  operative  fitness  or  mechanical  utility 
which  are  capable  of  being  seen  and  appreciated  by  others.  But  this  is  not 
always  so.  It  sometimes  happens  that  the  right  is  fully  reserved  where  it  is 
the  chief  ground,  if  not  the  only  one,  that  the  party  is  determined  to  pre- 
serve an  unqualified  option,  and  is  not  willing  to  leave  his  freedom  of  choice 
exposed  to  any  contention  or  subject  to  any  contingency.  He  is  resolved  to 
permit  no  right  in  any  one  else  to  judge  for  him  or  to  pass  on  the  wisdom  or 
unwisdom,  the  justice  or  injustice  of  his  action.  Such  is  his  will.  He  will 
not  enter  into  any  bargain  except  upon  the  condition  of  reserving  the  power 
to  do  what  others  might  regard  as  unreasonable.  The  following  cases  suffi- 
■ciently  illustrate  the  instances  of  the  first  class  :  Gibson  v.  Cranage,  39 
Mich,  49  ;  Taylor  v.  Brewer,  1  M.  &  S.  290  ;  McCarren  v.  McNulty,  7  Gray, 
139;  Brown  v.  Foster,  113  Mass.  136;  Zaleski  v.  Clark,  44  Conn.  218; 
Bossiter  v.  Cooper,  23  Vt.  522  ;  Hart  v.  Hart,  22  Barb.  606  ;  Tyler  v.  Ames, 
•6  Lans.  280. 

"In  the  other  class  the  promisor  is  supposed  to  undertake  that  he  will 
act  reasonably  and  fairly,  and  found  his  determination  on  grounds  which 
are  just  and  sensible,  and  from  thence  springs  a  necessary  implication  that 
his  decision  in  point  of  correctness  and  the  adequacy  of  the  grounds  of  it  are 
open  considerations  and  subject  to  the  judgment  of  judicial  triers.  Among 
the  cases  applicable  to  this  class  are  Daggett  v.  Johnson,  49  Vt.  345,  and 
Hartford  Sorghum  Mfg.  Co.  v.  Brush,  43  Vt.  528."  —Graves, C.  J.,  in  Walter 
A.  Wood  &c.  Co.  v.  Smith,  50  Mich.  565,  569-571.  See  also  Exhaust  Venti- 
lator Co.  v.  Chicago  &c.  By.,  66  Wis.  218 ;  Silsby  Mfg.  Co.  v.  Chico,  11 
Sawyer,  183  ;  24  Fed.  Rep.  893. 


Chap.  III.  §  2]  BY  BREACH.  555 


CHAPTER  III. 

DISCHARGE  OF  CONTRACT  BY  BREACH. 

§  1.   Position  of  parties  Avhere  a  contract  is  discharged  by  breach. 

DERMOTT   V.   JONES. 

2  WALLACE   (U.   S.),   1.  — 1864. 
[Reported  herein  at  p.  641.] 

Note.  —  All  of  the  cases  in  this  chapter  will  be  found  to  illustrate  this  topic. 


§  2.    Forms  of  discharge  by  breach. 

(i.)    Discharge  by  renunciation  before  performance  due. 
WINDMULLER   et  al   v.   POPE  et  al 

107  NEW  YORK,  674.  — 1887. 

This  was  an  action  to  recover  damages  for  alleged  breach  of  a 
contract  to  purchase  a  quantity  of  iron.  I  Verdict  for  plaintiffs. 
Judgment  affirmed  at  General  Term.         ' 

In  January,  1880,  the  parties  entered  into  a  cpntract  for  the 
sale  by  plaintiffs  and  purchase  by  defendants  of  *'  about  twelve 
hundred  tons  old  iron,  Vignol  rails,  for  shipment  from  Europe  at 
sellers'  option,  by  sail  or  steam  vessels  to  New  York,  Philadel- 
phia, or  Baltimore,  at  any  time  from  May  1  to  July  15,  1880,  at 
thirty-five  dollars  per  ton,  .  .  .  deliverable  in  vessels  at  either 
of  the  above  ports  on  arrival."  On  or  about  June  12,  1880, 
defendants  notified  plaintiffs  that  they  would  not  receive  or  pay 
for  the  iron,  or  any  part  of  it,  and  advised  that  plaintiffs  better 
stop  at  once  in  attempting  to  carry  out  the  contract.     Plaintiffs 


656  DISCHARGE  OF  CONTRACT,  [Pabt  V, 

thereupon  sold  the  iron  abroad  which  they  had  purchased  to 
carry  out  the  contract. 

Per  Curiam.  We  think  no  error  is  presented  upon  the  record 
which  requires  a  reversal  of  the  judgment.  The  defendants  hav- 
ing on  the  12th  of  June,  1880,  notified  the  plaintiffs  that  they 
would  not  receive  the  iron  rails  or  pay  for  them,  and  having 
informed  them  on  the  next  day  that  if  they  brought  the  iron  to 
New  York  they  would  do  so  at  their  own  peril,  and  advised  them 
that  they  had  better  stop  at  once  attempting  to  carry  out  the 
contract,  so  as  to  make  the  loss  as  small  as  possible,  the  plaintiffs 
were  justified  in  treating  the  contract  as  broken  by  the  defendant 
at  that  time,  and  were  entitled  to  bring  the  action  immediately 
for  the  breach,  without  tendering  the  delivery  of  the  iron,  or 
awaiting  the  expiration  of  the  period  of  performance  fixed  by 
the  contract;  nor  could  the  defendants  retract  their  renunciation 
of  the  contract  after  the  plaintiffs  had  acted  upon  it,  and  by  a 
sale  of  the  iron  to  other  parties  changed  their  position.  Dillon 
V.  Anderson,  43  X.  Y.  231;  Howard  v.  Daly,  61  Id.  362;  Ferris  v. 
Spooner,  102  Id.  12;  Hochster  v.  De  La  Tour,  2  El.  &  Bl.  678; 
Cort  V.  Ambergate  &c.  Railway  Co.,  17  Ad.  &  El.  127;  Crabtree 
V.  Messersmith,  19  la.  179;  Benjamin  on  Sales,  §§  567,  568. 

The  ordinary  rule  of  damages  in  an  action  by  a  vendor  of  goods 
and  chattels,  for  a  refusal  by  the  vendee  to  accept  and  pay  for 
them,  is  the  difference  between  the  contract  price  and  the  market 
value  of  the  property  at  the  time  and  place  of  delivery.  Dana 
v.  Fiedler,  12  N.  Y.  40;  Dustan  v.  Mc Andrew,  44  Id.  72;  Cahen 
V.  Piatt,  69  Id.  348. 

«  «  »  «  « 

All  concur.  Judgment  affirmed.* 


DINGLEY  et  al.  v.  OLER  et  aX. 

117  UNITED  STATES,  490.— 1886. 

Assumpsit  for  damages  for  alleged  breach  of  contract.     Judg- 
ment for  plaintiffs.     Writs  of  error  by  both  parties. 

1  See  also  Kurtz  v.  Frank,  76  Ind.  594,  ante,  p.  368. 


Chaf.  III.  §  2.]  BY   BREACH.  657 

Plaintiffs,  in  1879,  sold  defendants  a  quantity  of  ice  to  be 
returned  by  defendants  the  following  year.  Ice  was  then  worth 
fifty  cents  a  ton.  Next  season,  in  July,  when  ice  was  worth  five 
dollars  a  ton,  plaintiffs  demanded  a  return  of  the  amount  delivered. 
Defendants  replied:  "We  must,  therefore,  decline  to  ship  the  ice 
for  you  this  season,  and  claim  as  our  right  to  pay  you  for  the 
ice  in  cash  at  the  price  you  offered  other  parties  here  (that  is, 
fifty  cents),  or  give  you  ice  when  the  market  reaches  that  point." 
In  ansAver  to  another  demand  defendants  replied  in  substance  the 
same  and  asked  for  a  reply  or  a  personal  interview.  Plaintiffs 
thereupon,  without  waiting  for  the  end  of  the  season,  commenced 
this  action. 

Mk.  Justice  Matthews.  .  .  .  We  differ,  however,  from  the 
opinion  of  the  Circuit  Court  that  the  defendants  are  to  be  con- 
sidered, from  the  language  of  their  letters  above  set  out,  as  having 
renounced  the  contract  by  a  refusal  to  perform,  within  the  mean- 
ing of  the  rule  which,  it  is  assumed,  in  such  a  case,  confers  upon 
the  plaintiffs  a  right  of  action  before  the  expiration  of  the  contract 
period  for  performance.  We  do  not  so  construe  the  correspond- 
ence between  the  parties.  In  the  letter  of  July  7th,  the  defend- 
ants say:  "We  nfust,  therefore,  decline  to  ship  the  ice  for  you 
this  season,  and  claim,  as  our  right,  to  pay  you  for  the  ice,  in 
cash,  at  the  price  you  offered  it  to  other  parties  here,  or  give  you 
ice  when  the  market  reaches  that  point."  Although  in  this 
extract  they  decline  to  ship  the  ice  that  season,  it  is  accompanied 
with  the  expression  of  an  alternative  intention,  and  that  is,  to 
ship  it,  as  must  be  understood,  during  that  season,  if  and  when 
the  market  price  should  reach  the  point  which,  in  their  opinion, 
the  plaintiffs  ought  to  be  willing  to  accept  as  its  fair  price  between 
them.  It  was  not  intended,  we  think,  as  a  final  and  absolute 
declaration  that  the  contract  must  be  regarded  as  altogether  off, 
so  far  as  their  performance  was  concerned,  and  it  was  not  so 
treated  by  the  plaintiffs.  For,  in  their  answer  of  July  10th,  they 
repeat  their  demand  for  delivery  immediately,  speak  of  the  letter 
of  the  7th  instant  as  asking  "  for  a  postponement  of  the  delivery," 
urge  them  "to  fill  our  order,"  and  close  with  "hoping  you  (the 
defendants)  will  take  a  more  favorable  view  upon  further  reflec- 
tion," etc.     Here,  certainly,  was  a  locus  penitentice  conceded  to 


658  DISCHARGE  OF  CONTRACT.  [Part  V. 

the  defendants  by  the  plaintiffs  themselves,  and  a  request  for 
fiyrther  consideration,  based  upon  a  renewed  demand,  instead  of 
abiding  by  and  standing  upon  the  previous  one. 

Accordingly,  on  July  loth,  the  defendants  replied  to  the 
demand  for  an  immediate  delivery  to  meet  the  exigency  of  the 
plaintiffs'  sale  of  the  same  ice  to  others,  and  the  letter  is  evi- 
dently and  expressly  confined  to  an  answer  to  the  particular 
demand  for  a  delivery  at  that  time.  They  accordingly  say: 
"  Now  you  ask  us  at  a  time  when  we  are  pressed  by  our  sales  and 
by  short  supply  threatening  us  and  others,  to  deliver  to  you  the 
equivalent  in  tons  of  the  ice  taken  from  you  under  the  circum- 
stances stated.  This  does  not  seem  to  us  to  be  fair, "  etc.  "  We 
cannot,  therefore,  comply  with  your  request  to  deliver  to  you  the 
ice  claimed,  and  respectfully  submit  that  you  ought  not  to  ask  this 
of  us  in  view  of  the  fact  stated  herein  and  in  ours  of  the  7th." 
This,  we  think,  is  very  far  from  being  a  positive,  unconditional, 
and  unequivocal  declaration  of  fixed  purpose  not  to  perform  the 
contract  in  any  event  or  at  any  time.  In  view  of  the  consequences 
sought  to  be  deduced  and  claimed  as  a  matter  of  law  to  follow, 
the  defendants  have  a  right  to  claim  that  their  expressions,  sought 
to  be  converted  into  a  renunciation  of  the  contract,  shall  not  be 
enlarged  by  construction  beyond  their  strict  meaning. 

The  view  taken  by  the  Circuit  Court  of  the  correspondence  and 
conduct  of  the  parties,  and  which  we  hold  to  be  erroneous, 
brought  the  case  within  the  rule  laid  down  by  the  English  courts 
in  Hochster  v.  De  La  Tour,  2  El.  &  Bl.  678;  Frost  v.  Knight,  L.  R. 
7  Ex.  Ill;  Danube  &  Black  Sea  Railway  Co.  v.  Xenos,  11  C.  B. 
N.  S.  152;  and  which,  in  Boper  v.  Johnson  (L.  R.  8  C.  P.  167,  168) 
was  called  a  novel  doctrine ;  followed  by  the  courts  of  several  of 
the  States  (Crabtree  v.  Messersmith,  19  Iowa,  179;  Holloway  v. 
Griffith,  32  Iowa,  409;  Fox  v.  Kitton,  19  111.  519;  Chamber  of 
Commerce  y.  Sollitt,  43  111.  519;  Diigan  v.  Anderson,  36  Maryland, 
567;  Burtis  v.  Thompson,  42  X.  Y.  246);  but  disputed  and  denied 
by  the  Supreme  Judicial  Court  of  Massachusetts  in  Daniels  v. 
Newton  (114  Mass.  530)  and  never  applied  in  this  court.  Accord- 
ingly, the  right  to  maintain  the  present  action  was  justified  upon 
the  principle  supposed  to  be  established  by  those  cases. 

The  construction  we  place  upon  what  passed  between  the  parties 


Chap.  III.  §  2.]  BY  BREACH.  559 

renders  it  unnecessary  for  us  to  discuss  or  decide  whether  the 
doctrine  of  these  authorities  can  be  maintained  as  applicable  to 
the  class  of  cases  to  which  the  present  belongs;  for,  upon  that 
construction,  this  case  does  not  come  within  the  operation  of  the 
rule  involved. 

In  Smooths  Case  (15  Wall.  36)  this  court  quoted  with  approval 
the  qualification  stated  by  Benjamin  on  Sales  (1st  ed.  424,  2d  ed. 
§  568)  that, 

"  A  mere  assertion  that  the  party  will  be  unable,  or  will  refuse  to 
perform  his  contract,  is  not  sufficient;  it  must  be  a  distinct  and  une- 
quivocal absolute  refusal  to  perform  the  promise,  and  must  be  treated 
and  acted  upon  as  such  by  the  party  to  whom  the  promise  was  made ; 
for,  if  he  afterwards  continue  to  urge  or  demand  a  compliance  with 
the  contract,  it  is  plain  that  he  does  not  understand  it  to  be  at  an  end." 

We  do  not  find  any  such  refusal  to  have  been  given  or  acted 
upon- in  the  present  case,  and  the  facts  are  not  stronger  than  those 
in  Avery  v.  Bowden  (5  El.  &  Bl.  714;  S.  C.  6  El.  &  Bl.  953), 
which  were  held  not  to  constitute  a  breach  or  renunciation  of  the 
contract.  The  most  recent  English  case  on  the  subject  is  that  of 
Johnstone  v.  Milling,  in  the  Court  of  Appeal  (16  Q.  B.  D.  460), 
decided  in  January  of  the  present  year,  which  holds  that  the 
words  or  conduct  relied  on  as  a  breach  of  the  contract  by  antici- 
pation must  amount  to  a  total  refusal  to  perform  it,  and  that  that 
does  not  by  itself  amount  to  a  breach  of  the  contract  unless  so 
acted  upon  and  adopted  by  the  other  party. 

The  present  action  was  prematurely  brought  before  there  had 
been  a  breach  of  contract,  even  in  this  sense,  by  the  defendants, 
for  what  they  said  on  July  15th  amounted  merely  to  a  refusal  to 
comply  with  the  particular  demand  then  made  for  an  immediate 
delivery. 

The  judgment  is  accordingly  reversed  upon  the  writ  of  error 
sued  out  by  the  defendants  below,  and  the  cause  remanded,  with 
instructions  to  take  further  proceedings  therein  according  to  law; 
and  upon  the  writ  of  error  of  plaintiffs  below  judgment  will  be 
given  that  they  take  nothing  by  their  writ  of  error. 


560  DISCHAKGE  OF  CONTRACT.  [Pabt  V. 

(u.)    Impossibility  created  by  one  party  before  performance  due. 

WOLF  V.   MARSH. 

64  CALIFORNIA,  228.  —  1880. 

Action  on  an  instrument  in  writing.  Judgment  for  plaintiff. 
Defendant  appeals. 

The  instrument  was  as  follows : 

"Martinez,  November  24th,  1866. 
"For  value  received,  I  promise  to  pay  to  S,  Wolf,  or  order,  four  hun- 
dred and  forty-nine  dollars,  with  interest  at  one  per  cent  per  month  from 
date  until  paid,  principal  and  interest  payable  in  United  States  gold  coin. 
This  note  is  made  with  the  express  understanding  that  if  the  coal  mines 
in  the  Marsh  Ranch  yield  no  profits  to  me,  then  this  note  is  not  to  be 
paid,  and  the  obligation  herein  expressed  shaU  be  null  and  void. 

"  C.  P.  Marsh." 

On  November  1,  1871,  defendant  conveyed  his  interest  in  the 
ranch  to  one  Williams.  Up  to  that  date  the  mines  had  yielded 
defendant  no  profits. 

Sharpstein,  J.  .  .  .  Before  the  mines  had  yielded  any  profits 
to  the  defendant,  he  sold  and  conveyed  his  interest  in  them  to  a 
stranger.  By  so  doing  he  voluntarily  put  it  out  of  his  power 
ever  to  realize  any  profits  from  the  mines.  However  great  the 
yield  of  profits  from  them  might  be  after  that,  they  could  yield 
none  to  him.  And  the  principle  is  elementary,  that,  "if  one 
voluntarily  puts  it  out  of  his  power  to  do  what  he  has  agreed,  he 
breaks  his  contract,  and  is  immediately  liable  to  be  sued  therefor, 
without  demand,  even  though  the  time  specified  for  performance 
has  not  expired."     Bishop  on  Cont.,  §  690  (1426). 

That  this  case  is  within  that  principle,  we  do  not  entertain  a 
doubt.  When  the  note  was  executed,  the  defendant  was  a  half 
owner  of  the  mines,  which  were  leased  on  such  terms  that  the 
production  of  coal  from  them  must  have  yielded  him  a  profit. 
After  making  the  note,  he  voluntarily  committed  an  act  which 
made  it  impossible  for  the  contingency  upon  which  the  note  would 
become  due  and  payable  ever  to  arise.  When  he  did  that,  he 
violated  his  contract,  and  the  note  at  once  became  due  and  pay- 
able; and  as  this  acti-on  was  commenced  within  four  years  after 


Chap.  III.  §  2.]  BY  BREACH.  561 

that,  it  follows  that  the  judgment  and  order  of  the  court  appealed 
from  must  be  affirmed.^ 


DELAMATER  v.   MILLER. 

1  COWEN   (N.  Y.),  75.  — 1823. 

Assumpsit  by  Miller  against  Delamater;  for  that  the  former 
had  exchanged  his  horse  with  one  Schermerhorn  for  his  (S.'s) 
watch,  which  was  in  Delamater's  possession  at  his  (D.'s)  house; 
and  which  he,  being  present  at  the  contract,  agreed  to  keep  and 
deliver  to  Miller,  who  said  he  should  call  for  it  on  the  Saturday 
following.  Miller  did  not  demand  it  till  the  Sunday  following, 
when  Delamater  refused  to  deliver  it,  assuming  to  retain  it  for  a 
dollar  due  him  from  Schermerhorn;  and  he  afterAvards  gave  up 
the  watch  to  Schermerhorn,  who  sold  it.     Judgment  for  plaintiff. 

Curia.  The  defendant  was  not  bound  to  regard  the  demand  on 
Sunday  (vid.  Cowen's  Treatise,  135,  and  the  cases  there  cited); 
but,  as  the  defendant  parted  with  the  watch,  and  thereby  put  it 
out  of  his  power  to  perform  the  contract,  the  plaintiff  was  excused 
from  the  necessity  of  making  any  demand.  Sir  Anthony  Main's 
Case,  5  Rep.  21, —  the  2d  resolution  in  that  case. 

And  the  judgment  was  affirmed. 


(m.)   Renunciation  in  the  course  of  performance. 
HALE  et  al.   v.   TROUT  et  al. 

36  CALIFORNIA,  229.— 1868. 

Action  for  contract  price  of  lumber  delivered,  and  for  damages 
for  breach  of  contract  by  defendants  in  declaring  the  contract  at 
an  end  and  refusing  to  receive  any  more  lumber  under  it.  Judg- 
ment for  plaintiffs  for  lumber  delivered,  but  not  for  breach. 
Plaintiffs  appeal. 

1  Accord :  Cape  Fear  &c.  Nov.  Co.  v.  Wilcox,  7  Jones'  L.  (N.  C.)  481 ; 
United  States  v.  Peck,  102  U.  S.  64. 


662  DISCHARGE  OF  CONTRACT.  [Part  V, 

Sawyer,  C.  J.  .  .  .  Conceding  a  breach  to  have  occurred  on 
the  part  of  the  defendants,  it  is  claimed  on  their  behalf  that  the 
plaintiffs  had  but  one  of  three  courses  to  pursue:  firstly,  ta 
rescind  the  contract  and  sue  for  the  value  of  the  lumber  delivered ; 
secondly,  proceed  to  manufacture  and  tender  the  lumber,  and  sue 
upon  the  contract  from  month  to  month  for  a  corresponding^ 
amount  of  the  contract  price;  or,  thirdly,  proceed  to  manufacture 
and  tender  the  lumber  according  to  the  terms  of  the  contract,  till 
the  whole  two  million  feet  should  be  delivered  or  tendered,  and 
then  sue  for  the  entire  amount  at  once.  And  the  court  below 
must  either  have  adopted  this  theory,  or  have  rendered  judgment 
upon  the  hypothesis  that  the  only  breach  on  the  part  of  the 
defendants  consisted  in  not  paying  for  a  part  of  the  lumber 
delivered  and  accepted,  and  that  such  non-payment  did  not  con- 
stitute a  breach  of  the  contract  entitling  the  plaintiffs  to  damages 
beyond  the  price  of  the  amount  of  lumber  delivered  and  received, 
but  not  paid  for.  But  if  it  be  conceded  that  plaintiffs  were 
entitled  to  go  on  manufacturing  and  tendering  the  lumber,  and 
then  sue  for  the  contract  price,  as  suggested,  as  to  which  there 
may  be  some  doubt  (see  Clark  v.  Marsiglia,  1  Den.  318;  Derby  et 
al.  V.  Johnson  et  al.,  21  Vt.  22),  it  is  clear,  both  on  principle 
and  authority,  that  the  plaintiffs  were  entitled  to  pursue  another 
course,  the  one  adopted  in  this  action;  that  is  to  say,  to  treat  the 
contract  as  wholly  broken  by  the  defendants,  and  sue  to  recover, 
iirstly,  the  contract  price  for  the  lumber  actually  delivered  and 
received  under  the  contract;  and,  secondly,  upon  the  breach  to 
recover  the  entire  damages  resulting  from  the  breach  on  the  part 
of  defendants  in  putting  an  end  to  and  refusing  to  receive  any 
more  lumber  under  the  contract. 

It  may  be  that  the  monthly  payments  called  for  by  the  contract 
were  absolutely  necessary  to  enable  the  plaintiffs  to  perform  their 
covenants,  and  that  without  such  payments  it  would  have  been 
impossible  for  them  to  proceed.  It  would  require  a  large  amount 
of  capital  for  plaintiffs  to  proceed  in  the  manufacture  of  lumber 
for  a  period  of  three  years  without  receiving  payments.  Besides, 
they  were  compelled  to  erect,  and  did  erect,  a  new  mill  for  the 
express  purpose  of  enabling  them  to  fulfill  their  contract.  It 
would  be  equally  onerous  to  be  compelled  to  sue  each  month,  and 


Chap.  III.  §  2.]  BY  BREACH.  5t)3 

recover  the  amount  of  the  several  monthly  payments  at  the  end 
of  a  protracted  law  suit.  They  were  not  bound  to  do  so  under 
the  terms  of  their  contract.  There  was  not  merely  a  neglect  of 
payment,  but  they  were  notified  by  the  defendants  that  they 
should  treat  the  contract  as  at  an  end,  and  would  receive  no  more 
lumber  under  it.  Defendants  thereby  prevented  the  plaintiffs 
from  fulfilling  their  contract.  The  plaintiifs,  after  this,  even  if 
they  would  be  justified  in  so  doing,  could  not  be  required,  as  a 
condition  precedent  to  obtaining  adequate  relief  for  the  breach, 
to  go  on  manufacturing  lumber  at  the  risk  of  finding  no  market 
for  it,  or  of  being  unable  to  collect  from  the  defendants  the 
amounts  that  might  become  due  under  the  contract.  There  was 
a  total  breach  of  an  entire  contract,  and  the  plaintiifs  were 
entitled  to  sue  upon  the  breach  immediately,  and  recover  the 
entire  damages  resulting  from  it,  without  waiting  for  the  time  for 
full  performance  to  elapse.  The  following  authorities  sustain 
this  view:  Shaffer  v.  Lee,  8  Barb.  415;  Masterton  v.  Mayor  of 
Brooklyn,  7  Hill,  61;  Clark  v.  Mayor  of  N.  Y.,  4  N.  Y.  (4  Comst.) 
343;  Royalton  v.  R.  and  W.  Turnpike  Co.,  14  Vt.  311;  Derby  v. 
Johnson,  21  Vt.  22;  Jones  y.  Judd,  4  N.  Y.  414;  Phil,  Wil.  and 
Bait.  R.  R.  Co.  V.  Howard,  13  Howard,  U.  S.  313,  314,  344;  Fisk 
V.  Folley,  6  Hill,  55;  Shannon  v.  Comstock,  21  Wend.  460;  Seaion 
V.  Second  Municipality  of  New  Orleans,  3  La.  Am.  R.  45;  Rogers 
V.  Parham,  8  Cobb,  Ga.  190;  Planche  v.  Colburn,  8  Bing.  15; 
Clossman  v.  Lacoste,  28  Eng.  L.  and  Eq.  141. 

The  case  of  Masterton  v.  Mayor  of  Brooklyn,  supra,  was  similar 
in  principle  to  this.  The  suit  was  for  a  breach  of  a  contract, 
whereby  the  plaintiff  covenanted  to  furnish  for  a  specified  price, 
all  the  marble  required  to  build  the  city  hall  in  the  city  of 
Brooklyn,  to  be  delivered  from  time  to  time,  as  required  by  the 
superintendent,  and  paid  for  in  instalments  as  the  work  pro- 
gressed. After  the  delivery  of  something  over  fourteen  thousand 
feet,  which  was  paid  for,  the  defendants  suspended  the  work,  and 
like  the  defendants  in  this  case,  "refused  to  receive  any  more 
materials  from  the  plaintiffs,  though  the  latter  were  ready,  and 
offered  to  perform."  At  the  time  of  the  suspension  of  the  work, 
the  entire  quantity  of  marble  remaining  to  be  delivered,  in  order 
to   fulfill   the   contract,   was   about   eighty-nine    thousand    feet. 


664  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

Plaintiff  claimed,  and,  in  an  action  for  damages  on  the  breach, 
was  allowed  to  prove,  against  the  objection  of  the  defendants,  the 
difference  between  the  cost  of  furnishing  the  marble  and  the 
contract  price.  This  ruling  presented  one  of  the  questions  for 
determination  on  appeal,  and  it  was  decided  in  favor  of  the 
plaintiff,  Mr.  Chief  Justice  Nelson,  in  discussing  the  question, 
says: 

"  When  the  contract,  as  in  this  case,  is  broken  before  the  arrival  of 
the  time  for  full  performance,  and  the  opposite  party  elects  to  consider 
it  in  that  light,  the  market  price  on  the  day  of  the  breach  is  to  govern  in 
the  assessment  of  damages.  ...  If  there  was  a  market  value  of  the 
art,icle  in  this  case,  the  question  would  be  a  simple  one.  As  there  is 
none,  however,  the  parties  will  be  obliged  to  go  into  an  inquiry  as  to  the 
actual  cost  of  furnishing  the  article  at  the  place  of  delivery."  7  Hill, 
71,  72. 

And  this  is  what  was  done  in  the  case  now  under  considera- 
tion.    And  Mr,  Justice  Beardsley  says : 

"  The  plaintiffs  were  not  bound  to  wait  till  the  period  has  elapsed  for 
the  complete  performance  of  the  agreement,  nor  to  make  successive  offers 
of  performance  in  order  to  recover  all  their  damages.  They  might  regard 
the  contract  as  broken  up,  so  far  as  to  absolve  them  for  making  further 
•^orts  to  perform,  and  give  a  right  to  recover  full  damages,  as  for  a  total 
ireach."     Id.  75. 

In  the  case  of  the  Town  of  Royalton  v.  R.  &  W.  Turnpike  Co., 
there  was  a  contract,  by  the  terms  of  which  the  defendant  cov- 
enanted to  support  and  keep  in  repair  for  the  term  of  twenty 
years  a  bridge  which  the  plaintiff  was  bound  to  maintain,  in  con- 
sideration of  which  the  plaintiff  covenanted  to  pay  the  defendant 
the  sum  of  twenty-five  dollars  per  annum  for  the  entire  period  of 
time.  The  defendant  supported  the  bridge  for  a  period  of  eight 
years,  and  then  committed  a  breach  by  suffering  it  to  go  to  decay, 
and  refusing  to  support  it  longer.  The  suit  was  upon  the  con- 
tract for  the  breach,  and  it  was  held  that  the  plaintiff  was  entitled 
to  recover  full  damages,  covering  the  entire  twelve  years  yet 
unexpired,  at  the  time  of  the  commencement  of  the  suit.  The 
court,  by  Redfield,  J.,  say: 

"  The  rule  of  damages  in  this  case  should  have  been  to  give  the  plain- 
tiffs the  difference  between  what  they  were  to  pay  the  defendant  and  the 


Chap.  in.  §  2.]  BY  BREACH.  666 

probable  expense  pf  performing  the  contract,  and  thus  assess  the  entire 
damages  for  the  remaining  twelve  years."     14  Vt.  324. 

So  in  Phil,  Wil.  and  Bait.  R.  R.  Co.  v.  Howard,  upon  a  contract 
for  grading  and  doing  certain  work  on  a  railroad,  in  which  it  was 
provided  that  "in  case  the  party  ct  the  second  part  at  any  time 
be  of  opinion  that  this  contract  is  not  duly  complied  with  by  the 
party  of  the  first  part,  or  that  it  is  not  in  due  progress  of  execu- 
tion, or  that  the  said  party  of  the  first  part  is  irregular  or  negli- 
gent, then  and  in  such  case  he  shall  be  authorized  to  declare  this 
contract  forfeited,  and  thereupon  the  same  shall  be  null."  13 
How.  319.  Subsequently,  on  the  statement  of  the  engineer  that 
the  contract  was  "not  in  due  progress  of  execution,"  after  recit- 
ing that  the  party  of  the  first  part  had  not  complied  with  the 
contract,  it  was  by  the  company  "  resolved  that  the  said  contract 
be  and  the  same  is  hereby  declared  to  be  forfeited."  Id.  313. 
Plaintiff  sued,  and  one  of  the  breaches  relied  on  was  for  "  fraudu- 
lently declaring  the  contract  forfeited,  and  thereby  depriving 
plaintiff  of  the  gains  which  would  otherwise  have  accrued  to  him 
on  the  completion  of  the  contract."  Id.  313.  The  court  in- 
structed the  jury  to  the  effect  that  if  the  company  annulled  the 
contract,  not  for  the  reasons  stated,  but  for  the  purpose  of  having 
the  remaining  work  done  cheaper  than  the  contract  price,  the 
plaintiff  was  entitled  to  recover  damages  for  the  loss  of  profit 
sustained  by  the  refusal  of  the  company  to  permit  him  to  finish 
the  work  contracted  to  be  performed.  In  considering  the  rule  of 
damages,  the  Supreme  Court,  per  Curtis,  J.,  say: 

"Actual  damages  clearly  include  the  direct  and  actual  loss  which 
plaintiff  sustains  propter  rem  ipsam  non  habitam.  And  in  case  of  a  con- 
tract like  this  that  loss  is,  among  other  things,  the  diiference  between  the 
cost  of  doing  the  work  and  the  price  paid  for  it.  This  difference  is  the 
inducement  and  real  consideration  which  causes  the  contractor  to  enter 
into  the  contract.  For  this  he  expends  his  time,  exerts  his  skill,  uses  his 
capital,  and  assumes  the  risks  which  attend  the  enterprise.  And  to  de- 
prive him  of  it,  when  the  other  party  has  broken  the  contract,  and  unlaw- 
f  illy  put  an  end  to  the  work,  would  be  unjust.  There  is  no  rule  of  law 
which  requires  us  to  inflict  this  injustice.  .  .  .  We  hold  it  to  be  a  clear 
rule  that  a  gain  or  profit  of  which  the  contractor  was  deprived  by  the 
refusal  of  the  company  to  allow  him  to  proceed  with  and  complete  the 
work  was  a  proper  subject  of  damages."     Id.  344. 


666  DISCHARGE  OF  CONTRACT.  [Part  V. 

In  Clark  v.  Mayor  of  New  Yorlc  (4  New  York,  343)  the  court 
say: 

"  But  when  the  contract  is  terminated  by  one  party  against  the  consent 
of  the  other,  the  latter  will  not  be  confined  to  the  contract  price,  but  may 
briiio-  his  action  for  a  breach  of  the  contract,  and  recover  as  damages  all 
that  he  may  lose  by  way  of  profits  in  not  being  allowed  to  fulfill  the 
contract;  or  he  may  waive  the  contract  and  bring  his  action  on  the 
common  counts  for  work  and  labor  generally,  and  recover  what  the  work 
done  is  actually  worth.  But  in  the  latter  case,  he  will  not  be  allowed  to 
recover  as  damages  anything  for  speculative  profits,  but  the  actual  value 
of  the  work  and  materials  must  be  the  rule  of  damages.  ...  If  the 
party  seeks  to  recover  more  than  the  actual  worth  of  this  work,  in  a  case 
where  he  is  prevented  from  performing  the  entire  contract,  he  must 
resort  to  his  action  directly  upon  the  contract." 

And  in  Jones  v.  ^Judd  (4  N.  Y.  414)  the  court  say : 

"  If  the  performance  had  been  arrested  by  the  act  or  omission  of  the 
defendants,  the  plaintiff  would  have  had  his  election  to  treat  the  contract 
as  rescinded,  and  recover,  on  a  quantum  meruit,  the  value  of  his  labor,  or 
he  might  sue  upon  the  agreement  and  recover  for  the  work  completed, 
according  to  the  contract,  and  for  the  loss  in  profits  or  otherwise  which 
he  had  sustained  by  the  interruption." 

Now,  what  was  done  and  what  was  said  might  be  done  in  the 
cases  cited,  is  precisely  what  was  done  in  the  case  under  con- 
sideration. The  plaintiffs  sued  directly  upon  the  contract,  to 
recover  the  contract  price  for  the  lumber  delivered  and  received, 
and  directly  upon  the  contract  for  the  breach  in  declaring  the 
contract  at  an  end  and  refusing  to  take  any  more  lumber  under  it. 
And  the  foregoing  cases  show  that  they  may  so  sue  and  recover  the 
whole  damage  sustained  in  consequence  of  the  breach,  without 
waiting  for  the  time  of  performance  to  elapse  or  repeating  an 
offer  to  perform  from  month  to  month,  as  the  time  for  delivery 
arrives,  and  that  the  rule  of  damages  upon  the  breach  is  the  clear 
profit  which  the  plaintiffs  would  have  made,  that  is  to  say,  the 
difference  between  the  contract  price  and  what  it  would  have  cost 
the  plaintiffs  to  manufacture  and  deliver  the  lumber  according  to 
the  terms  of  the  contract. 

The  cases  cited  by  defendants  are  not  in  conflict  with  the 
authorities  referred  to  in  this  opinion.  Most  of  them  do  not 
touch  the  precise  question,  and  are  therefore  not  in  point.     The 


<Jhap.  III.  §  2.]  BY  BREACH.  667 

case  of  Rogers  v.  Parham  (8  Cobb,  190)  is  against  the  respond- 
ents, and  sustains  the  views  here  taken.  The  same  may  be  said 
of  Oirard  v.  Taggart  (5  S.  &  R.  19)  so  far  as  it  bears  upon  the 
question.  There  was  a  sale  of  teas  at  auction,  to  be  paid  for  in 
sixty,  ninety,  and  one  hundred  and  twenty  days,  the  purchaser, 
on  delivery  of  the  teas,  to  give  notes  with  approved  indorsers. 
The  purchaser  finally  refused  to  take  the  teas  or  give  the  notes. 
Thereupon  the  vendor  sold  the  teas  again  at  a  much  lower  price, 
and  sued  at  once  to  recover  the  difference.  In  the  language  of 
the  chief  justice,  the  action  was  "special,  on  the  breach  of  the 
contract."  Upon  the  question  as  to  when  the  action  could  be 
brought,  and  the  measure  of  damages,  Mr.  Justice  Gibson  said : 

"  The  breach  having  put  an  end  to  every  idea  of  further  performance 
by  either  is  a  violation  of  the  contract  in  all  its  parts,  for  which  the  seller 
may  recover  whatever  damages  he  can  prove  he  has  sustained.  The  buyer, 
after  having  disaffirmed  the  sale,  so  far  as  he  could  by  acts  of  his  own, 
must  not  be  permitted  to  treat  the  contract  as  still  existing,  for  the  pur- 
poses of  being  performed  by  him  specifically.  But  the  seller  may,  if  he 
please,  consider  it  existing  only  for  the  purpose  of  giving  a  remedy  for 
the  breach."     5  S.  &  R.  33. 

See  also  opinion  of  Mr.  Justice  Duncan  in  same  case  {Id.  543) ; 
also  Derby  et  al.  v.  Johnson  et  al.,  21  Vt.  22.  Some  principles 
stated  in  Foioler  v.  Armour  (24  Ala.  194)  seem  to  be  favorable  to 
respondents'  view,  but  if  so  they  are  wholly  against  the  current 
of  authorities  brought  to  our  notice. 

In  this  case  the  difference  between  the  contract  price  and  cost 
of  performance,  or  the  clear  profits  upon  the  amount  of  lumber 
remaining  undelivered,  the  court  found  to  be  $6304.79,  which 
sum  should  have  been  added  to  the  amount  for  which  judgment 
was  rendered. 

Judgment  reversed,  and  the  District  Court  directed  to  enter 
judgment  upon  the  findings  in  accordance  with  the  views  expressed 
in  this  opinion.^ 

1  "  When  a  party  injured  by  the  stoppage  of  a  contract  elects  to  rescind  it, 
then,  it  is  true,  lie  cannot  recover  any  damages  for  a  breach  of  the  contract, 
either  for  outlay  or  for  loss  of  profits  ;  he  recovers  the  value  of  his  services 
actually  performed  as  upon  a  quantum  meruit.  There  is  then  no  question 
of  losses  or  profits.  But  when  he  elects  to  go  for  damages  for  the  breach 
of  the  contract,  the  first  and  most  obvious  damage  to  be  shown  is,  the 


668  DISCHARGE  OF  CONTRACT.  [Part  V. 


CR<^jj(n<yfc^ 


DERBY  e<aZ.   v.   JOHNSON  e«  oZ. 

21  VERMONT,   17.  — 1848. 


Book  account.  Judgment  for  plaintiffs.  Exceptions  by  de- 
fendants. 

Plaintiffs  contracted  to  do  the  stone  work,  masonry  and  blast- 
ing on  three  miles  of  railroad,  defendants  to  pay  specified  prices 

amount  which  he  has  been  induced  to  expend  on  the  faith  of  the  contract, 
including  a  fair  allowance  for  his  own  time  and  services.  If  he  chooses  to 
go  further,  and  claims  for  the  loss  of  anticipated  profits,  he  may  do  so,  sub- 
ject to  the  rules  of  law  as  to  the  character  of  profits  which  may  be  thus 
claimed.  It  does  not  lie,  however,  in  the  mouth  of  the  party,  who  has 
voluntarily  and  wrongfully  put  an  end  to  the  contract,  to  say  that  the  party 
injured  has  not  been  damaged  at  least  to  the  amount  of  what  he  has  been 
induced  fairly  and  in  good  faith  to  lay  out  and  expend  (including  his  own 
services),  after  making  allowance  for  the  value  of  materials  on  hand ;  at 
least  it  does  not  lie  in  the  mouth  of  the  party  in  fault  to  say  this,  unless  he 
can  show  that  the  expenses  of  the  party  injured  have  been  extravagant,  and 
unnecessary  for  the  purpose  of  carrying  out  the  contract.  .  .  . 

"  It  is  to  be  observed  that  when  it  is  said  in  some  of  the  books,  that  when 
one  party  puts  an  end  to  the  contract,  the  other  party  cannot  sue  on  the 
contract,  but  must  sue  for  the  work  actually  done  under  it,  as  upon  a  quan- 
tum meruit,  this  only  means  that  he  cannot  sue  the  party  in  fault  upon  the 
stipulations  contained  in  the  contract,  for  he  himself  has  been  prevented 
from  performing  his  own  part  of  the  contract  upon  which  the  stipulations 
depend.  But  surely,  the  wilful  and  wrongful  putting  an  end  to  a  contract, 
and  preventing  the  other  party  from  carrying  it  out,  is  itself  a  breach  of  the 
contract  for  which  an  action  will  lie  for  the  recovery  of  all  damage  which 
the  injured  party  has  sustained.  The  distinction  between  those  claims  under 
a  contract  which  result  from  a  performance  of  it  on  the  part  of  the  claimant, 
and  those  claims  under  it  which  result  from  being  prevented  by  the  other 
party  from  performing  it,  has  not  always  been  attended  to.  The  party 
who  voluntarily  and  wrongfully  puts  an  end  to  a  contract  and  prevents  the 
other  party  from  performing  it,  is  estopped  from  denying  that  the  injured 
party  has  not  been  damaged  to  the  extent  of  his  actual  loss  and  outlay  fairly 
incurred."— Mr.  Justice  Bradley  in  United  States  v.  Behan,  110  U.  S.  338, 
345-7.  See  also  Danforth  v.  Tennessee  &c.  By.  Co.,  93  Ala.  614;  Nichols 
V.  S.  S.  Co.,  137  N.  Y.  471. 

That  there  may  be  such  conduct  on  the  part  of  the  defendant  as  to 
warrant  the  plaintiff  in  rescinding  the  contract  and  recovering  on  a  quantum 
meruit,  and  yet  not  warrant  him  in  regarding  the  contract  as  renounced  by 
the  defendant  so  as  to  sustain  an  action  for  damages  for  a  breach,  see 
Wharton  v.  Winch,  140  N.  Y.  287. 


Chap.  HI.  §  2.]  BY  BREACH.  569 

per  cubic  yard.  After  working  a  month,  plaintiffs  were  di- 
rected by  defendants  to  cease  further  work,  and  complied. 
Plaintiffs  presented  an  account  of  days'  labor  and  material 
furnished  by  them,  which  was  allowed  on  the  basis  of 
reasonable  value. 

Hall,  J.  It  is  insisted,  in  behalf  of  the  defendants,  that 
the  request  and  direction  of  the  defendants  to  the  plaintiffs, 
to  cease  work  and  abandon  the  execution  of  the  contract,  is 
to  be  considered  in  the  light  of  a  proposition  to  the  plaintiffs, 
which  they  were  at  liberty  to  accede  to,  or  disregard,  and 
that,  having  acquiesced  in  it  by  quitting  the  work,  the  contract 
is  to  be  treated  as  having  been  relinquished  by  the  mutual 
consent  of  the  parties.  But  we  do  not  look  upon  it  in  that 
light.  The  direction  of  the  defendants  to  the  plaintiffs  to  quit 
the  work  was  positive  and  unequivocal;  and  we  do  not  think 
the  plaintiffs  were  at  liberty  to  disregard  it.  In  Clark  v. 
Marsiglia  (1  Denio,  317)  it  was  held,  that  the  employer,  in  a. 
contract  for  labor,  had  the  power  to  stop  the  completion  of 
it  if  he  chose,  —  subjecting  himself  thereby  to  the  consequences 
of  a  violation  of  his  contract;  and  that  the  workman,  after 
notice  to  quit  work,  had  not  the  right  to  continue  his  labor 
and  claim  pay  for  it.  And  this  seems  to  be  reasonable.  For 
otherwise  the  employer  might  be  entirely  ruined,  by  being 
compelled  to  pay  for  work,  which  an  unexpected  change  of 
circumstances,  after  the  employment,  would  render  of  no  value 
to  him.  If,  for  instance,  in  this  case  the  location  .of  the  rail- 
road had  been  changed  from  the  place  where  the  work  was 
contracted  to  be  done,  or  if  the  plaintiffs'  [defendants'?]  em- 
ployers had  become  wholly  insolvent  after  the  making  of  the 
contract,  the  injury  to  them,  if  they  had  no  power  to  stop  the 
work,  might  be  immense  and  altogether  without  remedy. 
Rather  than  an  injury  so  greatly  disproportioned  to  that  which 
could  possibly  befall  the  workman  should  be  inflicted  on  the 
employers,  it  seems  better  to  allow  them  to  stop  work,  taking 
upon  themselves,  of  course,  all  the  consequences  of  such  a  breach 
of  their  contract.  Such,  we  think,  is  and  ought  to  be  the  law. 
We  are  therefore  satisfied  that  the  plaintiffs  were  prevented 
from  executing  their  contract  by  the  act  of  the   defendants. 


570  DISCHARGE  OF  CONTRACT.  [Part  V. 

and  that  the  contract  is  not  to  be  treated  as  liaving  been  mutually 

/  relinquished. 

'  Treating  the  plaintiffs  as  having  been  prevented  from  execut- 
ing their  part  of  the  contract  by  the  act  of  the  defendants,  we 
think  the  plaintiffs  are  entitled  to  recover,  as  upon  a  quantum 

1  meruit,  the  value  of  the  services  they  had  performed  under  it, 
without  reference  to  the  rate  of  compensation  specified  in  the 
contract.  They  might  doubtless  have  claimed  the  stipulated 
compensation,  and  have  introduced  the  contract  as  evidence  of 
the  defendants'  admission  of  the  value  of  the  services.  And 
they  might,  in  addition,  in  another  form  of  action,  have  re- 
covered their  damages  for  being  prevented  from  completing  the 
whole  work.  In  making  these  claims  the  plaintiffs  would  be 
acting  upon  the  contract  as  still  subsisting  and  binding;  and 
they  might  well  do  so;  for  it  doubtless  continued  binding  on 
the  defendants.  But  we  think  the  plaintiffs,  upon  the  facts 
stated  in  the  report  of  the  auditor,  were  at  liberty  to  consider 
the  contract  as  having  been  rescinded  from  the  beginning,  and 
to  claim  for  the  services  they  had  performed,  without  reference 
to  its  terms. 

The  defendants,  by  their  voluntary  act,  put  a  stop  to  the 
execution  of  the  work,  when  but  a  fractional  part  of  that  which 
had  been  contracted  for  had  been  done,  and  while  a  large  portion 
of  that  which  had  been  entered  upon  was  in  such  an  unfinished 
condition  as  to  be  incapable  of  being  measured  and  its  price 
ascertained  by  the  rate  specified  in  the  contract.  Under  these 
circumstances,  we  think  the  defendants  have  no  right  to  say 
that  the  contract,  which  they  have  thus  repudiated,  shall  still 
subsist  for  the  purpose  of  defeating  a  recovery  by  the  plain- 
tiffs of  the  actual  amount  of  labor  and  materials  they  have 
expended. 

In  Tyson  v.  Doe  (15  Vt.  571),  where  the  defendant,  after 
a  part  performance  of  a  contract  for  delivering  certain  articles 
of  iron  castings,  prevented  the  plaintiff  from  farther  perform- 
ing it,  the  contract  was  held  to  be  so  far  rescinded  by  the  defend- 
ant as  to  allow  the  plaintiff  to  sustain  an  action  pn  book  for 
the  aiticles  delivered  under  it,  although  the  time  of  credit  for 
the   articles,  by   the  terms  of   the   contract,  had   not   expired. 


Chap.  III.  §  2.]  BY  BREACH.  571 

The  court  in  that  case  say,  "that  to  allow  the  defendant  to 
insist  on  the  stipulation  in  regard  to  the  time  of  payment, 
while  he  repudiates  the  others,  would  be  to  enforce  a  different 
contract  from  that  which  the  parties  entered  into."  The  claim 
now  made  in  behalf  of  the  defendants,  that  the  rate  of  compen- 
sation specified  in  the  contract  should  be  the  only  rule  of 
recovery,  would,  if  sustained,  impose  upon  the  plaintiffs  a 
contract  which  they  never  made.  They  did,  indeed,  agree  to 
do  all  the  work  of  a  certain  description  on  three  miles  of  road, 
at  a  certain  rate  of  compensation  per  cubic  yard;  but  they  did 
not  agree  to  make  all  their  preparations  and  do  but  a  sixteenth 
part  of  the  work  at  that  rate ;  and  it  is  not  to  be  presumed  that 
,  they  would  have  made  any  such  agreement.  We  are  not  there- 
fore disposed  to  enforce  such  an  agreement  against  them. 

The  case  of  Koon  v.  Greenman  (7  Wend.  121)  is  much  relied 
upon  by  the  counsel  for  the  defendants.  In  that  case  the  plain- 
tiff had  contracted  to  do  certain  mason  work  at  stipulated  prices, 
the  defendant  finding  materials.  After  a  part  of  the  work  had 
been  done,  the  defendant  neglecting  to  furnish  materials  for 
the  residue,  the  plaintiff  quit  work  and  brought  his  action  of 
general  assumpsit.  The  court  held  he  was  not  entitled  to  re- 
cover the  value  of  the  work,  but  only  according  to  the  rate 
specified.  The  justice  of  the  decision  is  not  very  apparent ;  and  it 
-■does  not  appear  to  be  sustained  by  the  authorities  cited  in  the 
opinion,  they  being  all  cases,  either  of  deviations  from  the 
contract  in  the  manner  of  the  work,  or  delays  of  performance 
in  point  of  time.  But  that  case,  if  it  be  sound  law,  is  dis- 
tinguishable from  this  in  at  least  two  important  particulars. 
In  that  case  the  plaintiff  was  prevented  from  completing  his 
contract  by  the  mere  negligence  of  the  defendant;  in  this  by 
his  voluntary  and  positive  command.  In  that  case  there  does 
not  appear  to  have  been  any  difficulty  in  ascertaining  the 
amount  to  which  the  plaintiff  would  be  entitled,  according  to 
the  rate  specified  in  the  contract;  whereas  in  this  it  is  alto- 
gether impracticable  to  ascertain  what  sum  would  be  due  the 
plaintiffs,  at  the  stipulated  prices,  for  the  reason  that  when  the 
work  was  stopped  by  the  defendants,  a  large  portion  of  it  was 
in  such  an  unfinished  state  as  to  be  incapable  of  measurement. 


672  DISCHARGE  OF  CONTRACl.  [Pabt  V. 

That  case  is  therefore  no  authority  against  the  views  we  have 
already  taken. 

The  judgment  of  the  County  Court  is  therefore  affirmed. *^ 


CLAEK  V.   MARSIGLIA. 

1  DENIO   (N.  Y.),  317.  — 1845. 

Assumpsit  for  work,  labor,  and  material.  Plea,  non-assumpsit. 
Judgment  for  plaintiff.     Defendant  brings  error. 

Defendant  delivered  a  number  of  paintings  to  plaintiff  to  be 
cleaned  and  repaired  at  a  specified  price  for  each.     After  plain- 

1  "  When  the  contract  is  terminated  by  one  party  against  the  consent  of 
the  other,  the  latter  will  not  be  confined  to  the  contract  price,  but  may  bring 
his  action  for  a  breach  of  the  contract,  and  recover  as  damages  all  that  he 
may  lose  by  way  of  profits  in  not  being  allowed  to  fulfill  the  contract ;  or  he 
may  waive  the  contract  and  bring  his  action  on  the  common  counts  for  work 
and  labor  generally,  and  recover  what  the  work  done  is  actually  worth.  .  .  . 
If  the  party  seeks  to  recover  more  than  the  actual  worth  of  his  work,  in  a 
case  where  he  has  been  prevented  from  performing  the  entire  contract,  he 
must  resort  to  his  action  directly  upon  the  contract ;  but  when  he  elects  to 
consider  the  contract  rescinded,  and  goes  upon  quantum  meruit,  the  actual 
value  is  the  rule  of  damages." — Pratt,  J.,  in  Clark  v.  Mayor,  4  Comstock 
(4N.  Y.),  338.  Contra:  Doolittle  v.  McCullough,  12  Ohio  St.  360,  where 
it  is  held  that  the  plaintiff  suing  in  quantum  meruit  is  restricted  in  his 
recovery  to  the  contract  rate,  and  Clark  v.  Mayor  is  criticised. 

Where  the  work  is  performed  on  the  plaintiff's  own  material,  in  which 
the  defendant  has  no  interest,  it  would  seem  that  the  only  remedy  is  on  the 
special  contract  in  an  action  for  damages  for  breach.  Hosmer  v.  Wilson,  7 
Mich.  294. 

In  cases  where  the  plaintiff  has  fully  performed  his  part  of  the  contract, 
but  the  defendant  refuses  to  perform  his,  the  value  of  what  the  defendant 
promised  (money,  property,  or  services),  and  not  the  value  of  the  plaintiff's 
services  or  property,  is  the  measure  of  the  recovery.  Bradley  v.  Levy,  6 
Wis.  400 ;  Anderson  v.  Bice,  20  Ala.  239  ;  Porter  v.  Dunji,  61  Hun,  310 ; 
S.  C.  131  N.  Y.  314.  Contra :  Hudson  v.  Hudson,  87  Ga.  678,  where  the 
court  says:  "It  seems  the  fairest  and  best  way  of  adjusting  these  matters 
is  to  allow  the  son  to  recover  of  the  administrator,  upon  a  quantum  meruit, 
the  actual  value  of  his  services,  but  the  amount  must  in  no  event  exceed  the 
value  of  the  home  place"  [promised].  A  fortiori,  the  plaintiff  cannot  re- 
cover for  part  performance  an  amount  in  excess  of  that  stipulated  for  full 
performance.    McClair  v.  Austin,  17  Col.  676. 


Chap.  III.  §  2.]  BY  BREACH.  673 

tiff  had  begun  work  on  them  defendant  directed  him  to  stop, 
but  plaintiff  persisted  and  claims  to  recover  for  the  whole.  The 
court  charged  that  as  plaintiff  had  begun  the  work,  he  had  a 
right  to  finish  and  defendant  could  not  revoke  the  order. 

Per  Curiam.  The  question  does  not  arise  as  to  the  right  of 
the  defendant  below  to  take  away  these  pictures,  upon  which  the 
plaintiff  had  performed  some  labor,  without  payment  for  what 
he  had  done,  and  his  damages  for  the  violation  of  the  contract, 
and  upon  that  point  we  express  no  opinion.  The  plaintiff  was 
allowed  to  recover  as  though  there  had  been  iio  countermand  of 
the  order;  and  in  this  the  court  erred.  J  The  defendant,  by 
requiring  the  plaintiff  to  stop  work  upon  the  paintings,  violated 
[his  contract,  and  thereby  incurred  a  liability  to  pay  such 
[damages  as  the  plaintiff  should  sustain.  Such  damages  would 
include  a  recompense  for  the  labor  done  and  materials  used, 
and  such  further  sum  in  damages  as  might,  upon  legal  princi- 
ples, be  assessed  for  the  breach  of  the  contract;  but  the  plaintiff 
hainojight,  by  obstinately  persisting  in  the  work,  to  make  the 
penalty  upon  the  defendant  greater  than  it  would  otherwise 
have  been. 

To  hold  that  one  who  employs  another  to  do  a  piece  of  work 
is  bound  to  suffer  it  to  be  done  at  all  events,  would  sometimes 
lead  to  great  injustice.  A  man  may  hire  another  to  labor  for  a 
year,  and  within  the  year  his  situation  may  be  such  as  to  render 
the  work  entirely  useless  to  him.  The  party  employed  cannot 
persist  in  working,  though  he  is  entitled  to  the  damages  conse- 
quent upon  his  disappointment.  So  if  one  hires  another  to  build 
a  house,  and  subsequent  events  put  it  out  of  his  power  to  pay  for 
it,  it  is  commendable  in  him  to  stop  the  work,  and  pay  for  what 
has  been  done  and  the  damages  sustained  by  the  contractor.  He 
may  be  under  a  necessity  to  change  his  residence ;  but  upon  the 
rule  contended  for,  he  would  be  obliged  to  have  a  house  which 
he  did  not  need  and  could  not  use.  In  all  such  cases  the  just 
claims  of  the  party  employed  are  satisfied  when  he  is  fully 
recompensed  for  his  part  performance  and  indemnified  for  his 
loss  in  respect  to  the  part  left  unexecuted;  and  to  persist  in 
accumulating  a  larger  demand  is  not  consistent  with  good  faith 


674  DISCHARGE  OF  CONTRACT.  [Paet  V. 

towards  the  employer.     The  judgment  must  be  reversed,  and  a 

venire  de  novo  awarded. 

Judgment  reversed.* 


(iv.)  Impossibility  created  by  one  party  in  the  course  of  per- 
formance. 

WOODBERRY  v.    WARNER. 

53  ARKANSAS,  488.  —1890. 

Action  upon  a  quantum  meruit  for  services.  Judgment  for 
plaintiff.     Defendant  appeals. 

Defendant  was  the  owner  of  a  steamboat,  the  Allen,  and  on 
January  1,  1886,  employed  plaintiff  as  pilot,  agreeing  to  pay 
him  $720  a  year,  and,  when  the  net  earnings  of  the  boat  should 
amount  to  $8000,  to  make  over  to  him  a  fourth  interest  in  the 

1  Accord :  Dillon  v.  Anderson,  43  N.  Y.  231 ;  Butler  v.  Butler,  77  N.  Y. 
472 ;  Moline  Scale  Co.  v.  Beed,  62  la.  307  ;  City  of  Nebraska  v.  Nebraska 
&c.  Coke  Co.,  9  Neb.  339;  Davis  v.  Bronson,  2  N.  Dak.  300;  Tiifts  v. 
Lawrence,  77  Tex.  526.  . 

"The  person  who  has  not  broken  his  part  of  the  compact  may,  at  his 
option,  extend  to  the  person  who  has  signified  his  purpose  to  violate  the 
agreement,  an  opportunity  for  repentance,  measured  by  the  time  to  elapse 
between  the  refusal  to  perform  and  the  date  when  performance  is  to  com- 
mence. .  .  .  The  party  keeping  the  contract  need  not  mitigate  the  damages 
by  treating  as  final  a  premature  repudiation  thereof ;  but  this  is  far  from 
establishing  the  proposition  that  he  may  increase  the  amount  to  be  paid  by 
the  other  party  by  completing  the  contract  after  notice  of  repudiation,  made 
on  the  day  of  performance,  or  made  before  that  day,  and  never  withdrawn, 
but,  on  the  contrary,  constantly  insisted  upon  down  to  and  including  that 
day.  .  .  .  The  question  in  all  cases  is  whether  one  party  has  prevented 
performance  by  the  other  party  at  the  time  when  performance  by  him  is  due. 
This  can  be  done  as  well  by  preventing  the  taking  of  those  preliminary  steps, 
without  which  the  final  step  cannot  be  taken,  as  by  preventing  the  taking  of 
such  final  step.  These  preliminary  steps  must  often  precede  by  many  days 
the  time  of  performance,  and  it  therefore  must  follow  that  notice  of  refusal 
to  carry  out  the  conti-act,  in  such  a  case,  given  before  the  time  of  perform- 
ance, will  operate  as  a  breach  of  the  contract  in  case  the  time  has  arrived  at 
which  the  person  willing  to  keep  the*  contract  may  enter  upon  the  work 
under  the  contract."  —  Corliss,  C.  J.,  in  Davis  v.  Bronson,  2  N.  Dak.  300. 
See  also  for  the  distinction  between  repudiation  before  the  time  for  perform- 
ance begins  and  repudiation  after  such  time,  Kadish  v.  Young,  108  111.  170 ; 
Boebling's  Sons'  Co.  v.  Lock  Stitch  Fence  Co.,  130  III.  660. 


Chap.  III.  §  2.]  BY  BREACH.  575 

boat.  A  few  months  later  defendant  bought  another  boat  which 
he  r^n  in  opposition  to  the  Allen,  thus  reducing  her  profits. 
On  May  31,  1888,  defendant  sold  the  Allen  without  plaintiff's 
consent,  and  before  she  had  earned  the  net  profits  specified  in 
the  contract.  Plaintiff  claimed  his  services  were  worth  $1000 
a  year,  or  $280  a  year  more  than  he  had  received.  Defendant 
contended  that  plaintiff  could  not  sue  in  quantum  meruit,  but  must 
sue  for  breach  of  contract  and  recover  as  damages  the  value  of 
one-fourth  of  the  boat  at  such  time  as  her  net  earnings  should 
have  amounted  to  $8000. 

Per  Curiam.  1.  The  defendant  having  put  it  beyond  his 
power  to  perform  the  contract  according  to  its  terms,  the  plain- 
tiff was  entitled  to  recover  the  value  of  his  services  over  and 
above  the  amount  he  had  received  under  the  contract. 

2.  The  terms  of  the  contract,  as  alleged  in  the  complaint, 
required  the  defendant  to  devote  his  personal  services  to  the 
business  of  the  steamer  Allen.  As  the  bill  of  exceptions  does 
not  purport  to  set  forth  the  substance  of  all  the  testimony,  the 
verdict  is  conclusive  that  the  contract  was  such  as  the  plaintiff 
alleged.  Evidence  therefore  was  admissible  which  tended  to 
show  that  the  defendant's  conduct  in  devoting  his  services  to 
another  steamer  decreased  the  earnings  of  the  Allen,  and  thereby 
prevented  the  plaintiff  from  earning  the  interest  in  the  Allen 
called  for  by  the  contract. 

No  other  questions  are  argued  by  counsel,  and  there  being  no 
error  as  to  these,  the  judgment  is  affirmed.^ 

^  In  Doolittle  v.  McCuUough  (12  Ohio  St.  360)  the  plaintiff  had  been  paid 
the  full  contract  price  for  the  portion  performed,  and  it  was  held  that  he 
could  not,  after  the  defendant  repudiated  the  contract,  sue  in  quantum 
meruit  to  recover  the  value  of  his  services,  but  must  sue  as  for  a  breach  of 
contract.  The  court  says  :  "  It  is  certain  that  where  there  has  been  a  part 
performance,  and  that  part  paid  for,  under  the  contract,  according  to  its 
terms,  and  the  contract  has  then  been  terminated  wrongfully  by  the  party 
so  having  paid,  it  cannot  be  that  the  termination  of  the  contract  occasions 
damage  or  gives  any  right  of  action  to  the  other  party  in  regard  to  the  part 
so  performed  and  paid  for  under  the  contract.  The  damage  in  such  a  case, 
if  any,  arises  from  wrongfully  precluding  the  other  party  from  performing 
and  receiving  pay  for  that  part  of  the  contract  unperformed  on  his  part." 
—  p.  368. 

See  also  Lynch  v.  Sellers,  41  La.  An.  375  ;  Marquis  v.  Lauretson,  76  la.  23. 


576  DISCHARGE  OF  CONTRACT.  [Paet  V. 

(v.)  Breach  by  failure  of  performance. 

a.  Absolute  promises  and  concurrent  conditions. 

NORTHRUP  V.   NORTHRUP. 

6  COWEN   (N.   Y.),  296.  — 1826. 

(^  Declaration  on  covenant.     Demurrer  to  plea,  and  joinder. 

Defendant  covenanted  to  pay  certain  rent  due  and  in  arrears 
on  a  certain  farm,  to  one  Tomlinson,  and  to  pay  all  that  should 
become  due  on  March  25,  1825,  the  whole  to  be  paid  on  that  day. 
Plaintiff  covenanted,  that  on  defendant's  so  paying  the  rent,  he, 
plaintiff,  would  give  up  and  discharge  a  certain  bond  and 
1  mortgage.     The  action  was  for  the  non-payment  of  the  rent. 

Defendant  pleaded  that  plaintiff  did  not,  on  March  25,  give 
up  and  discharge  the  bond  and  mortgage,  nor  tender  nor  offer 
to  do  so,  on  that  day,  or  before,  or  since. 
1  Savage,  C.  J.  The  plea  is  bad.  The  payment  of  the  money 
to  Tomlinson,  on  the  day  specified,  is  clearly  a  condition  prece- 
dent. The  performance  by  the  plaintiff  of  his  part  of  the 
agreement  is  not  necessarily  simultaneous;  but  was  naturally 
to  be  subsequent.  A  general  averment  of  his  readiness  to  per- 
form is  all  that  can  be  necessary  or  proper.  To  aver  a  tender 
was  certainly  not  necessary. 

Lord  Mansfield,  in  Jones  v.  Barkley  (Doug.  690),  makes  three 
classes  of  covenants.  1.  Such  as  are  mutual  and  independent, 
where  separate  actions  lie  for  breaches  on  either  side.  2.  Cove- 
nants which  are  conditions,  and  dependent  on  each  other,  in 
which  the  performance  of  one  depends  on  the  prior  performance 
of  the  other.  3.  Covenants  which  are  mutual  conditions  to  be 
performed  at  the  same  time,  as  to  which  the  party  who  would 
maintain  an  action  must,  in  general,  offer  or  tender  performance. 

I  consider  the  plaintiff's  covenant  as  clearly  belonging  to 
the  second  class.  The  defendant's  covenant  was  absolute.  The 
cases  cited  by  the  defendant's  counsel  relate  to  the  third  class. 

The  plaintiff  must  have  judgment,  with  leave  to  the  defendant 
to  amend  on  payment  of  costs.  Judgment  for  the  plaintiff.^ 

1  See  Dodge  v.  McClintock,  47  N.  H.  383  ;  Clough  v.  Baker,  48  N.  H.  264  ; 
Loud  V.  Pomona  Land  and  Water  Co.,  153  U.  S.  664;  Gould  v.  Brown, 
6  Ohio  St.  638. 


Chap.  III.  §  2.]  BY  BREACH.  677 

McRAVEN   V.   CRISLER. 

53  MISSISSIPPI,  542.— 1876. 

Action  on  a  note  for  the  purchase  price  of  land.  Demurrer  to 
plea  sustained. 

Chalmers,  J.  The  suit  was  upon  a  note  for  $3840  given  by 
the  appellant  to  the  appellee's  intestate  for  the  purchase  money 
of  a  tract  of  land.  The  note  undertook  to  recite  the  land  for  the 
price  of  which  it  was  executed,  but  the  land  was  misdescribed. 
This  being  discovered  by  the  payee  some  months  after  its  execu- 
tion, he  took  it  to  one  Harris,  who  had  acted  as  draughtsman  for 
both  parties  in  drawing  it,  and  procured  him  to  interline  and 
alter  it,  so  as  properly  to  describe  the  land. 

In  suing  upon  the  note,  several  counts  were  laid  in  the  declara- 
tion: 1.  Upon  the  note;  2.  Upon  a  special  contract  to  pay  the 
sum  agreed  upon,  and  a  delivery  and  retention  of  possession  of 
the  land  thereunder;  3.  The  common  counts  for  money  paid  out 
and  expended,  etc. 

To  the  count  upon  the  note  there  was  a  plea  of  non  est  factum 
under  oath ;  and  the  view  which  we  take  of  this  count  and  the 
plea  thereto  renders  an  examination  of  the  subsequent  pleadings 
unnecessary,  in  so  far  as  they  relate  to  an  ultimate  right  of  recov- 
ery. We  doubt  whether  the  alteration  in  the  description  of  the 
land  was  a  material  alteration  of  the  note,  and,  if  not,  of  course 
the  latter  was  not  aifected  by  it.     Bridges  v.  Winters,  42  Miss.  135. 

But  even  if  it  be  deemed  a  material  alteration,  we  think  it  is 
equally  clear  that  it  did  not  vitiate  the  note.  It  was  but  the 
correction  of  a  mistake  so  as  to  conform  the  note  to  the  intention 
of  both  the  parties  to  it,  and  it  was  made  in  such  manner  as 
clearly  to  negative  any  fraud  upon  the  part  of  the  payee,  or  any 
intention  to  obtain  an  advantage.  That  under  these  circum- 
stances alterations  in  notes  will  not  vitiate  them,  we  think,  is 
well  settled.  The  only  questions  in  such  cases  are,  Does  the 
alteration  actually  conform  to  the  true  intention  of  both  parties 
to  the  instrument?  and  was  it  honestly  made  to  correct  the  mis- 
take, and  with  no  intent  of  procuring  an  advantage?  Where 
these  questions  are  answered  in  the  affirmative,  the  law  will  pre- 


678  DISCHARGE  OF  CONTRACT.  [Part  V. 

sume  or  dispense  with  the  assent  of  the  maker  of  the  note  to  its 
alteration.  2  Parsons  on  Bills  and  Notes,  569,  570;  Chitty  on 
Bills  and  Notes,  184,  185;  Bayley  on  Bills  and  Notes,  90;  Kershaw 
V.  Cox,  3  Esp.  216;  Knill  v.  Williams,  10  East,  431;  Bruit  v. 
Picard,  %.  &  Mood.  37;  Clute  v.  Small,  17  Wend.  238;  Hervey 
V.  Harvey,  15  Me.  357;  Bowers  v.  Jewell,  2  N.  H.  543;  Boyd  v. 
Brotherson,  10  Wend.  93. 

The  point  was  ruled  otherwise  in  Miller  v.  Gilleland  (19  Penn. 
St.  119)  by  a  divided  court;  but  we  think  the  dissenting  opinion 
of  Justices  Lowrie  and  Woodward  (to  be  found  in  1  Am.  Law  Reg. 
672)  enunciates  the  sounder  doctrine,  both  upon  reason  and 
authority. 

The  judgment  in  the  case  at  bar  is  therefore  maintainable  upon 
the  first  count  in  the  declaration. 

By  the  defendant's  sixth  plea  she  averred  "that  the  original 
note  was  given  by  her  in  consideration  that  the  plaintiff  would 
sell  and  convey  to  her  by  proper  deed  of  conveyance  the  land," 
etc. ;  and  that  no  deed  had  been  tendered  before  suit  brought.  A. 
deed  was  filed  with  the  declaration,  which,  by  the  judgment  of 
the  court,  was  ordered  to  remain  on  file,  and  be  delivered  on 
payment  of  the  judgment.  Was  there  any  obligation  to  tender 
it  before  the  institution  of  the  suit?  There  was  no  written  con- 
tract to  convey  the  land,  nor  any  proof  of  a  parol  promise  to  do 
so.  The  question  must  therefore  be  tested  by  the  averments  of 
the  plea. 

It  will  be  observed  that  there  is  no  allegation  that  the  deed  was 
to  be  made  at  or  before  the  payment  of  the  note,  nor  is  any  time 
specified  when  the  execution  of  the  deed  was  to  take  place.  The 
note  was  payable  one  day  after  date.  While  it  is  true  that  the 
courts  will  hold  the  covenant  to  pay  and  the  covenant  to  make 
title  as  dependent,  unless  a  contrary  intention  clearly  appears, 
it  is  no  less  true  that  the  covenants  must  be  regarded  as  inde- 
pendent, where  the  time  of  payment  precedes  the  time  fixed  for 
delivering  the  deed,  or  where  no  time  for  making  title  is  speci- 
fied. Gibson  v.  Newman,  1  How.  (Miss.)  341;  Leftwich  v. 
Coleman,  3  How.  (Miss.)  167;  Rector  v.  Price,  3  How.  (Miss.) 
321;  Robinson  v.  Harbour,  42  Miss.  795. 

The  case  of  Gibson  v.  Nezvman,  supra,  was  much  like  the  one 


Chap.  III.  §  2.]  BY  BREACH.  679 

at  bar.  In  that  case,  as  in  this,  there  was  no  written  obligation 
to  convey,  and  the  question  was  determined  by  the  language  of 
the  plea.  There,  as  here,  the  plea  failed  to  aver  any  period  when 
the  deed  was  to  be  made;  and  upon  this  ground  the  covenants 
were  held  to  be  independent.  That  case  is  cited  and  approved  in 
Robinson  v.  Harbour,  ubi  stipra,  the  latest  authoritative  exposi- 
tion of  this  court  on  the  much-vexed  question  of  dependent  and 
independent  covenants. 

The  demurrer  to  thj  plea  in  the  case  at  bar  was  properly 

sustained. 

Judgment  affirmed. 


TRACY  V.   ALBANY  EXCHANGE  CO. 

7  NEW  YORK,  472. —1852. 

Action  for  damages  for  breach  of  a  covenant  to  renew  a  lease.. 
Judgment  for  plaintiff.     Defendant  appeals. 

Jewett,  J.  .  .  .  As  to  the  objection  made  by  the  defendant 
that  there  was  rent  in  arrears,  and  therefore  the  plaintiff  was  not 
entitled  to  a  further  lease,  the  covenant  being  independent,  the 
liability  of  the  defendant  for  the  breach  of  the  covenant  in  ques- 
tion remained.  The  payment  of  the  rent  was  not  a  condition 
precedent  to  the  right  of  the  plaintiff  to  a  renewal  of  the  lease 
under  the  covenant,  and  he  might  bring  his  action  for  a  breach  of 
j  it,  although  he  was  guilty  of  a  default  in  the  payment  of  his  rent 
)  or  performance  of  his  convenant.     Dawson  v.  Dyer,  5  Barn.  & 

Adol.  584.  .  .  . 

Judgment  affirmed. 


HAMILTON  V.  HOME  INS.   CO. 

137  UNITED  STATES,  370.— 1890. 
[Quoted  herein  at  p.  8fiS  b.] 


680  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

HILL  'r.   GEIGSBY  et  cd. 

38  CALIFORNIA,  656.  — 1868. 

Action  upon  nine  promissory  notes  made  jointly  by  defendants 
to  plaintiff.  Defense,  that  plaintiff,  as  a  consideration  for  said 
notes,  agreed  to  convey  to  defendants  a  half  interest  in  certain 
property ;  that  the  amount  sued  for  was  the  whole  purchase  money 
remaining  unpaid;  that  before  the  commencement  of  the  action 
plaintiff  had  conveyed  the  property  to  another,,  and  had  not  offered 
to  perform  by  tendering  a  deedj  of  the  property  to  defendants. 
On  motion  the  court  struck  out  the  answer.  Judgment  for  plain- 
tiff.    Defendants  appeal. 

Rhodes,   J.     The   leading   question   is,   whether   plaintiff   is 

entitled  to  recover  upon  certain  promissory  notes  representing 

'■  the  unpaid  portion  of  the  purchase  money  for  certain  real  estate, 

I  sold  by  the  plaintiff  to  defendants,  without  conveying  or  offering 
•  to  convey  the  property.     The  solution  of  the  question  depends 

upon  the  construction  to  be  given  to  the  bond  or  covenant  of  the 
plaintiff.  The  bond,  after  reciting  the  purchase  and  the  terms  of 
payment,  proceeds  as  follows: 

"  Now,  therefore,  the  said  Hill  agrees  and  binds  himself,  on  condition 
that  the  said  Grigsby  and  Smittle  shall  pay  the  sum  of  ^18,000,  less 
^200  heretofore  paid,  with  interest,  as  aforesaid,  to  execute  and  deliver 
to  the  said  Smittle  and  Grigsby  a  good  deed,  conveying  all  his  right, 
title,  and  interest  of,  in,  and  to  the  one  undivided  half  interest  in  said 
mill  and  premises  herein  as  aforesaid,  which,  if  he  shall  well  and  truly 
do,  the  above  obligation  to  be  null  and  void  and  of  no  effect ;  otherwise 
the  above  obligation  to  be  and  remain  in  full  force  and  effect.  The  said 
deed  to  be  executed  by  the  said  Hill  as  soon  as  the  full  sum  of  §18,000 
and  interest,  as  above  provided,  is  paid,  and  to  be  sufficient  to  convey  to 
.said  Grigsby  and  Smittle  one  undivided  half  interest  in  and  to  said  mill, 
free  from  all  incumbrance." 

I I  In  the  first  clause  the  plaintiff  covenants  to  convey  on  condi- 
'Ition  that  the  defendants  pay  the  price.     These  acts  were  plainly 

I  intended  to  be  simultaneous,  that  is  to  say,  the  payment  in  full 
and  conveyance.  The  words  "^on  condition"  are  susceptible  of 
no  other  interpretation.  The  second  clause  was  added  as  if  to 
put  the  matter  beyond  question.     There  the  covenant  is,  to  con- 


Chap.  in.  §2.]  BY  BREACH.  581 

vey  as  soon  as  the  full  sum  is  paid.  The  conveyance  must,  of 
necessity,  be  executed  concurrently  with  or  before  payment  in 
full,  or  it  will  not  be  executed  as  soon  as  such  payment  is  made. 

Neither  argument  nor  illustration  will  make  the  meaning  of 
the  covenants  in  respect  to  the  time  for  their  performance  more 
apparent. 

When  the  meaning  of  the  terms  employed  in  the  covenants  is 
ascertained,  the  application  of  the  rules  of  law  governing  the 
performance  of  the  covenants  is  not  difficult.  In  a  contract  for 
the  sale  of  real  estate,  where  the  purchaser  covenants  to  pay  the 
purchase  money,  and  the  vendor  covenants  to  convey  the  premises 
at  the  time  of  payment,  or  upon  the  time  of  payment  of  the 
money,  or  as  soon  as  it  is  paid, — and  they  all  mean  the  same 
thing, —  the  covenants  are  mutual  and  dependent,  and  neither  can 
sue  without  showing  a  performance,  or  an  offer  to  perform,  on 
his  part;  and  performance,  or  the  offer  to  perform,  on  the  one 
part,  is  a  condition  precedent  to  the  right  to  insist  upon  a  per- 
formance on  the  other  part.     Barron  v.  Frink,  30  Cal.  488. 

When  the  purchase  money  is  payable  in  instalments,  and  the 
conveyances  to  be  executed  on  the  last  day  of  payment,  or  upon 
the  payment  of  the  whole  price,  or  at  any  previous  day,  the 
covenants  to  pay  the  instalments  falling  due  before  the  time 
appointed  for  the  execution  of  the  conveyance  are  independent 
covenants,  and  suit  may  be  brought  thereon  without  conveying  or 
offering  to  convey. 

The  covenants  to  pay  the  instalments  falling  due  on  or  after 
the  day  appointed  for  the  conveyance  are  dependent  covenants, 
and  the  vendor,  in  his  suit  to  recover  the  same,  whether  he  sues 
for  those  alone  or  joins  instalments  that  became  due  before  the 
time,  must  show  a  conveyance  or  offer  to  convey.  In  these 
respects,  contracts  of  all  kinds  are  governed  by  the  same  rule  as 
covenants. 

Questions  covering  the  greater  portion,  if  not  the  entire 
ground  occupied  by  those  presented  here,  were  considered  at  an 
early  day  in  this  court,  and  the  decisions  accord  with  the  views 
here  expressed.  Osborne  v.  Elliott,  1  Cal.  337;  Folsom  v.  Bartlett, 
2  Cal.  163.  See  also  Barron  v.  Frink,  30  Cal.  486.  It  is  very 
correctly  said  in  Bank  of  Columbia  v.  Hagner  (1  Pet.  455)  that 


682  DISCHARGE  OF  CONTRACT.  [Part  V. 

"  in  contracts  of  this  description  the  undertakings  of  the  respec- 
tive parties  are  always  considered  dependent  unless  a  contrary- 
intention  clearly  appears ; "  and  the  reason  assigned,  as  well  as 
the  rule,  would  be  applicable  here  were  the  words  of  the  covenant 
of  doubtful  import.  "A  different  construction  would  in  many 
cases  lead  to  the  greatest  injustice,  and  a  purchaser  might  have 
payment  of  the  purchase  money  enforced  upon  him,  and  yet  be 
disabled  from  procuring  the  property  for  which  he  paid  it."  The 
authorities  in  support  of  these  principles  are  very  numerous,  and 
there  is  a  greater  degree  of  uniformity  among  them  than  is  usual 
on  a  question  presented,  as  this  has  been,  in  so  many  different 
aspects.  Pordage  v.  Cole,  1  Wm.  Saund.  320;  Jones  y.  Gardner, 
10  Johns.  266;  Gazley  v.  Price,  16  Johns.  267;  Parker  v.  Par- 
mele,  20  Johns.  130;  Williams  v.  Healey,  3  Den.  367;  Johnson  v. 
Wygant,  11  Wend.  48;  Bean  v.  Atioater,  4  Conn.  3;  Lester  v. 
Jetcett,  11  N.  Y.,  1  Kern.,  453;  Hunt  v.  Livermore,  5  Pick.  395; 
Kane  v.  Hood,  13  Pick.  281;  1  Pars,  on  Cont.  42;  2  Smith  L.  C.  17. 
♦  *  *  #  ♦ 

It  is  unnecessary  to  consider  the  remaining  questions,  because 
if  the  plaintiff  had  not  delivered  or  tendered  the  conveyance 
according  to  his  covenant,  he  cannot  prevail  in  the  action. 

We  are  of  opinion  that  the  portion  of  the  answer  setting  up 
the  contract  of  sale,  and  alleging  the  failure  of  the  plaintiff  to 
convey,  or  offer  to  convey,  to  the  defendants  the  interest  in  the 
premises  sold  to  them,  is  a  .good  defense  to  the  action,  and  that 
the  order  striking  it  out  was  erroneous. 

Judgment  reversed,  and  cause  remanded  for  further  pro- 
ceedings.* 


BRUSIE  V.  PECK  BROS.  &  CO. 

14  UNITED  STATES  APPEALS,  21.  — 1893. 

Action  at  law  to  recover  the  amount  of  royalties  alleged  to  be 
due  for  the  manufacture  of  sprinklers.  Judgment  for  defendant. 
Plaintiff  brings  error. 

1  Accord:  Kane  v.  Hood,  13  Pick.  281  ;  Beecher  v.  Conradt,  13  N.  Y. 
108  ;  Bunkle  v.  Johnson,  30  111.  328 ;  Bobinson  v.  Harbour,  42  Miss.  795 ; 
Eddy  V.  Davis,  116  N.  Y.  247. 

Cf.  Loud  V.  Pomona  Land  and  Water  Co.,  153  U.  S.  564. 


t!HAP.  m.  §  2.]  BY  BREACH.  683 

Plaintiff  granted  defendant  the  exclusive  right  to  manufacture 
and  sell  a  lawn  sprinkler  patented  by  plaintiff,  the  defendant 
agreeing  to  pay  plaintiff  a  royalty  of  two  dollars  for  each 
sprinkler,  and  not  to  sell  them  for  less  than  fifteen  dollars, 
except  by  joint  agreement,  and  to  manufacture  sprinklers  for 
plaintiff  at  a  profit  of  twenty -five  per  cent  on  the  cost,  which 
plaintiff  might  sell  in  competition  with  defendant.  Differences 
arising  between  the  parties,  plaintiff  forbade  defendant  to  manu- 
facture the  sprinklers  and  himself  began  to  manufacture  and 
sell  them. 

The  court  charged  that  if  the  plaintiff,  without  any  justifica- 
tion arising  from  the  previous  conduct  of  the  defendant,  entered 
upon  the  market  as  a  competitor  with  it  in  making  a!nd  selling 
the  sprinklers,  he  was  not  entitled  to  recover,  and  submitted  to 
the  jury  whether  plaintiff  violated  the  contract  without  justifica- 
tion arising  from  defendant's  non-performance. 

Shipman,  Circuit  Judge.  .  .  .  This  part  of  the  case  de- 
pends upon  the  question  whether  the  respective  undertakings  of 
the  two  parties  to  the  contract  shall  be  construed  to  be  inde- 
pendent, so  that  a  breach  by  one  party  is  not  an  excuse  for  a 
breach  by  the  other,  and  either  party  may  recover  damages  for 
the  injury  he  has  sustained,  or  are  dependent  so  that  a  breach 
by  one  relieves  the  other  from  the  duty  of  performance.  King- 
ston V.  Preston,  Doug.  689.  "Where  the  agreements  go  to  the 
whole  of  the  consideration  on  both  sides,  the  promises  are 
dependent,  and  one  of  them  is  a  condition  precedent  to  the  other. 
If  the  agreements  go  to  a  part  only  of  the  consideration  on  both 
sides,  and  a  breach  may  be  paid  for  in  damages,  the  promises  are 
so  far  independent."  2  Parsons  on  Contracts  (8th  ed.),  792. 
By  the  contract  which  is  the  foundation  of  this  suit  Brusie 
granted  to  the  defendant  the  sole  and  exclusive  right  to  manufact- 
ure the  patented  sprinkler,  and  the  sole  right  to  sell,  except  that 
Brusie  could  sell  sprinklers  manufactured  by  the  defendant, 
paying  it  twenty-five  per  cent  profit  upon  the  cost  of  such  manu- 
facture. The  defendant  promised  to  manufacture  sprinklers  of 
good  material,  to  use  its  best  endeavors  to  introduce  the  same, 
to  pay  a  royalty  of  two  dollars  upon  each  machine  sold,  and  not 
to  sell  below  fifteen  dollars,  unless  the  price  was  changed  by  joint 


684  DISCHARGE  OF  CONTRACT.  [Part  V. 

agreement.     Brusie  having  manufactured  and  sold  at  reduced 

prices,  calls  upon  the  defendant  to  pay  a  royalty  of  two  dollars 

upon  every  machine  which  it  sold,  and  to  recover  damages  for  his 

own  violation  of  the  contract  in  a  separate  action. 

The  contention  of  the  plaintiff  would  have  weight,  if  Brusie's 

fulfillment  of  his  part  of  the  contract  had  not  been  vital  to  the 

ability  of  the  defendant  to  fulfill  any  part  of  its  contract.     The 

plaintiff  bound  the  defendant  not  to  sell  at  a  price  less  than  fifteen 

dollars,  unless  the  price  should  be  changed  by  joint  agreement. 

He  thereby  impliedly  promised  that  the  price  imposed  upon  the 

defendant  should  be  maintained,  unless  altered  by  joint  consent. 

The  defendant's  ability  to  pay  the  royalty  depended  upon  Brusie's 

abstinence  from  competition  at  reduced  prices.     He  could  not 

become,  as  he  did,  the  defendant's  active  competitor,  lower  prices 

without  consent,  and  still  compel  the  defendant  to  sell  at  not 

less  than  fifteen  dollars,  and  pay  a  royalty  of  two  dollars  per 

machine.     This  breach  by  Brusie  of  his  undertakings,  when  found 

to  be  unjustifiable  by  reason  of  any  previous  conduct  of  the 

defendant,  relieved  it  from  the  obligation  which  it  had  assumed. 

There  was  no  error  in  the  charge,  and  the  judgment   of   the 

Circuit  Court  is 

Affirmed. 


6.    Divisible  promises  and  virtual  failure  of  consideration. 
(a)  Divisible  promises. 
(-^^■-^Ma^  j^% y j^         NORRINGTOI^  v.   WRIGHT  e<  oZ. 

115  UNITED  STATES,   188.  — 1885. 

Action  of  assumpsit.  Judgment  for  defendants.  Plaintiff 
brings  error. 

The  action  was  on  the  following  contract : 

"Philadelphia,  January  19,  1880.  Sold  to  Messrs.  Peter  Wright  & 
Sons,  for  account  of  A.  Norrington  &  Co.,  London  :  Five  thousand  (5000) 
tons  old  T  iron  rails,  for  shipment  from  a  European  port  or  ports,  at  the 
rate  of  about  one  thousand  (1000)  tons  per  month,  beginning  February, 
1880,  but  whole  contract  to  be  shipped  before  August  1st,  1880,  at  forty- 
five  dollars  ($45.00)  per  ton  of  2240  lbs.  custom-house  weight,  ex  ship 


Chap.  HI.  §  2.]  BY  BREACH.  685 

Philadelphia.  Settlement  cash  on  presentation  of  bills  accompanied  by 
custom-house  certificate  of  weight.  Sellers  to  notify  buyers  of  shipments 
with  vessels'  names  as  soon  as  known  by  them.  Sellers  not  to  be  com- 
pelled to  replace  any  parcel  lost  after  shipment.  Sellers,  when  possible, 
to  secure  to  buyers  right  to  name  discharging  berth  of  vessels  at  Phila- 
delphia. 

"  Edward  J.  Etting,  Metal  Broker." 

Plaintiff  shipped  under  this  contract  400  tons  by  one  vessel  in 
the  last  part  of  February,  885  tons  by  two  vessels  in  March,  1571 
tons  by  five  vessels  in  April,  850  tons  by  three  vessels  in  May, 
1000  tons  by  two  vessels  in  June,  and  300  tons  by  one  vessel  in 
July,  and  notified  defendants  of  each  shipment. 

Defendants  received  and  paid  for  the  February  shipment  upon 
its  arrival  in  March,  but  on  May  14,  about  the  time  of  the 
arrival  of  the  March  shipment,  having  learned  of  the  amounts 
shipped  in  February,  March,  and  April,  gave  written  notice  that 
they  should  decline  to  receive  the  shipments  made  in  March 
and  April  because  they  were  not  in  accordance  with  the  contract. 
On  June  10,  plaintiff  offered  defendants  a  delivery  of  exactly 
1000  tons,  which  was  declined. 

At  the  trial,  the  plaintiff  contended,  1st.  That  under  the  con- 
tract he  had  six  months  in  which  to  ship  the  5000  tons,  and  any 
deficiency  in  the  earlier  months  could  be  made  up  subsequently, 
provided  that  the  defendants  could  not  be  required  to  take  more 
than  1000  tons  in  any  one  month.  2d.  That,  if  this  was  not  so, 
the  contract  was  a  divisible  contract,  and  the  remedy  of  the 
defendants  for  a  default  in  any  month  was  not  by  rescission  of 
the  whole  contract,  but  only  by  deduction  of  the  damages  caused 
by  the  delays  in  the  shipments  on  the  part  of  the  plaintiff. 

But  the  court  instructed  the  jury  that  if  the  defendants,  at  the 
time  of  accepting  the  delivery  of  the  cargo  paid  for,  had  no  notice 
of  the  failure  of  the  plaintiff  to  ship  about  1000  tons  in  the  month 
of  February,  and  immediately  upon  learning  that  fact  gave 
notice  of  their  intention  to  rescind,  the  verdict  should  be 
for  them. 

The  plaintiff  excepted  to  this  instruction,  and,  after  verdict 
and  judgment  for  the  defendants,  sued  out  this  writ  of  error. 

Mr.  Justice  Gray.  In  the  contracts  of  merchants,  time  is 
of  the  essence.     The  time  of  shipment  is  the  usual  and  conven- 


580  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

lent  means  of  fixing  the  probable  time  of  arrival,  with  a  view  of 
providing  funds  to  pay  for  the  goods,  or  of  fulfilling  contracts 
with  third  persons.  A  statement  descriptive  of  the  subject 
matter,  or  of  some  material  incident,  such  as  the  time  or  place  of 
shipment,  is  ordinarily  to  be  regarded  as  a  warranty,  in  the  sense 
in  which  that  term  is  used  in  insurance  and  maritime  law,  that 
is  to  say,  a  condition  precedent,  upon  the  failure  or  non-perform- 
ance of  which  the  party  aggrieved  may  repudiate  the  whole 
contract.  Behn  v.  Burness,  3  B.  &  S.  751;  Bowes  v.  Shand,  2 
App.  Cas.  455;  Lowber  v.  Bangs,  2  Wall.  728;  Davison  v.  Von 
Lingen,  113  U.  S.  40. 

The  contract  sued  on  is  a  single  contract  for  the  sale  and 
purchase  of  5000  tons  of  iron  rails,  shipped  from  a  European  port 
or  ports  for  Philadelphia.  The  subsidiary  provisions  as  to  ship- 
ping in  different  months,  and  as  to  paying  for  each  shipment 
upon  its  delivery,  do  not  split  up  the  contract  into  as  many  con- 
tracts as  there  shall  be  shipments  or  deliveries  of  so  many 
distinct  quantities  of  iron.  Mersey  Co.  v.  Naylor,  9  App.  Cas. 
434,  439.  The  further  provision,  that  the  sellers  shall  not  be 
compelled  to  replace  any  parcel  lost  after  shipment,  simply 
reduces,  in  the  event  of  such  a  loss,  the  quantity  to  be  delivered 
and  paid  for. 

The  times  of  shipment,  as  designated  in  the  contract,  are  "  at 
the  rate  of  about  1000  tons  per  month,  beginning  February,  1880, 
but  whole  contract  to  be  shipped  before  August  1,  1880,"  These 
words  are  not  satisfied  by  shipping  one-sixth  part  of  the  5000 
tons,  or  about  833  tons,  in  each  of  the  six  months  which  begin 
with  February  and  end  with  July.  But  they  require  about  1000 
tons  to  be  shipped  in  each  of  the  five  months  from  February  to 
June  inclusive,  and  allow  no  more  than  slight  and  unimportant 
deficiencies  in  the  shipments  during  those  months  to  be  made  up 
in  the  month  of  July.  The  contract  is  not  one  for  the  sale  of  a 
specific  lot  of  goods,  identified  by  independent  circumstances, 
such  as  all  those  deposited  in  a  certain  warehouse,  or  to  be 
shipped  in  a  particular  vessel,  or  that  may  be  manufactured  by 
the  seller,  or  may  be  required  for  use  by  the  buyer,  in  a  certain 
mill  —  in  which  case  the  mention  of  the  quantity,  accompanied 
by  the  qualification  of  "about,"  or  "more  or  less,"  is  regarded  as 


Chap.  IU.  §  2.]  BY  BREACH.  687 

a  mere  estimate  of  the  probable  amount,  as  to  which  good  faitli 
is  all  that  is  required  of  the  party  making  it.  But  the  contract 
before  us  comes  within  the  general  rule :  "  When  no  such  inde- 
pendent circumstances  are  referred  to,  and  the  engagement  is  to 
furnish  goods  of  a  certain  quality  or  character  to  a  certain 
amount,  the  quantity  specified  is  material,  and  governs  the 
contract.  The  addition  of  the  qualifying  words  'about,'  'more 
or  less,'  and  the  like,  in  such  cases,  is  only  for  the  purpose  of 
providing  against  accidental  variations,  arising  from  slight  and 
unimportant  excesses  or  deficiencies  in  number,  measure,  or 
weight."     Brawley  v.  United  States,  96  U.  S.  168,  171,  172. 

The  seller  is  bound  to  deliver  the  quantity  stipulated,  and  has 
no  right  either  to  compel  the  buyer  to  accept  a  .less  quantity,  or 
to  require  him  to  select  part  out  of  a  greater  quantity ;  and  when 
the  goods  are  to  be  shipped  in  certain  proportions  monthly,  the 
seller's  failure  to  ship  the  required  quantity  in  the  first  month 
gives  the  buyer  the  same  right  to  rescind  the  whole  contract,  that 
he  would  have  had  if  it  had  been  agreed  that  all  the  goods  should 
be  delivered  at  once. 

The  plaintiff,  instead  of  shipping  about  1000  tons  in  February 
and  about  1000  tons  in  March,  as  stipulated  in  the  contract, 
shipped  only  400  tons  in  February,  and  885  tons  in  March.  His 
failure  to  fulfill  the  contract  on  his  part  in  respect  to  these  first 
two  instalments  justified  the  defendants  in  rescinding  the  whole 
contract,  provided  they  distinctly  and  seasonably  asserted  the 
right  of  rescission. 

The  defendants,  immediately  after  the  arrival  of  the  March 
shipments,  and  as  soon  as  they  knew  that  the  quantities  which  had 
been  shipped  in  February  and  in  March  were  less  than  the  con- 
tract called  for,  clearly  and  positively  asserted  the  right  to  rescind, 
if  the  law  entitled  them  to  do  so.  Their  previous  acceptance  of 
the  single  cargo  of  400  tons  shipped  in  February  was  no  waiver  of 
this  right,  because  it  took  place  without  notice,  or  means  of  knowl- 
edge, that  the  stipulated  quantity  had  not  been  shipped  in  Feb- 
ruary. The  price  paid  by  them  for  that  cargo  being  above  the 
market  value,  the  plaintiff  suffered  no  injury  by  the  omission  of 
the  defendants  to  return  the  iron;  and  no  reliance  was  placed  on 
that  omission  in  the  correspondence  between  the  parties. 


688  DISCHARGE   OF  CONTRACT.  [Pabt  V, 

The  case  wliolly  differs  from  that  of  Lyon  v.  Bertram  (20  How. 
149),  in  which  the  buyer  of  a  specific  lot  of  goods  accepted  and 
used  part  of  them  with  full  means  of  previously  ascertaining 
whether  they  conformed  to  the  contract. 

The  plaintiff,  denying  the  defendants'  right  to  rescind,  and 
asserting  that  the  contract  was  still  in  force,  was  bound  to  show 
such  performance  on  his  part  as  entitled  him  to  demand  perform- 
ance on  their  part,  and,  having  failed  to  do  so,  cannot  maintain 
this  action. 

For  these  reasons,  we  are  of  opinion  that  the  judgment  below 
should  be  affirmed.  But  as  much  of  the  argument  at  the  bar  was 
devoted  to  a  discussion  of  the  recent  English  cases,  and  as  a 
diversity  in  the  law,  as  administered  on  the  two  sides  of  the 
Atlantic,  concerning  the  interpretation  and  effect  of  commercial 
contracts  of  this  kind,  is  greatly  to  be  deprecated,  it  is  proper  to- 
add  that  upon  a  careful  examination  of  the  cases  referred  to  they 
do  not  appear  to  us  to  establish  any  rule  inconsistent  with  our 
conclusion. 

In  the  leading  case  of  Hoare  v,  Rennie  (5  H.  &  N.  19),  which 
was  an  action  upon  a  contract  of  sale  of  667  tons  of  bar  iron,  to 
be  shipped  from  Sweden  in  June,  July,  August,  and  September, 
and  in  about  equal  portions  each  month,  at  a  certain  price  payable 
on  delivery,  the  declaration  alleged  that  the  plaintiffs  performed 
all  things  necessary  to  entitle  them  to  have  the  contract  per- 
formed by  the  defendants,  and  were  ready  and  willing  to  perform 
the  contract  on  their  part,  and  in  June  shipped  a  certain  portion 
of  the  iron,  and  within  a  reasonable  time  afterwards  offered  to 
deliver  to  the  defendants  the  portion  so  shipped,  but  the  defendants 
refused  to  receive  it,  and  gave  notice  to  the  plaintiffs  that  they 
would  not  accept  the  rest.  The  defendants  pleaded  that  the 
shipment  in  June  was  of  about  20  tons  only,  and  that  the  plain- 
tiffs failed  to  complete  the  shipment  for  that  month  according  to 
the  contract.  Upon  demurrer  to  the  pleas,  it  was  argued  for  the 
plaintiffs  that  the  shipment  of  about  one-fourth  of  the  iron  in 
each  month  was  not  a  condition  precedent,  and  that  the  defend- 
ants' only  remedy  for  a  failure  to  ship  that  quantity  was  by  a 
cross  action.  But  judgment  was  given  for  the  defendants.  Chief 
Baron  Pollock  saying : 


Chap.  III.  §  2.]  BY  BREACH.  689 

"  The  defendants  refused  to  accept  the  first  shipment,  because,  as  they 
aay,  it  was  not  a  performance,  but  a  breach  of  the  contract.  Where 
parties  have  made  an  agreement  for  themselves,  the  courts  ought  not  to 
make  another  for  them.  Here  they  say  that  in  the  events  that  have  hap- 
pened one-fourth  shall  be  shipped  in  each  month,  and  we  cannot  say  that 
they  meant  to  accept  any  other  quantity.  At  the  outset,  the  plaintiffs 
failed  to  tender  the  quantity  according  to  the  contract ;  they  tendered  a 
much  less  quantity.  The  defendants  had  a  right  to  say  that  this  was  no 
performance  of  the  contract,  and  they  were  no  more  bound  to  accept  the 
short  quantity  than  if  a  single  delivery  had  been  contracted  for.  There- 
fore the  pleas  are  an  answer  to  the  action."     5  H.  Sf  N.  28. 

So  in  Coddington  v.  Paleologo  (L.  R.  2  Ex.  193),  while  there 
"was  a  division  of  opinion  upon  the  question  whether  a  contract 
to  supply  goods  "delivering  on  April  17,  complete  8th  May," 
bound  the  seller  to  begin  delivering  on  April  17,  all  the  judges 
agreed  that  if  it  did,  and  the  seller  made  no  delivery  on  that  day, 
the  buyer  might  rescind  the  contract. 

On  the  other  hand,  in  Simpson  v.  Crippin  (L.  R.  8  Q.  B.  14), 
under  a  contract  to  supply  from  6000  to  8000  tons  of  coal,  to  be 
taken  by  the  buyer's  wagons  from  the  seller's  colliery  in  equal 
monthly  quantities  for  twelve  months,  the  buyer  sent  wagons  for 
only  150  tons  during  the  first  month;  and  it  was  held  that  this 
did  not  entitle  the  seller  to  annul  the  contract  and  decline  to 
deliver  any  more  coal,  but  that  his  only  remedy  was  by  an  action 
for  damages.  And  in  Brandt  v.  Lawrence  (1  Q.  B.  D.  344),  in  which 
the  contract  was  for  the  purchase  of  4500  quarters,  ten  per  cent 
more  or  less,  of  Russian  oats,  "  shipment  by  steamer  or  steamers 
during  February,"  or,  in  case  of  ice  preventing  shipment,  then 
immediately  upon  the  opening  of  navigation,  and  1139  quarters 
were  shipped  by  one  steamer  in  time,  and  3361  quarters  were 
shipped  too  late,  it  was  held  that  the  buyer  was  bound  to  accept 
the  1139  quarters,  and  was  liable  to  an  action  by  the  seller  for 
refusing  to  accept  them. 

Such  being  the  condition  of  the  law  of  England  as  declared  in 
the  lower  courts,  the  case  of  Bowes  v.  Shand,  after  conflicting 
decisions  in  the  Qiieen's  Bench  Division  and  the  Court  of  Appeal, 
was  finally  determined  by  the  House  of  Lords.  1  Q.  B.  D.A70; 
2  Q.  B.  D.  112;  2  App.  Oas.  455. 

In  that  case,  two  contracts  were  made  in  London,  each  for  the 


590  DISCHARGE  OF  CONTRACT.  [Part  V. 

sale  of  300  tons  of  "Madras  rice,  to  be  shipped  at  Madras  or 
coast,  for  this  port,  during  the  months  of  March  ■","'  April,  1874, 
per  Rajah  of  Cochin."  The  600  tons  filled  8200  bags,  of  which 
7120  bags  were  put  on  board  and  bills  of  lading  signed  in  Feb- 
ruary ;  and  for  the  rest,  consisting  of  1030  bags  put  on  board  in 
February,  and  50  in  March,  the  bill  of  lading  was  signed  in 
March.  At  the  trial  of  an  action  by  the  seller  against  the  buyer 
for  refusing  to  accept  the  cargo,  evidence  was  given  that  rice 
shipped  in  February  would  be  the  spring  crop,  and  quite  as  good 
as  rice  shipped  in  March  or  April.  Yet  the  House  of  Lords  held 
that  the  action  could  not  be  maintained,  because  the  meaning  of 
the  contract,  as  apparent  upon  its  face,  was  that  all  the  rice  must 
be  put  on  board  in  March  and  April,  or  in  one  of  those  months. 

In  the  opinions  there  delivered  the  general  principles  under- 
lying this  class  of  cases  are  most  clearly  and  satisfactorily  stated. 
It  will  be  sufficient  to  quote  a  few  passages  from  two  of  those 
opinions. 

Lord  Chancellor  Cairns  said: 

"  It  does  not  appear  to  me  to  be  a  question  for  your  Lordships,  or  for 
any  court,  to  consider  whether  that  is  a  contract  which  bears  upon  the 
face  of  it  some  reavson,  some  explanation,  why  it  was  made  in  that  form, 
and  why  the  stipulation  is  made  that  the  shipment  should  be  during  these 
particular  months.  It  is  a  mercantile  contract,  and  merchants  are  not  in 
the  habit  of  placing  upon  their  contracts  stipulations  to  which  they  do 
not  attach  some  value  and  importance."  2  App.  Cas.  463.  "If  it  be 
admitted  that  the  literal  meaning  would  imply  that  the  whole  quantity 
must  be  put  on  board  during  a  specified  time,  it  is  no  answer  to  that 
literal  meaning,  it  is  no  observation  which  can  dispose  of,  or  get  rid  of, 
or  displace,  that  literal  meaning,  to  say  that  it  puts  an  additional  burden 
on  the  seller,  without  a  corresponding  benefit  to  the  purchaser;  that  is  a 
matter  of  which  the  seller  and  the  purchaser  are  the  best  judges.  Xor  is 
it  any  reason  for  saying  that  it  would  be  a  means  by  which  purchasers, 
without  any  real  cause,  would  frequently  obtain  an  excuse  for  rejecting 
contracts  when  prices  had  dropped.  The  nonfulfillment  of  any  term  in 
any  contract  is  a  meaits  by  which  a  purchaser  is  able  to  get  rid  of  the 
contract  when  prices  have  dropped;  but  that  is  no  reason  why  a  term 
which  is  found  in  a  contract  should  not  be  fulfilled."  pp.  465,  466.  "  It 
was  suggested  that  even  if  the  construction  of  the  contract  be  as  I  have 
stated,  still  if  the  rice  was  not  put  on  board  in  the  particular  months, 
that  would  not  be  a  reason  which  would  justify  the  appellants  in  having 
rejected  the  rice  altogether,  but  that  it  might  afford  a  ground  for  a  cross 


Chap.  III.  §  2.]  BY  BREACH.  691 

action  by  them  if  they  could  show  that  any  particular  damage  resulted 
to  them  from  the  rice  not  having  been  put  on  board  in  the  months  in 
question.  My  Lords,  T  cannot  think  that  there  is  any  foundation  what- 
ever for  that  argument.  If  the  construction  of  the  contract  be  as  I  have 
said,  that  it  bears  that  the  rice  is  to  be  put  on  board  in  the  months  iu 
question,  that  is  part  of  the  description  of  the  subject  matter  of  what  is 
sold.  What  is  sold  is  not  300  tons  of  rice  in  gross  or  in  general.  It  is 
300  tons  of  Madras  rice  to  be  put  on  board  at  Madras  during  the  partic- 
ular months."  "  The  plaiutilf,  who  sues  upon  that  contract,  has  not 
launched  his  case  until  he  has  shown  that  he  has  tendered  that  thing 
which  has  been  contracted  for,  and  if  he  is  unable  to  show  that,  he 
cannot  claim  any  damages  for  the  nonfulfillment  of  the  contract."  pp. 
467,  468. 

Lord  Blackburn  said : 

"  If  the  description  of  the  article  tendered  is  different  in  any  respect, 
it  is  not  the  article  bargained  for,  and  the  other  party  is  not  bound  to 
take  it.  I  think  in  this  case  what  the  parties  bargained  for  was  rice, 
shipped  at  Madras  or  the  coast  of  Madras.  Equally  good  rice  might 
have  been  shipped  a  little  to  the  north  or  a  little  to  the  south  of  the 
coast  of  Madras.  I  do  not  quite  know  what  the  boundary  is,  and  prob- 
ably equally  good  rice  might  have  been  shipped  in  February  as  was 
shipped  in  March,  or  equally  good  rice  might  have  been  shipped  in  May 
as  was  shipped  in  April,  and  I  dare  say  equally  good  rice  might  have  been 
put  on  board  another  ship  as  that  which  was  put  on  board  the  Rajah  of 
Cochin.  But  the  parties  have  chosen,  for  reasons  best  known  to  them- 
selves, to  say:  We  bargain  to  take  rice,  shipped  in  this  particular  region, 
at  that  particular  time,  on  board  that  particular  ship;  and  before  the 
defendants  can  be  compelled  to  take  anything  in  fulfillment  of  that  con- 
tract it  must  be  shown  not  merely  that  it  is  equally  good,  but  that  it  is 
the  same  article  as  they  have  bargained  for  —  otherwise  they  are  not 
bound  to  take  it."     2  A  pp.  Cas.  480,  481. 

Soon  after  that  decision  of  the  House  of  Lords,  two  cases  were 
determined  in  the  Court  of  AppeaL  In  Renter  v.  Sala  (4  C.  P. 
D.  239),  under  a  contract  for  the  sale  of  "about  twenty-five  tons 
(more  or  less)  black  pepper,  October  *°/  November  shipment,  from 
Penang  to  London,  the  name  of  the  vessel  or  vessels,  marks  and 
full  particulars  to  be  declared  to  the  buyer  in  writing  within 
sixty  days  from  date  of  bill  of  lading,"  the  seller,  within  the 
sixty  days,  declared  twenty-five  tons  by  a  particular  vessel,  of 
which  only  twenty  tons  were  shipped  in  November,  and  five  tons 
in  December;  and  it  was  held  that  the  buyer  had  the  right  to 


592  DISCHARGE  OF  CONTRACT.  [Past  V. 

refuse  to  receive  any  part  of  the  pepper.  In  Honck  v.  Muller 
(7  Q.  B.  D.  92),  under  a  contract  for  the  sale  of  2000  tons  of  pig 
iron,  to  be  delivered  to  the  buyer  free  on  board  at  the  maker's 
wharf  "  in  November,  or  equally  over  November,  December,  and 
January  next,"  the  buyer  failed  to  take  any  iron  in  November, 
but  demanded  delivery  of  one-third  in  December  and  one-third  in 
January;  and  it  was  held  that  the  seller  was  justified  in  refusing 
to  deliver,  and  in  giving  notice  to  the  buyer  that  he  considered 
the  contract  as  canceled  by  the  buyer's  not  taking  any  iron  in 
November. 

The  plaintiff  in  the  case  at  bar  greatly  relied  on  the  very  recent 
decision  of  the  House  of  Lords  in  Mersey  Go.  v.  Naylor  (9  App. 
Cas.  434),  affirming  the  judgment  of  the  Court  of  Appeal  in  9 
Q.  B.  D.  648,  and  following  the  decision  of  the  Court  of  Common 
Pleas  in  Freeth  v.  Burr,  L.  R.  9  C.  P.  208. 

But  the  point  there  decided  was  that  the  failure  of  the  buyer  to 
pay  for  the  first  instalment  of  the  goods  upon  delivery  does  not, 
unless  the  circumstances  evince  an  intention  on  his  part  to  be  no 
longer  bound  by  the  contract,  entitle  the  seller  to  rescind  the 
contract  and  to  decline  to  make  further  deliveries  under  it.  And 
the  grounds  of  the  decision,  as  stated  by  Lord  Chancellor  Sel- 
borne  in  moving  judgment  in  the  House  of  Lords,  are  applicable 
only  to  the  case  of  a  failure  of  the  buyer  to  pay  for,  and  not  to 
that  of  a  failure  of  the  seller  to  deliver,  the  first  instalment. 

The  Lord  Chancellor  said: 

"  The  contract  is  for  the  purchase  of  5000  tons  of  steel  blooms  of  the 
company's  manufacture  ;  therefore  it  is  one  contract  for  the  purchase  of 
that  quantity  of  steel  blooms.  No  doubt  there  are  subsidiary  terms  in 
the  contract,  as  to  the  time  of  delivery,  '  Delivery  1000  tons  monthly 
commencing  January  next ; '  and  as  to  the  time  of  payment,  '  Payment 
net  cash  within  three  days  after  receipt  of  shipping  documents ; '  but  that 
does  not  split  up  the  contract  into  as  many  contracts  as  there  shall  be 
deliveries  for  the  purpose,  of  so  many  distinct  quantities  of  iron.  It  is 
quite  consistent  with  the  natural  meaning  of  the  contract,  that  it  is  to 
be  one  contract  for  the  purchase  of  that  quantity  of  iron  to  be  delivered  at 
those  times  and  in  that  manner,  and  for  which  payment  is  so  to  be  made. 
It  is  perfectly  clear  that  no  particular  payment  can  be  a  condition  prece- 
dent of  the  entire  contract,  because  the  delivery  under  the  contract  was 
most  certainly  to  precede  payment ;  and  that  being  so,  I  do  not  see  how, 
without  express  words,  it  can  possibly  be  made  a  condition  precedent  to 


Chap.  m.  §2.]  BY  BREACH.  593 

the  subsequent  fulfillment  of  the  unfulfilled  part  of  the  contract,  by  the 
delivery  of  the  undelivered  steel."    9  App.  Cos.  439. 

Moreover,  although  in  the  Court  of  Appeal  dicta  were  uttered 
tending  to  approve  the  decision  in  Simpson  v.  Crippin,  and  to 
disparage  the  decisions  in  Hoare  v.  Bennie  and  Honck  v.  Muller, 
above  cited,  yet  in  the  House  of  Lords  Simpson  v.  Crippin  was 
not  even  referred  to,  and  Lord  Blackburn,  who  had  given  the 
leading  opinion  in  that  case,  as  well  as  Lord  Bramwell,  who  had 
delivered  the  leading  opinion  in  Honck  v.  Muller,  distinguished 
Hoare  v.  Bennie  and  Honck  v.  Muller  from  the  case  in  judgment. 
9  App.  Cas.  444,  446. 

Upon  a  review  of  the  English  decisions,  the  rule  laid  down  in 
the  earlier  cases  of  Hoare  v.  Bennie  and  Coddington  v.  Paleologo, 
as  well  as  in  the  later  cases  of  Beuter  v.  Sala  and  Honck  v. 
Muller,  appears  to  us  to  be  supported  by  a  greater  weight  of 
authority  than  the  rule  stated  in  the  intermediate  cases  of  Simp- 
son V.  Crippin  and  Brandt  v.  Lawrence,  and  to  accord  better  with 
the  general  principles  affirmed  by  the  House  of  Lords  in  Bowes 
V.  Shand,  while  it  in  nowise  contravenes  the  decision  of  that 
tribunal  in  Mersey  Co.  v.  Naylor. 

In  this  country  there  is  less  judicial  authority  upon  the  ques- 
tion. The  two  cases  most  nearly  in  point  that  have  come  to  our 
notice  are  Hill  v.  Blake  (97  N.  Y.  216),  which  accords  with  Bowes 
V.  Shand,  and  King  Philip  Mills  v.  Slater  (12  R.  I.  82),  which 
approves  and  follows  Hoare  v.  Bennie.  The  recent  cases  in  the 
Supreme  Court  of  Pennsylvania,  cited  at  the  bar,  support  no 
other  conclusion.  In  Shinn  v.  Bodine  (60  Penn.  St.  182)  the 
point  decided  was  that  a  contract  for  the  purchase  of  800  tons  of 
coal  at  a  certain  price  per  ton,  "coal  to  be  delivered  on  board 
vessels  as  sent  for  during  months  of  August  and  September,"  was 
an  entire  contract,  under  which  nothing  was  payable  until 
delivery  of  the  whole,  and  therefore  the  seller  had  no  right  to 
rescind  the  contract  upon  a  refusal  to  pay  for  one  cargo  before 
that  time.  In  Morgan  v.  McKee  (77  Penn.  St.  228)  and  in  Scott  v. 
Kittanning  Coal  Co.  (89  Penn.  St.  231)  the  buyer's  right  to  rescind 
the  whole  contract  upon  the  failure  of  the  seller  to  deliver  one 
instalment  was  denied,  only  because  that  right  had  been  waived, 

QQ 


594  DISCHARGE  OF  CONTRACT.  [Part  V. 

in  the  one  case  by  unreasonable  delay  in  asserting  it,  and  in  the 
other  by  having  accepted,  paid  for,  and  used  a  previous  instal- 
ment of  the  goods.  The  decision  of  the  Supreme  Judicial  Court 
of  Massachusetts  in  Winchestei'  v.  Newton  (2  Allen,  492)  resembles 
that  of  the  House  of  Lords  in  Mersey  Co.  v.  Naylor. 

Being  of  opinion  that  the  plaintiff's  failure  to  make  such  ship- 
ments in  February  and  March  as  the  contract  required  prevents 
his  maintaining  this  action,  it  is  needless  to  dwell  upon  the 
further  objection  that  the  shipments  in  April  did  not  comply 
with  the  contract,  because  the  defendants  could  not  be  compelled 
to  take  about  1000  tons  out  of  the  larger  quantity  shipped  in  that 
month,  and  the  plaintiff,  after  once  designating  the  names  of 
vessels,  as  the  contract  bound  him  to  do,  could  not  substitute 
other  vessels.     See  Busk  v.  Spence,  4  Camp.  329;  Graves  y.  Legg, 

9  Exch.  709;  Renter  v.  Sola,  above  cited. 

Judgment  affirmed.^ 

The  Chief  Justice  was  not  present  at  the  argument,  and  took 
no  part  in  the  decision  of  this  case. 


(fi)   Virtual  failure  of  consideration.. 

Note.  —  For  cases  illustrating  virtual  failure  of  consideration,  see  Pope  v. 
Allis,  115  U.  S.  36.3,  post,  p.  695  ;  Wolcott  v.  Mount,  36  N.  J.  L.  262,  post,. 
p.  698 ;  and  other  cases  on  "  Conditions  and  Warranties."  For  total  failure 
of  consideration,  see  Gibson  v.  Pelkie,  37  Mich.  380,  ante,  p.  247. 

c.    Conditions  and  warranties,  or  vital  and  subsidiary  promises. 
(a)   Condition,  or  vital  promise. 

DAVISON  V.  VON  LINGEN. 

113  UNITED  STATES,  40.— 1885. 
[Reported  herein  at  p.  265.] 


1  "The  reasoning  of  that  case  {Norrington  v.  Wright)  seems  to  us  accu- 
rate and  decisive,  and  we  follow  it  without  hesitation."  — Finch,  J.,  in  Pope 
v.  Porter,  102  N.  Y.  366,  371.    Cf.  Cahen  v.  Piatt,  69  N.  Y.  348. 


Chap.  m.  §2.]  BY  BREACH.  595 

POPE  et  al  V.    ALLIS. 

115  UNITED  STATES,  363.  — 1885. 

Action  to  recover  back  money  paid  for  iron  which,  on  arrival, 
was  rejected.     Judgment  for  plaintiff  (defendant  in  error). 

Plaintiif  bought  of  defendants  by  description  a  quantity  of 
"Ko.  1  extra  pig  iron"  to  be  shipped  from  Coplay,  Penn.  On 
arrival  plaintiff  rejected  the  iron  because  it  did  not  answer  the 
description. 

Mr.  tTusTiCE  Wood.  .  .  .  The  assignment  of  error  mainly 
relied  on  by  the  plaintiffs  in  error  is  that  the  court  refused  to 
instruct  the  jury  to  return  a  verdict  for  the  defendants.  The 
legal  proposition  upon  which  their  counsel  based  this  request 
was  that  the  purchaser  of  personal  property,  upon  breach  of 
warranty  of  quality,  cannot,  in  the  absence  of  fraud,  rescind 
the  contact  of  purchase  and  sale,  and  sue  for  the  recovery  of 
the  price.  And  they  contended  that,  as  the  iron  was  delivered 
to  defendant  in  error  either  at  Coplay  or  Elizabethport,  and 
the  sale  was  completed  thereby,  the  only  remedy  of  the  defend- 
ant in  error  was  by  a  suit  upon  the  warranty.  It  did  not  appear 
that  at  the  date  of  the  contract  the  iron  had  been  manufactured, 
and  it  was  shown  by  the  record  that  no  particular  iron  was 
segregated  and  appropriated  to  the  contract  by  the  plaintiffs  in 
error  until  a  short  time  before  its  shipment,  in  the  latter  part 
of  April  and  the  early  part  of  May.  The  defendant  in  error 
had  no  opportunity  to  inspect  it  until  it  arrived  in  Milwaukee, 
and  consequently  never  accepted  the  particular  iron  appropriated 
to  fill  the  contract.  It  was  established  by  the  verdict  of  the 
jury  that  the  iron  shipped  was  not  of  the  quality  required  by 
the  contract.  Under  these  circumstances  the  contention  of  the 
plaintiffs  in  error  is  that  the  defendant  in  error,  although  the 
iron  shipped  to  him  was  not  what  he  bought,  and  could  not  be 
used  in  his  business,  was  bound  to  keep  it,  and  could  only 
recover  the  difference  in  value  between  the  iron  for  which  he 
contracted  and  the  iron  which  was  delivered  to  him. 

We  do  not  think  that  such  is  the  law.  When  the  subject 
matter  of  a  sale  is  not  in  existence,  or  not  ascertained  at  the 


696  DISCHARGE  OF   CONTRACT.  [Part  V. 

time  of  the  contract,  an  undertaking  that  it  shall,  when  existing 
or  ascertained,  possess  certain  qualities,  is  not  a  mere  warranty, 
but  a  condition,  the  performance  of  which  is  precedent  to  any 
obligation  upon  the  vendee  under  the  contract;  because  the 
existence  of  those  qualities  being  part  of  the  description  of  the 
thing  sold  becomes  essential  to  its  identity,  and  the  vendee  can- 
not be  obliged  to  receive  and  pay  for  a  thing  different  from  that 
for  which  he  contracted.  Chanter  v.  Hopkins,  4  Mees.  &W.  399; 
Barr  v.  Gibson,  3  Mees.  &  W.  390;  Gompertz  v.  Bartlett,  2  El. 
&  Bl.  849;  Okell  v.  Smith,  1  Stark,  X.  P.  107;  notes  to  Cutter 
V.  Powell,  2  Smith's  Lead.  Cas.  (7th  Am.  ed.)  37;  Woodle  v. 
Whitney,  23  Wis.  55;  Boothhy  v.  Scales,  27  Wis.  626;  Fairfield 
V.  Madison  Manuf'g  Co.,  38  Wis.  346.  See  also  Nichol  v. 
Godts,  10  Exch.  191.  So,  in  a  recent  case  decided  by  this  court, 
it  was  said  by  Mr.  Justice  Gray:  "A  statement"  in  a  mercan- 
tile contract  "descriptive  of  the  subject  matter  or  of  some 
material  incident,  such  as  the  time  or  place  of  shipment,  is 
ordinarily  to  be  regarded  as  a  warranty  in  the  sense  in  which 
that  term  is  used  in  insurance  and  maritime  law ;  that  is  to  say, 
A  condition  precedent  upon  the  failure  or  non-performance  of 
-which  the  party  aggrieved  may  repudiate  the  whole  contract." 
Norrington  v.  Wright,  115  U.  S.  188,  6  Sup.  Ct.  Eep.  12.  See 
also  Filley  v.  Pope,  115  U.  S.  213,  6  Sup.  Ct.  Eep.  19.  And 
so,  when  a  contract  for  the  sale  of  goods  is  made  by  sample, 
it  amounts  to  an  undertaking  on  the  part  of  the  seller  with  the 
buyer  that  all  the  goods  are  similar,  both  in  nature  and  quality, 
to  those  exhibited,  and  if  they  do  not  correspond  the  buyer  may 
lefuse  to  receive  them;  or,  if  received,  he  may  return  them  in 
a  reasonable  time  allowed  for  examination,  and  thus  rescind  the 
contract.  Lorymer  v.  Smith,  1  Barn.  &  C.  1;  Magee  v.  Bil- 
Ungsley,  3  Ala.  679. 

The  authorities  cited  sustain  this  proposition:  that  when  a 
vendor  sells  goods  of  a  specified  quality,  but  not  in  existence 
or  ascertained,  and  undertakes  to  ship  them  to  a  distant  buyer, 
when  made  or  ascertained,  and  delivers  them  to  the  carrier  for 
the  purchaser,  the  latter  is  not  bound  to  accept  them  without 
examination.  The  mere  delivery  of  the  goods  by  the  vendor 
to  the  carrier  does  not  necessarily  bind  the  vendee  to  accept 


Chap.  in.  §2.]  BY  BREACH.  69T 

them.  On  their  arrival  he  has  the  right  to  inspect  them  to 
ascertain  whether  they  conform  to  the  contract,  and  the  right 
to  inspect  implies  the  right  to  reject  them  if  they  are  not  of  the 
quality  required  by  the  contract.  The  rulings  of  the  Circuit 
Court  were  in  accordance  with  these  views. 

We  have  been  referred  by  the  plaintiffs  in  error  to  the  cases 
of  Thornton  v.  Wynn  (12  Wheat.  184)  and  Lyon  v.  Bertram  (20 
How.  149)  to  sustain  the  proposition  that  the  defendant  in  error 
in  this  case  could  not  rescind  the  contract  and  sue  to  recover 
back  the  price  of  the  iron.  But  the  cases  are  not  in  point.  In 
the  first,  there  was  an  absolute  sale  with  warranty  and  delivery 
to  the  vendee  of  a  specific  chattel,  namely,  a  race-horse;  in  the 
second,  the  sale  was  of  a  specified  and  designated  lot  of  flour 
which  the  vendee  had  accepted,  and  part  of  which  he  had  used, 
with  ample  means  to  ascertain  whether  or  not  it  conformed  to 
the  contract. 

The  cases  we  have  cited  are  conclusive  against  the  contention 
of  the  plaintiffs  in  error.  The  jury  has  found  that  the  iron  was 
not  of  the  quality  which  the  contract  required,  and  on  that 
ground  the  defendant  in  error,  at  the  first  opportunity,  rejected 
it,  as  he  had  a  right  to  do.  His  suit  to  recover  the  price  was, 
therefore,  well  brought. 

Other  errors  are  assigned,  but,  in  our  opinion,  they  present 

no  ground  for  the  reversal  of  the  judgment,  and  do  not  require 

discussion. 

Judgment  affirmed. 


COPLAY  IRON  CO.  v.   POPE  et  al. 

108  NEW  YORK,  232.  — 1888. 

Action  to  recover  the  price  of  iron. 

Defense,  breach  of  warranty.  Verdict  directed  for  plaintiff. 
Defendants  appeal. 

Plaintiff  sold  defendants  by  description  "  No.  1  extra  foundry 
pig  iron."  Defendants  resold  it  by  description  to  Allis  &  Co., 
to  whom,  by  defendants'  directions,  it  was  shipped  by  plaintiff. 
Allis  &  Co.  refused  to  accept  it  because  it  was  inferior  to  the 


698  DISCHARGE  OF  CONTRACT.  [Paet  V. 

description.  Defendants  notified  plaintiff  that  they  should  hold 
plaintiff  liable  for  all  damage  sustained  by  the  failure  to  deliver 
iron  according  to  contract. 

Earl,  J.  .  .  .  Treating  this  then  as  an  executory  contract 
of  sale,  the  defendants  are  not  in  a  position  to  complain  of  the 
quality  of  the  iron,  because  they  never  offered  to  return  it,  and 
never  gave  the  plaintiff  notice  or  opportunity  to  take  it  back. 
They  must  therefore  be  conclusively  presumed  to  have  ac- 
quiesced in  the  quality  of  the  iron.  Hargnus  v.  Stone,  5  N.  Y. 
73;  Reed  v.  Randall,  29  Id.  358;  McCormick,  v.  Sarson,  45  Id. 
265;  Dutchess  Co.  v.  Harding,  49  Id.  323;  Gaylord  Mfg.  Co.  v. 
Allen,  53  Id.  515.  Here  there  was  no  collateral  warranty  or 
agreement  as  to  the  quality  of  the  iron.  The  representation  as 
to  the  kind  and  quality  of  iron  was  part  of  the  contract  of  sale 
itself,  descriptive  simply  of  the  article  to  be  delivered  in  the 
future;  and  clearly  within  the  cases  cited,  an  acceptance  of  the 
property  by  the  defendants,  without  any  offer  to  return  the  same 
at  any  time,  deprives  them  of  any  right  to  make  complaint  of  its 
inferior  quality. 

The  judgment  should  be  affirmed  with  costs.  All  concur  ex- 
cept Andrews,  J.,  not  voting. 

Judgment  affirmed. 


WOLCOTT  et  al.   v.    MOUNT. 

36  JTEW  JERSEY  LAW,   262.  — 1873. 

Action  for  breach  of  warranty.  Judgment  for  plaintiff.  De- 
fendants appeal. 

Plaintiff  purchased  of  defendants,  who  were  retail  merchants, 
a  quantity  of  seed  represented  and  believed  by  defendants  to  be 
early  strap-leaf  red-top  turnip  seed,  plaintiff  informing  defend- 
ants that  he  wanted  seed  of  that  variety  to  raise  a  crop  for  the 
early  New  York  market.  In  fact  the  seed  was  of  a  late  variety, 
fit  only  for  cattle,  and  plaintiff  lost  his  entire  crop.  The  dif- 
ference between  the  two  kinds  of  seed  cannot  be  discovered  by 
inspection. 

Depue,  J.     The  action  in  this  case  was  brought  on  a  contract 


C5HAP.  III.  §  2.J  BY  BREACH.  599 

of  warranty  and  resulted  in  a  judgment  against  the  defendants 
in  the  action  for  damages. 

Two  exceptions  to  the  proceedings  are  presented  by  the  brief 
submitted.  The  first  touches  the  right  of  the  plaintiff  to  recover 
at  all.     The  second,  the  measure  of  damages. 


I. 

In  the  absence  of  fraud  or  a  warranty  of  the  quality  of  an 
article,  the  maxim,  caveat  emptor,  applies.  •  As  a  general  rule, 
no  warranty  of  the  goodness  of  an  article  will  be  implied  on  a 
contract  of  sale. 

It  has  been  held  by  the  courts  of  New  York,  that  no  warranty 
whatever  would  arise  from  a  description  of  the  article  sold. 
JSeixas  v.  Woods,  2  Caines,  48;  S7iell  v.  Moses,  1  Johns.  96;  Swett 
V.  Colgate,  20  Johns.  196.  In  these  cases  the  defect  was  not  in 
the  quality,  but  the  article  delivered  was  not  of  the  species 
described  in  the  contract  of  sale. 

In  the  well-known  case  of  Chandelor  v.  Lopus  (Cro.  Jac.  4) 
it  was  decided  that  a  bare  afi&rmation  that  a  stone  sold  was  a 
bezoar  stone,  when  it  was  not,  was  no  cause  of  action. 

The  cases  cited  fairly  present  the  negative  of  the  proposition 
on  which  the  plaintiff's  right  of  action  depends.  Chandelor  v. 
Lopus  was  decided  on  the  distinction  between  actions  on  the  case 
in  tort  for  a  misrepresentation,  in  which  a  scienter  must  be 
averred  and  proved  and  actions  upon  the  contract  of  warranty. 
1  Smith's  Lead.  Cas.  283.  Chancellor  Kent,  who  delivered  the 
opinion  in  Seixas  v.  Woods,  in  his  Commentaries,  expresses  a 
doubt  whether  the  maxim,  caveat  emptor,  was  correctly  applied 
in  that  case,  inasmuch  as  there  was  a  description  in  writing  of 
the  articles  sold,  from  which  a  warranty  might  have  been 
inferred.  2  Kent,  479.  And  in  a  recent  case  before  the  Com- 
mission of  Appeals  of  New  York,  Earl,  C,  declared  that  Seixas 
V.  Woods  had  been  much  questioned  and  could  no  longer  be 
regarded  as  authority  on  the  precise  point.  Hawkins  v.  Pemher- 
ton,  51  N.  Y.  204.  In  the  later  English  cases  some  criticism  has 
been  made  upon  the  application  of  the  term  "  warranty  "  to  repre- 
sentations in  contracts  of  sale,  descriptive  of  articles  which  are 


600  DISCHARGE  OF  CONTRACT.  [Part  V, 

known  in  the  market  by  such  descriptions,  per  Lord  Abinger 
in  Chanter  v.  Hopkins,  4  M.  &  W.  404;  per  Erie,  C.  J.,  in 
Bannerman  v.  White,  10  C.  B.  (N.  S.)  844.  But  in  a  number 
of  instances  it  has  been  held  that  statements  descriptive  of  the 
subject  matter,  if  intended  as  a  substantive  part  of  the  contract, 
will  be  regarded  in  the  first  instance  as  conditions,  on  the 
failure  of  which  the  other  party  may  repudiate  in  toto,  by  a 
refusal  to  accept  or  a  return  of  the  article,  if  that  be  practicable, 
or  if  part  of  the  consideration  has  been  received,  and  rescission 
therefore  has  become  impossible,  such  representations  change 
their  character  as  conditions  and  become  warranties,  for  the  breach 
of  which  an  action  will  lie  to  recover  damages.  The  rule  of  law 
is  thus  stated  by  Williams,  J.,  in  Behn  v.  Burness,  as  established 
on  principle  and  sustained  by  authority.     3  B.  &  S.  755. 

In  Bridge  v.  Wain  (1  Starkie,  504)  no  special  warranty  was 
proved,  but  the  goods  were  described  as  scarlet  cuttings,  an 
article  known  in  the  market  as  peculiar  to  the  China  trade. 
In  an  action  for  breach  of  warranty.  Lord  Ellenborough  held  that 
if  the  goods  were  sold  by  the  name  of  scarlet  cuttings,  and  were 
so  described  in  the  invoice,  an  undertaking  that  they  were  such 
must  be  inferred.  In  Allan  v.  Lake  (18  Q.  B,  560)  the  defendant 
sold  to  the  plaintiff  a  crop  of  turnips,  described  in  the  note  sold 
as  Skirving's  Sweedes.  The  seed  having  been  sown,  it  turned 
out  that  the  greater  part  was  not  of  that  kind,  but  of  an  inferior 
kind.  It  was  held  that  the  statement  that  the  seeds  were 
Skirving's  Sweedes,  was  a  description  of  a  known  article  of  trade 
and  a  warranty.  In  Josling  v.  Kingaford  (13.  C.  B.  N.  S.  447) 
the  purchaser  recovered  damages  upon  a  contract  for  the  sale  of 
oxalic  acid,  where  the  jury  found  that  the  article  delivered  did 
not,  in  a  commercial  sense,  come  properly  within  the  description 
of  oxalic  acid,  though  the  vendor  was  not  the  manufacturer,  and 
the  vendee  had  an  opportunity  of  inspection  (the  defect  not 
being  discoverable  by  inspection),  and  no  fraud  was  suggested. 
In  Wieler  v.  Schilizzi  (17  C.  B.  619)  the  sale  was  of  ''Calcutta 
linseed."  The  goods  had  been  delivered,  and  the  action  was  in 
form  on  the  warranty  implied  from  the  description.  The  jury 
having  found  that  the  article  delivered  had  lost  its  distinctive 
character  as  Calcutta  linseed,  by  reason  of  the  admixture  of 


CJhap.  m.  §  2.]  BY  BREACH.  601 

foreign  substance,  the  plaintiff  recovered  his  damages  upon  the 
warranty. 

The  doctrine  that  on  the  sale  of  a  chattel  as  being  of  a  particu- 
lar kind  or  description,  a  contract  is  implied  that  the  article  sold 
is  of  that  kind  or  description,  is  also  sustained  by  the  following 
English  cases:  Powell  v.  Horton,  2  Bing.  K.  C.  668;  Barr  v. 
Gibson,  3  M.  &  W.  390;  Chanter  v.  Hopkins,  4  M.  &  W.  399; 
mchol  V.  Oodts,  10  Exch.  191;  Gompertz  v.  Bartlett,  2  E.  &  B. 
849;  Azemar  v.  Casella',  Law  Kep.  2  C.  P.  431,  677;  and  has 
been  approved  by  some  decisions  in  the  courts  of  this  country. 
Henshaw  v.  Robins,  9  Mete.  83;  Borrekins  v.  Bevan,  3  Rawle, 
23;  Osgood  v.  Lewis,  2  Harr,  &  Gill.  495;  Hawkins  v.  Pember- 
ton,  51  N.  Y.  198. 

The  right  to  repudiate  the  purchase  for  the  non-conformity  of 
the  article  delivered,  to  the  description  under  which  it  was  sold, 
is  universally  conceded.  That  right  is  founded  on  the  engage- 
ment of  the  vendor,  by  such  description,  that  the  article  delivered 
shall  correspond  with  the  description.  The  obligation  rests  upon 
the  contract.  Substantially,  the  description  is  warranted.  It 
will  comport  with  sound  legal  principles  to  treat  such  engage- 
ments as  conditions  in  order  to  afford  the  purchaser  a  more  en- 
larged remedy,  by  rescission,  than  he  would  have  on  a  simple 
warranty;  but  when  his  situation  has  been  changed,  and  the 
remedy,  by  repudiation,  has  become  impossible,  no  reason  sup- 
ported by  principle  can  be  adduced,  why  he  should  not  have  upon 
his  contract  such  redress  as  is  practicable  under  the  circum- 
stances. In  that  situation  of  affairs,  the  only  available  means  of 
redress  is  by  an  action  for  damages.  Whether  the  action  shall 
be  technically  considered  an  action  on  a  warranty,  or  an  action 
for  the  non-performance  of  a  contract,  is  entirely  immaterial. 

The  contract  which  arises  from  the  description  of  an  article  on 
a  sale  by  a  dealer  not  being  the  manufacturer  is  not  in  all  re- 
spects coextensive  with  that  which  is  sometimes  implied  where 
the  vendor  is  the  manufacturer,  and  the  goods  are  ordered  by  a 
particular  description,  or  for  a  specified  purpose,  without  oppor- 
tunity for  inspection,  in  which  case  a  warranty,  under  some  cir- 
cumstances, is  implied  that  the  goods  shall  be  merchantable,  or 
reasonably  fit  for  the  purpose  for  which  they  were  ordered.     In 


602  DISCHARGE  OF  CONTRACT.  [Part  V. 

general,  the  only  contract  which  arises  on  the  sale  of  an  article 
by  a  description,  by  its  known  designation  in  the  market,  is  that 
it  is  of  the  kind  specified.  If  the  article  corresponds  with  that 
description,  no  warranty  is  implied  that  it  shall  answer  the  par- 
ticular purpose  in  view  of  which  the  purchase  was  made.  Chanter 
V.  Hopkins,  4  M.  &  W.  404;  Ollivant  v.  Bayley,  5  Q.  B.  288; 
Winsor  v.  Lombard,  18  Pick.  57;  Mixer  v.  Coburn,  11  Mete. 
559;  Gossler  v.  E<igle  &c.  Co.,  103  Mass.  331.  The  cases  on 
this  subject,  so  productive  of  judicial  discussion,  are  classified  by 
Justice  Mellor,  in  Jones  v.  Jiist,  Law  Kep.  3  Q.  B.  197.  iSTor  can 
any  distinction  be  maintained  between  statements  of  this  charac- 
ter in  written  and  in  oral  contracts.  The  arguments  founded  on 
an  apprehension  that  where  the  contract  is  oral,  loose  expressions 
of  judgment  or  opinion  pending  the  negotiations  might  be  re- 
garded as  embodied  in  the  contract,  contrary  to  the  intentions 
of  the  parties,  is  without  reasonable  foundation.  It  is  always  a 
question  of  construction  or  of  fact,  whether  such  statements 
were  the  expression  of  a  mere  matter  of  opinion,  or  were  intended 
to  be  a  substantive  part  of  the  contract,  when  concluded.  If  the 
contract  is  in  writing,  the  question  is  one  of  construction  for  the 
court.  Behn  v.  Burness,  3  B.  &  S.  751.  If  it  be  concluded  by 
parol,  it  will  be  for  the  determination  of  the  jury,  from  the  nature 
of  the  sale,  and  the  circumstances  of  each  particular  case,  whether 
the  language  used  was  an  expression  of  opinion,  merely  leaving 
the  buyer  to  exercise  his  own  judgment,  or  whether  it  was  in- 
tended and  understood  to  be  an  undertaking  which  was  a  contract 
on  the  part  of  the  seller.  Lomi  v.  Tucker,  4  C.  &  P.  15;  De 
Seiohanberg  v.  Buchanan,  5  C.  &  P.  343;  Power  v.  Barham,  4 
A.  &  E.  473.  In  the  case  last  cited,  the  vendor  sold  by  a  bill 
on  parcels,  "four  pictures,  views  in  Venice  —  Canaletto;  "  it  was 
held  that  it  was  for  the  jury  to  say,  under  all  the  circumstances, 
what  was  the  effect  of  the  words,  and  whether  they  implied  a 
warranty  of  genuineness,  or  conveyed  only  a  description  or  an 
expression  of  opinion,  and  that  the  bill  of  parcels  was  properly 
laid  before  the  jury  with  the  rest  of  the  evidence. 

The  purchaser  may  contract  for  a  specific  article,  as  well  as 
for  a  particular  quality,  and  if  the  seller  makes  such  a  contract, 
lie  is  bound  by  it.     The  state  of  the  ease  presented  shows  that 


Chap.  III.  §  2.]  BY  BREACH.  603 

the  plaintiff  inquired  for  seed  of  a  designated  kind,  and  in- 
formed the  defendants  that  he  wanted  it  to  raise  a  crop  for  the 
New  York  market.  The  defendants  showed  him  the  seed,  and 
told  him  it  was  the  kind  he  inquired  for,  and  sold  it  to  him  as 
such.  The  inspection  and  examination  of  the  seed  were  of  no 
service  to  the  plaintiff.  The  facts  and  circumstances  attending 
the  transaction  were  before  the  court  below,  and  from  the  evi- 
dence, it  decided  that  the  proof  was  sufficient  to  establish  a 
contract  of  warranty.  The  evidence  tended  to  support  that  con- 
clusion, and  this  court  cannot,  on  certiorari,  review  the  finding 
of  the  court  below,  on  a  question  of  fact,  where  there  is  evidence 
from  which  the  conclusion  arrived  at  may  be  lawfully  inferred.* 

The  second  reason  for  reversal  is,  that  the  court  was  in  error 
in  the  damages  awarded.  The  judgment  was  for  consequential 
damages. 

The  contention  of  the  defendants'  counsel  was  that  the  dam- 
ages recoverable  should  have  been  limited  to  the  price  paid  for 
the  seed,  and  that  all  damages  beyond  a  restitution  of  the  con- 
sideration were  too  speculative  and  remote  to  come  within  the 
rules  for  measuring  damages.  As  the  market  price  of  the  seed 
which  the  plaintiff  got,  and  had  the  benefit  of  in  a  crop,  though 
of  an  inferior  quality,  was  probably  the  same  as  the  market  price 
of  the  seed  ordered,  the  defendants'  rule  of  damages  would  leave 
the  plaintiff  remediless. 

The  earlier  cases,  both  in  English  and  American  courts,  gen- 
erally concurred  in  excluding,  as  well  in  actions  in  tort  as  in 
actions  on  contracts,  from  the  damages  recoverable,  profits  which 
might  have  been  realized  if  the  injury  had  not  been  done,  or  the 
contract  had  been  performed.     Sedg.  on  Dam.  69. 

This  abridgment  of  the  power  of  courts  to  award  compensation 
adequate  to  the  injury  suffered  has  been  removed  in  actions  of 
tort.     The  wrong-doer  must  answer  in  damages  for  those  results 

1  Accord :  Bagley  v.   Cleveland  Boiling  Mill  Co.,  22  Blatch.  842 ;  S.  C. 
21  Fed.  Rep.  159. 
^  See  post,  p.  611. 


604  DISCHARGE  OF  CONTRACT.  [Part  V, 

injurious  to  other  parties,  which  are  presumed  to  have  been 
within  his  contemplation  when  the  wrong  was  done.  Crater  v. 
Binninger,  4  Vroom,  513.  Thus,  in  an  action  to  recover  damages 
for  personal  injuries  caused  by  the  neligence  of  the  defendant, 
the  plaintiff  was  held  to  be  entitled  to  recover  as  damages  the 
loss  he  sustained  in  his  profession  as  an  architect,  by  reason  of 
his  being  incapacitated  from  pursuing  his  business.  New  Jersey 
Express  Co.  v.  Nichols,  4  Vroom,  435. 

A  similar  relaxation  of  this  restrictive  rule  has  been  made,  at 
least  to  a  qualified  extent,  in  action  on  contracts,  and  loss  of 
profits  resulting  naturally  from  the  breach  of  the  contract,  has 
been  allowed  to  enter  into  the  damages  recoverable  where  the 
profits  that  might  have  been  realized  from  the  performance  of  the 
contract  are  capable  of  being  estimated  with  a  reasonable  degree 
of  certainty.  In  an  action  on  a  warranty  of  goods  adapted  to  the 
China  market,  and  purchased  with  a  view  to  that  trade,  the 
purchaser  was  allowed  damages  with  reference  to  their  value  in 
China,  as  representing  the  benefit  he  would  have  received  from, 
the  contract,  if  the  defendant  had  performed  it.  Bridge  v.  Wain, 
1  Starkie,  504.  On  an  executory  contract  put  an  end  to  by  the 
refusal  of  the  one  party  to  complete  it,  for  such  a  breach  the 
other  party  may  recover  such  profits  as  would  have  accrued  to 
him  as  the  direct  and  immediate  result  of  the  performance  of  the 
contract.  Fox  v.  Harding,  7  Cush.  516;  Masterton  v.  Mayor  of 
Brooklyn,  7  Hill,  61.  In  an  action  against  the  charterer  of  a 
vessel  for  not  loading  a  cargo,  the  freight  she  would  have  earned 
under  the  charter  party,  less  expenses  and  the  freight  actually 
received  for  services  during  the  period  over  which  the  charter 
extended,  was  held  to  be  the  proper  measure  of  damages.  Smith 
V.  McGuire,  3  H.  &  N.  554. 

In  the  cases  of  the  class  from  which  these  citations  have  been 
made,  and  they  are  quite  numerous,  the  damages  arising  from  loss 
of  profits  were  such  as  resulted  directly  from  non-performance, 
and  in  the  ordinary  course  of  business  would  be  expected  as  a 
necessary  consequence  of  the  breach  of  the  contract.  In  the  two 
cases  cited,  of  Fox  v.  Harding  and  Masterton  v.  Mayor  of  Brooklyn, 
it  was  said  that  the  profits  that  might  have  been  realized  from 
independent  and  collateral  engagements,  entered  into  on  the  faith 


€hap.  III.  §  2.]  BY  BREACH.  005 

of  the  principal  contract,  were  too  remote  to  be  taken  into  con- 
sideration. This  latter  qualification  would  exclude  compensation 
for  the  loss  of  the  profits  of  a  resale  by  the  vendee  of  the  goods 
purchased,  made  upon  the  faith  of  his  expectation,  that  his  con- 
tract with  his  vendor  would  be  performed. 

In  the  much  canvassed  case  of  Hadley  v.  Baxendale  (9  Exch. 
341),  AldersoQ,  B.,  in  pronouncing  the  judgment  of  the  court, 
enunciated  certain  principles  on  which  damages  should  be  awarded 
for  breaches  of  contracts  which  assimilated  damages  in  actions 
on  contract  to  actions  in  tort.  The  rule  there  adopted  as  resting 
on  the  foundation  of  correct  legal  principles  was,  that  the  damages 
recoverable  for  a  breach  of  contact  were  either  such  as  might  be 
considered  as  arising  naturally,  i.e.  according  to  the  usual  course 
of  things,  from  the  breach  of  the  contract  itself;  or  such  as  might 
reasonably  be  supposed  to  have  been  in  the  contemplation  of  both 
parties  at  the  time  they  made  the  contract,  as  the  probable  results 
of  the  breach  of  it;  and  that  when  the  contract  is  made  under 
special  circumstances,  if  those  special  circumstances  are  com- 
municated, the  amount  of  injury  which  would  ordinarily  follow 
from  a  breach  of  the  contract,  under  such  circumstances,  may  be 
recovered  as  damages  that  would  reasonably  be  expected  to  result 
from  such  breach.  The  latter  branch  of  this  rule  was  considered 
by  Blackburn,  J.,  and  Martin,  B.,  as  analogous  to  an  agreement 
to  bear  the  loss  resulting  from  the  exceptional  state  of  things, 
made  part  of  the  principal  contract,  by  the  fact  that  such  special 
circumstances  were  communicated,  with  reference  to  which  the 
parties  may  be  said  to  have  contracted.  Hoi'ne  v.  The  Midland 
Railway  Company,  Law  Eep.  8  C.  P.  134-140.  Under  the  opera- 
tion of  this  rule,  damages  arising  from  the  loss  of  a  profitable 
sale,  or  the  deprivation  for  a  contemplated  use,  have  been  allowed 
when  special  circumstances  of  such  sale  or  proposed  use  were 
•communicated  contemporaneously  with  the  making  of  the  con- 
tract; and  have  been  denied  when  such  communication  was  not 
made  so  specially,  as  that  the  other  party  was  made  aware  of 
the  consequences  that  would  follow  from  his  non-performance. 
Borries  v.  Hutchinson,  18  C.  B.  (N.  S.)  445;  Cory  v.  Thames 
Ironworks  Co.,  Law  Eep.  3  Q.  B.  181;  Home  v.  The  Midland 
Hailway  Company,  L.  R.  8  C.  P.  134;  Benjamin  on  Sales,  665-671. 


606  DISCHARGE  OF  CONTRACT.  [Part  V, 

It  must  not  be  supposed  that  under  the  principle  of  Hadley  v. 
Baxendale  mere  speculative  profits,  such  as  might  be  conjectured 
to  have  been  the  probable  results  of  an  adventure  which  was 
defeated  by  the  breach  of  the  contract  sued  on,  the  gains  from 
which  are  entirely  conjectural,  with  respect  to  which  no  means 
exist  of  ascertaining,  even  approximately,  the  probable  results, 
can,  under  any  circumstances,  be  brought  within  the  range  of 
damages  recoverable.  The  cardinal  principle  in  relation  to  the 
damages  to  be  compensated  for  on  the  breach  of  a  contract,  that 
the  plaintiff  must  establish  the  quantum  of  his  loss,  by  evidence 
from  which  the  jury  will  be  able  to  estimate  the  extent  of  his 
injury,  will  exclude  all  such  elements  of  injury  as  are  incapable 
of  being  ascertained  by  the  usual  rules  of  evidence  to  a  reasonable 
degree  of  certainty. 

For  instance,  profits  expected  to  be  made  from  a  whaling 
voyage,  the  gains  from  which  depend  in  a  great  measure  upon 
chance,  are  too  purely  conjectural  to  be  capable  of  entering  into 
compensation  for  the  non-performance  of  a  contract,  by  reason  of 
which  the  adventure  was  defeated.  For  a  similar  reason,  the  loss 
of  the  value  of  a  crop  for  which  the  seed  had  not  been  sown,  the 
yield  from  which,  if  planted,  would  depend  upon  the  contingencies 
of  weather  and  season,  would  be  excluded  as  incapable  of  estima- 
tion, with  that  degree  of  certainty  which  the  law  exacts  in  the 
proof  of  damages.  But  if  the  vessel  is  under  charter,  or  engaged 
in  a  trade,  the  earnings  of  which  can  be  ascertained  by  reference 
to  the  usua,  schedule  of  freights  in  the  market,  or  if  a  crop  has 
been  sowed  oa  the  ground  prepared  for  cultivation,  and  the  plain- 
tiff's complaint  is,  that  because  of  the  inferior  quality  of  the  seed 
a  crop  of  less  value  is  produced,  by  these  circumstances  the  means 
would  be  furnished  to  enable  the  jury  to  make  a  proper  estimation 
of  the  injury  resulting  from  the  loss  of  profits  of  this  character. 

In  this  case  the  defendants  had  express  notice  of  the  intended 
use  of  the  seed.  Indeed,  the  fact  of  the  sale  of  seeds  by  a  dealer 
keeping  them  for  sale  for  gardening  purposes,  to  a  purchaser 
engaged  in  that  business,  would  of  itself  imply  knowledge  of  the 
use  which  was  intended,  sufficient  to  amount  to  notice.  The 
ground  was  prepared  and  sowed,  and  a  crop  produced.  The  uncer- 
tainty of  the  quantity  of  the  crop,  dependent  upon  the  condition 


Chap.  III.  §  2.]  BY  BREACH.  60T 

of  weather  and  season,  was  removed  by  the  yield  of  the  ground 
under  the  precise  circumstances  to  which  the  seed  ordered  would 
have  been  exposed.  The  difference  between  the  market  value  of 
the  crop  raised,  and  the  same  crop  from  the  seed  ordered,  would 
be  the  correct  criterion  of  the  extent  of  the  loss.  Compensation 
on  that  basis  may  be  recovered  in  damages  for  the  injury  sus- 
tained as  the  natural  consequence  of  the  breach  of  the  contract. 
Randall  v.  Raper,  E.  B.  &  E.  84;  Lovegrove  v.  Fisher,  2  F. 
&  F.  128. 

From  the  state  of  the  case,  it  must  be  presumed  that  the  court 
below  adopted  this  rule  as  the  measure  of  damages,  and  the 
judgment  should  be  afl&rmed.* 


(fi)   Warranty  or  subsidiary  promise. 

FKEYMAN  v.   KNECHT. 
78  PENNSYLVANIA  STATE,  141.  — 1875. 

Action  on  the  case.  Verdict  for  plaintiff.  Defendant  brings 
error. 

Defendant  sold  plaintiff  a  horse  and  warranted  it  sound.  It 
turned  out  that  the  horse  had  one  blind  eye  and  the  other  was 
affected.  Plaintiff  took  the  horse  to  defendant's  house  and  left 
it  there,  but  defendant  refused  to  receive  it,  and  it  was  sold  as  an 
estray.  The  plaintiff  was  allowed  to  recover  as  damages  the 
purchase  price  with  interest. 

Mr.  Justice  Williams.  It  was  clearly  competent  for  the 
plaintiff  to  prove  that,  when  he  purchased  the  mare  in  November, 
1872,  her  eyes  were  diseased;  and  in  order  to  show  that  the  dis- 
ease was  not  temporary  but  permanent  and  incurable,  that  it 
continued  until  i^ovember,  1873,  when  one  of  her  eyes  became 
wholly  blind  and  the  sight  of  the  other  was  greatly  impaired. 
But  evidence  as  to  the  condition  of  her  eyes  in  November,  1873)i 
was  not  admissible  per  se  for  the  purpose  of  showing  that  they 
were  diseased  at  the  time  of  the  sale;  and  it  should  not  have 

1  Affirmed  38  N.  J.  L.  496  (1875). 


608  DISCHARGE  OF  CONTRACT.  [Part  V. 

been  received  if  there  was  no  evidence  tending  to  show  what  their 
condition  was  during  the  ten  months  immediately  preceding  that 
date.  If  the  defendant  was  guilty  of  fraud  in  the  sale  and  war- 
ranty of  the  mare,  the  plaintiff  had  the  right  to  rescind  the  con- 
tract, and  upon  returning  or  offering  to  return  her,  to  recover 
back  the  price  paid  in  an  action  on  the  case  for  deceit,  or  in  an 
action  of  assumpsit  or  case  for  the  fraudulent  warranty.  1  Chit. 
PI.  137.  But  if  there  was  no  fraud  or  deceit  in  the  sale,  the 
plaintiff  had  no  right  to  rescind  the  contract  for  the  alleged 
breach  of  warranty,  and  to  return  the  mare  without  the  defend- 
ant's consent.  Kase  v.  John,  10  Watts,  107;  Sedgwick  on  Dam- 
ages, 286-7.  It  is  true  that  he  might  sue  either  in  assumpsit  or 
case  for  the  breach  of  the  warranty  ( Vanleer  v.  Earle,  2  Casey, 
277) ;  but  the  measure  of  his  damages  would  be,  not  the  consid- 
eration or  price  paid,  but  the  difference  between  the  actual  value 
of  the  mare,  and  her  value,  if  sound,  with  interest  from  the  date 
of  the  sale.  Where  there  is  no  fraud  or  agreement  to  return,  the 
vendee  cannot  rescind  the  contract  after  it  has  been  executed,  but 
his  only  remedy  is  an  action  on  the  warranty. 

In  this  case  it  is  not  alleged  that  the  defendant  was  guilty  of 
any  fraud  or  deceit  in  the  sale  and  warranty  of  the  mare,  nor  is 
there  any  evidence  that  he  knew  or  had  any  reason  to  believe 
that  her  eyes  were  permanently  and  incurably  diseased  at  the 
time  of  the  sale.  The  plaintiff,  therefore,  had  no  right  to  return 
the  mare,  and  the  defendant  was  not  bound  to  take  her  back  and 
refund  the  price.  It  follows  that  there  was  error  in  over- 
ruling the  defendant's  offer  to  show  that  he  refused  to  accept  the 
mare  when  she  was  returned  by  the  plaintiff,  and  that  soon  after- 
wards she  was  sold  as  a  stray  for  about  the  same  price  the 
plaintiff  paid  for  her;  and  for  not  charging,  as  requested  in 
defendant's  fourth  point,  that  the  horse,  or  the  value  thereof,  is 
to  be  considered  as  the  property  of  the  plaintiff.  The  defendant 
had  the  right  to  show  the  price  for  which  the  mare  was  sold,  as  a 
stray,  by  the  constable,  as  evidence  of  her  value  at  the  time  of 
the  sale  to  the  plaintiff;  and  he  was  entitled  to  the  instruction 
prayed  for,  in  order  to  limit  the  plaintiff's  recovery  to  the  differ- 
ence between  the  actual  value  of  the  mare,  and  her  value,  if 
sound,  as  warranted,  with  interest  thereon  from  the  date  of  her 


Chap.  HI.  §  2.]  BY  BREACH.  609 

sale.     The  other  assignments  of  error  are  not  sustained,  but  for 
the  reasons  given  the  judgment  must  be  reversed. 

Judgment  reversed,  and  a  venire  facias  de  novo  awarded.* 


BRYANT  V.  ISBURGH. 

13  GRAY  (Mass.),  607.  — 1859. 

Action  of  contract  to  recover  the  price  of  a  horse  sold  and 
delivered  to  the  defendant  by  the  plaintiff.  Answer,  that  the 
plaintiff  warranted  the  horse  to  be  sound  at  the  time  of  the  sale ; 
that  the  horse  proved  to  be  unsound,  and  was  returned  to  the 
plaintiff.  The  plaintiff  did  not  receive  the  horse  back,  but 
declined  to  do  so.  Verdict  for  plaintiff,  with  deduction  for 
damages. 

The  court  charged  that  the  defendant  had  no  right  to  return 
the  horse  and  rescind  the  contract,  in  the  absence  of  fraud,  unless 
such  a  remedy  was  provided  for  by  the  terms  of  the  contract. 
Defendant  excepted  to  this  charge. 

Metcalf,  J.  The  precise  question  in  this  case  is,  whether  a 
purchaser  of  personal  property,  sold  to  him  with  an  express 
warranty,  and  taken  into  possession  by  him,  can  rescind  the  con- 
tract and  return  the  property,  for  breach  of  the  warranty,  when 
there  is  no  fraud,  and  no  express  agreement  that  he  may  do  so. 
It  appears  from  the  cases  cited  for  the  plaintiff  that  in  the 
English  courts,  and  in  some  of  the  courts  in  this  country,  he 
cannot,  and  that  his  only  remedy  is  on  the  warranty.  See  also 
2  Steph.  N.  P.  1296;  Addison  on  Con.  (2d  Am.  ed.)  272;  Oli- 
phanVs  Law  of  Horses,  88;  Cripps  v.  Smith,  3  Irish  Law  R.  277. 

But  we  are  of  opinion  (nothwithstanding  a  dictum  of  Parsons, 
C.  J.,  in  Kimball  v.  Cunningham,  4  Mass.  505)  that,  by  the  law  of 
this  commonwealth,  as  understood  and  practiced  upon  for  more 

1  Accord :  Matteson  v.  Holt,  45  Vt.  .336 ;  Marsh  v.  Low,  55  Ind.  271 ; 
Thornton  v.  Wynn,  12  Wheat.  189  (semble).  In  New  York  there  is  an  un- 
broken line  of  dicta  to  the  same  effect.  Voorhees  v.  Earl,  2  Hill,  288  ;  Cary 
V.  Gruman,  4  Hill,  025  ;  Muller  v.  Etio,  14  N.  Y.  697  ;  Day  v.  Pool,  52  N.  Y. 
416  ;  Brigg  v.  Hilton,  99  N.  Y.  517. 


610  DISCHARGE  OF  CONTRACT.  [Part  V. 

than  forty  years,  there  is  no  such  difference  between  the  effect  of 
an  implied  and  an  express  warranty  as  deprives  a  purchaser  of 
any  legal  right  of  rescission  under  the  latter  which  he  has  under 
the  former;  and  that  he  to  whom  property  is  sold  with  express 
warranty,  as  well  as  he  to  whom  it  is  sold  with  an  implied  war- 
ranty, may  rescind  the  contract  for  breach  of  warranty,  by  a 
seasonable  return  of  the  property,  and  thus  entitle  himself  to  a 
full  defense  to  a  suit  brought  against  him  for  the  price  of  the 
property,  or  to  an  action  against  the  seller  to  recover  back  the 
price,  if  it  has  been  paid  to  him.  In  Bradford  v.  Manly  (13  Mass. 
139),  where  it  was  decided  that  a  sale  by  sample  was  tantamount 
to  an  express  warranty  that  the  sample  was  a  true  representative 
of  the  kind  of  thing  sold  (and  in  which  case  there  was  no  fraud). 
Chief  Justice  Parker  said :  "  If  a  different  thing  is  delivered,  he  " 
(the  seller)  "does  not  perform  his  contract,  and  must  pay  the 
difference,  or  receive  the  thing  back  and  rescind  the  bargain,  if 
it  is  offered  him."  This,  it  is  true,  was  only  a  dictum,  and  not 
to  be  regarded  as  a  decisive  authority.  But  in  Perley  v.  Balch 
(23  Pick.  283),  which  was  an  action  on  a  promissory  note  given 
for  the  price  of  an  ox  sold  to  the  defendant,  it  was  adjudged  that 
the  jury  were  rightly  instructed  that  if,  on  the  sale  of  the  ox, 
there  was  fraud,  or  an  express  warranty  and  a  breach  of  it,  the 
defendant  might  avoid  the  contract  by  returning  the  ox  within  a 
reasonable  time,  and  that  this  would  be  a  defense  to  the  action. 
In  Dorr  v.  Fisher  (1  Cush.  274)  it  was  said  by  Shaw,  C.  J.,  that, 
"  to  avoid  circuity  of  action,  a  warranty  may  be  treated  as  a  con- 
dition subsequent,  at  the  election  of  the  vendee,  who  may,  upon  a 
breach  thereof,  rescind  the  contract  and  recover  back  the  amount 
of  his  purchase  money,  as  in  case  of  fraud.  But  if  he  does  this, 
he  must  first  return  the  property  sold,  or  do  everything  in  his 
power  requisite  to  a  complete  restoration  of  the  property  to  the 
vendor;  and  without  this  he  cannot  recover."  The  chief  justice 
took  no  distinction  between  an  express  warranty  and  an  implied 
one,  but  referred,  in  support  of  what  he  had  said  (with  other 
cases),  to  Perley  v.  Balch,  cited  above. 

In  1816,  when  the  case  of  Bradford  v.  Manly  was  before  this 
court,  and  afterwards,  until  1831,  the  law  of  England,  on  the 
point  raised  in  the  present  case,  was  supposed  to  be  as  we  now 


CH.VP.  III.  §  3.]  BY  BREACH:  REMEDIES.  till 

hold  it  to  be  here.  Lord  Eldon  had  said,  in  Curtis  v.  Hannay 
(3  Esp.  R.  82),  that  he  took  it  to  be  "clear  law;  "  and  so  it  was 
laid  down  in  2  Sehv.  N.  P.  (1st  ed. )  586,  in  1807,  and  in  Long  on 
Sales,  125,  126,  in  1821,  and  in  2  Stark.  Ev.  (1st  ed.)  645,  in  1825. 
In  1831,  in  Street  v.  Blay  (2  B.  &  Ad.  461),  Lord  Eldon's  opinion 
was  first  denied,  and  a  contrary  opinion  expressed  by  the  court 
of  the  king's  bench.  Yet  our  court  subsequently  (in  1839) 
decided  the  case  of  Perley  v.  Balch.  The  doctrine  of  that  decis- 
ion prevents  circuity  of  action  and  multiplicity  of  suits,  and  at  the 
same  time  accomplishes  all  the  ends  of  justice. 

Exceptions  sustained.* 


§  3.   Remedies  for  breach  of  contract. 

{i.)  Damages. 
WOLCOTT  et  al.  v.   MOUNT. 

36  NEW  JERSEY  LAW,  262.— 1873.  / 

[Beported  herein  at  p.  603.]* 

1  Accord :  Marston  v.  Knight,  29  Me.  .341  ;  Franklin  v.  Long,  7  Gill,  & 
Johns.  (Md.)  407;  Rogers  v.  Hanson,  35  la.  283;  Boothby  v.  Scales,  27 
Wis.  626 ;  Smith  v.  Hale,  158  Mass.  178. 

2  See  also  Griffin  v.  Colver,  16  N.  Y.  489  ;  Allison  v.  Chandler,  11  Mich. 
542  ;  Shprman  v.  Kitsmiller,  ante,  p.  157  ;  Windmuller  v.  Pope,  ante,  p.  665 ; 
Hale  V.  Trout,  ante,  p.  661 ;  note,  p.  667  ;  Davison  v.  Von  Lingen,  aiUe, 
p.  265. 

"  It  is  not  true  that  loss  of  profits  cannot  be  allowed  as  damages  for  a  breach 
of  contract.  Losses  sustained  and  gains  prevented  are  proper  elements  of 
damage.  Most  contracts  are  entered  into  with  a  view  to  future  profits,  and 
such  profits  are  in  the  contemplation  of  the  parties,  and  so  far  as  they  can 
be  properly  proved,  they  may  form  the  measure  of  damage.  As  they  are 
prospective,  they  must,  to  some  extent,  be  uncertain  and  problematical,  and 
yet  on  that  account  a  person  complaining  of  breach  of  contract  is  not  to  be 
deprived  of  all  remedy.  It  is  usually  his  right  to  prove  the  nature  of  his 
contract,  the  circumstances  surrounding  and  following  its  breach,  and  the 
consequences  naturally  and  plainly  traceable  to  it,  and  then  it  is  for  the 
jury,  under  proper  instructions  as  to  the  rules  of  damages,  to  determine 
the  compensation  to  be  awarded  for  the  breach.  When  a  contract  is  repu- 
diated, the  compensation  of  the  party  complaining  of  its  repudiation  shou!  I 
be  the  value  of  the  contract.    He  has  been  deprived  of  his  contract,  and  hu 


^ 


612  DISCHARGE  OF  CONTRACT.  [Pa»t  V. 

ROCHESTER  LANTERN  CO.  v.   STILES   Am)  PARKER 

PRESS  CO. 

136  NEW  YORK,  209.  — 1892. 
[Reported  herein  at  p.  4iT.] 


MATHER  V.  BUTLER  COUNTY. 

28  IOWA,  253.  — 1869. 

(Quantum  meruit.  Cross  claim  for  damages  for  defective  work, 
etc.  .  Verdict  for  plaintiff,  who,  not  being  satisfied  with  the 
amount,  moved  for  a  new  trial.  Motion  denied.  Plaintiff 
appeals. 

DiiiLox,  C.  J.  .  .  .  The  defendant  had  a  set-off  or  cross 
claim  arising  out  of  damages  claimed  to  have  been  occasioned 
by  defective  work  and  materials.  There  was  evidence  offered  by 
the  defendant  tending  to  show,  that,  owing  to  the  imperfect 
manner  in  which  the  belfry  was  constructed,  the  roof  leaked,  and 
this  caused  the  plastering,  some  time  afterwards,  to  fall,  and  that 
it  would  cost  one  hundred  dollars  to  make  good  the  damage  by 
replacing  the  plastering.  Concerning  this  subject,  the  plaintiff 
:asked  the  court  to  give  the  following  instruction,  which  was 
xefused : 

"That,  if  the  defendant  could  have  protected  itself  from  damage 
which  would  naturally  result  from  the  alleged  defects  in  the  construction 
of  said  court-house,  it  was  bound  to  do  so,  if  practicable,  at  a  moderate 
expense  or  by  ordinary  efforts,  and  it  can  charge  the  plaintiff  for  such 
expense  and  efforts  only,  and  for  the  damages  which  could  not  be  pre- 
vented by  the  exercise  of  due  diligence." 

The  court's  instructions  contained  no  reference  whatever  to  this 
point.     Without  more  particularly  alluding  to  the  circumstances 

should  have  in  lieu  thereof  its  value,  to  be  ascertained  by  the  application  of 
rules  of  law  which  have  been  laid  down  for  the  guidance  of  courts  and 
jurors."  — Earl,  J.,  in  Wakeman  v.  Wheeler  &  Wilson  Mfg.  Co.,  101  N.  Y. 
206,  209,  210;  Beeman  v.  Banta,  118  N.  Y.  538  ;  Swain  v.  Schieffelin,  134 
N.  Y.  471 ;  United  States  v.  Behan,  110  U.  S.  338;  Howard  v.  Mfg.  Co.,  139 
U.  S.  199. 


Chap,  m.  §3.]        BY  BREACH:  REMEDIES.  618 

of  the  case  before  the  court,  it  is  our  opinion  that  the  instruction 
asked  was  pertinent,  and  the  case  one  to  which  the  doctrine 
asserted  (which  should  be  cautiously  applied)  was  applicable. 

The  doctrine  itself  has  been  before  recognized  in  this  court  in 
almost  the  identical  language  of  the  instruction  which  was  refused. 
Davis  V.  Fish,  1  G.  Greene,  406,  409.  See  also  Miller  v.  The 
Mariner's  Church,  7  Greenl.  (Me.)  51;  Loker  v.  Damon,  17 
Pick.  284. 

For  this  error  the  judgment  must  be  reversed,  unless  the 
defendant  consents  that  the  plaintiff's  damages  may  be  increased 
to  the  extent  of  one  hundred  dollars,  the  largest  amount  to  which 
the  error  could,  under  the  evidence,  have  operated  to  the  plain- 
tiff's injury. 

Reversed.* 


STREEPER  V.   WILLIAMS. 

48  PENNSYLVANIA  STATE,   450.  — 1865. 
[Reported  herein  at  p.  517.] 


(u.)  Specific  performance  and  injunction. 

a.    Specific  performance. 

ADAMS  V.   MESSINGER. 

147  MASSACHUSETTS,   185.— 1888. 

Bill  in  equity  for  specific  performance  and  for  an  injunction. 
Demurrer  to  bill.     Demurrer  sustained.     Plaintiff  appeals. 

The  bill  alleged  that  the  defendant  agreed  to  furnish  to  plain- 
tiff certain  steam  injectors,  and  further  agreed  that  in  case  he 
took  out  in  the  United  States  patents  for  improvements  in  such 
injectors  he  would  apply  for  patents  in  Canada,  and  on  receiving 

1  Accord:  Parsons  v.  Sutton,  66  N.  Y.  92  ;  Maynard  v.  Maynard,  49  Vt. 
297.  On  the  duty  of  a  servant  wrongfully  discharged  to  seek  new  employ- 
ment, see  Howard  v.  Daly,  61  N.  Y.  362,  370  ;  Strauss  v.  Meertief,  64  Ala. 
299.  On  the  duty  to  stop  work  when  directed,  see  Clark  v.  Marsiglia,  1 
Denio,  317,  ante,  p.  572. 


614  DISCHAKGE   OF  CONTRACT.  [Pabt  V. 

the  same  assign  them  to  plaintiff;  that  defendant  had  failed  and 
refused  to  supply  the  injectors,  and  had,  after  taking  out  addi- 
tional patents  in  the  United  States,  failed  and  refused  to  apply 
for  corresponding  patents  in  Canada;  that  plaintiff  could  obtain 
the  injectors  only  of  defendant,  and  had  suffered  great  and 
peculiar  damages  from  defendant's  failure  to  deliver  them.  The 
bill  prayed  that  defendant  might  be  decreed  specifically  to  per- 
form the  agreement ;  that  there  might  be  assessed  damages  grow- 
ing out  of  defendant's  neglect;  and  that  defendant  might  be 
restrained  from  alienating  his  right  to  the  patents  in  Canada. 
The  defendant  demurred  to  the  bill  on  the  following  grounds : 

"  1.  That  the  plaintiff  has  not  stated  such  a  case  as  entitles  him  to 
any  relief  in  equity  against  the  defendant.  2.  That  the  plaintiff  has  a 
plain  and  adequate  remedy  at  law.  3.  That  the  agreement,  specific  per- 
formance of  which  the  plaintiff  prays  may  be  decreed,  is  a  contract  for 
personal  services.  4.  That  the  specific  performance,  which  the  plaintiff 
prays  may  be  decreed,  requires  the  exercise  of  mechanical  skill,  intellect- 
ual ability,  and  judgment.  5.  That  the  specific  performance  of  said 
agreement  involves  the  building  of  a  machine  embodying  a  patent. 
6.  That  the  securing  of  letters  patent  in  Canada  involves  the  action  of 
oflBcers  of  a  foreign  government,  and  cannot  be  the  subject  of  an  order 
for  specific  performance.  7.  That  it  does  not  appear  by  said  bill  what 
relief  the  plaintiff  prays  for,  and  the  plaintiff's  bill  is  entirely  indefinite 
and  uncertain." 

Devens,  J.  It  is  the  contention  of  the  defendant,  that  the 
plaintiff  has  a  full,  complete,  and  adequate  remedy  at  common 
law  by  an  action  for  damages,  and  that  the  court  sitting  in  equity 
cannot  grant  the  relief  sought  by  the  prayer  of  the  bill. 

The  controversy  arises  from  the  failure  to  perform  an  executory 
written  contract.  So  far  as  this  relates  to  personal  property,  the 
objections  arising  from  the  statute  of  frauds,  which  have  some- 
times been  found  to  exist  when  oral  contracts  were  sought  to  be 
enforced,  have  of  course  no  application.  The  general  rule  that 
contracts  as  to  the  purchase  of  personal  property  are  not  specifi- 
cally enforced,  as  are  those  which  relate  to  real  property,  does 
not  rest  on  the  ground  of  any  distinction  between  the  two  classes 
of  property  other  than  that  which  arises  from  their  character. 

Contracts  which  relate  to  real  property  can  necessarily  be  satis- 
fied only  by  a  conveyance  of  the  particular  estate  or  parcel  con- 


Chap.  m.  §3.]  BY  BREACH:   REMEDIES.  615 

tracted  for,  while  those  which  relate  to  personal  property  are 
often  fully  satisfied  by  damages  which  enable  the  party  injured 
to  obtain  elsewhere  in  the  market  property  precisely  similar  to 
that  which  he  had  agreed  to  purchase.  The  distinction  between 
real  and  personal  property  is  entirely  subordinate  to  the  question 
whether  an  adequate  remedy  can  thus  be  afforded.  If,  from  the 
nature  of  the  personal  property,  it  cannot,  a  court  of  equity  will 
entertain  jurisdiction  to  enforce  the  contract.  Story  Eq.  Jur., 
i  717;  Clark  v.  Flint,  22  Pick.  231.  A  contract  for  bank,  rail- 
way, or  other  corporation  stock  freely  sold  in  the  market,  might 
not  be  thus  enforced,  but  it  would  be  otherwise  where  the  stock 
was  limited  in  amount,  held  in  a  few  hands,  and  not  ordinarily 
to  be  obtained.  White  v.  Schuyler,  1  Abb.  Pr.  (N.  S.)  300; 
Treasurer y.  Commercial  Mining  Co.,  23Cal.  390;  Pooler.  Middle- 
ton,  29  Beav.  646;  Doloret  v.  Rothschild,  1  Sim.  &  Stu.  590.  See 
Chaffee  v.  Middlesex  Railroad,  146  Mass.  224. 

Where  articles  of  personal  property  are  also  peculiar  and  in- 
dividual in  their  character,  or  have  an  especial  value  on  account 
of  the  associations  connected  with  them,  as  pictures,  curiosities, 
family  furniture,  or  heirlooms,  specific  performance  of  a  contract 
in  relation  to  them  will  be  decreed.  Lloyd  v.  Loaring,  6  Ves. 
773;  Fells  v.  Read,  3  Ves.  Jr.  70;  Loivther  v.  Lowther,  13  Ves.  95; 
Williams  v.  Howard,  3  Murphey,  74.  An  agreement  to  assign  a 
patent  will  be  specifically  enforced. .  Binney  v.  Annan,  107  Mass. 
^4.  Nor  do  we  perceive  any  reason  why  an  agreement  to  furnish 
articles  which  the  vendor  alone  can  supply,  either  because  their 
manufacture  is  guarded  by  a  patent  or  for  any  similar  reason, 
should  not  also  be  thus  enforced.  Hapgood  v.  Rosenstock,  23  Fed. 
Rep.  86.  As  the  value  of  a  patent  right  cannot  be  ascertained  by 
computation,  so  it  is  impossible  with  any  approach  to  accuracy 
to  ascertain  how  much  a  vendee  would  suffer  from  not  being  able 
to  obtain  such  articles  for  use  in  his  business. 

The  contract  of  the  defendant  was  twofold,  to  furnish  and 
deliver  certain  described  working  steam  injectors  within  a  speci- 
fied time  to  the  plaintiff,  and  also  that,  if  the  defendant  shall 
make  improvements  in  injectors  for  steam  boilers,  and  shall  take 
out  patents  therefor  in  the  United  States,  he  will  apply  for  letters 
patent  in  Canada,  and  on  obtaining  them  will  assign  and  convey  the 


616  DISCHARGE  OF  CONTRACT.  [Part  V. 

same  to  the  plaintiff,  and  that  he  will  not  do  any  act  prejudical 
to  these  letters  patent  of  Canada  or  the  monopoly  thus  secured. 

It  is  said  that  the  court  will  not  enforce  a  contract  for  personal 
services  when  such  services  require  the  exercise  of  peculiar  skill, 
intellectual  ability,  and  judgment,  and  therefore  that  the  defend- 
ant cannot  be  ordered  to  make  and  deliver  the  injectors  contracted 
for.  But  the  principle  on  which  it  is  held  that  a  court  of  equity 
cannot  decree  one  to  perform  a  personal  service  involving  peculiar 
talent  or  skill,  because  it  cannot  so  mold  its  order  and  so  super- 
vise the  individual  executing  it  that  it  can  determine  whether  he 
has  honestly  obeyed  it  or  not,  has  no  application  here. 

The  defendant  has  agreed  to  furnish  and  deliver  certain 
injectors,  which  the  contract  shows  to  be  patented  articles.  It 
does  not  appear  from  the  bill  that  they  were  yet  to  be  made  when 
the  contract  was  executed.  But  if  it  be  assumed  that  they  were, 
there  is  nothing  from  which  it  can  be  inferred  that  any  skill 
peculiar  to  the  defendant  was  required  to  construct  them.  For 
aught  that  appears,  they  could  be  made  by  any  intelligent  artificer 
in  the  metals  of  which  they  are  composed.  The  details  of  their 
manufacture  are  given  by  reference  to  the  patents  which  are 
referred  to  in  the  agreement,  so  that  no  difficulty  such  as  has 
sometimes  been  experienced  could  have  been  found  in  describing 
accurately,  and  even  minutely,  the  articles  to  be  furnished.  Nor 
are  there  found  in  the  case  at  bar  any  continuous  duties  to  be 
done,  or  work  to  be  performed,  requiring  any  permanent  super- 
vision, which,  as  it  could  not  be  concluded  within  a  definite  and 
reasonable  time,  has  sometimes  been  held  an  obstacle  to  the 
enforcement  of  a  contract  by  the  court. 

Agreements  to  make  an  archway  under  a  railway,  or  to  construct 
a  siding  at  a  particular  point  for  the  convenience  of  the  land- 
owner, have  been  ordered  to  be  specifically  enforced.  Although 
the  party  aggrieved  might  have  obtained  damages  which  would 
have  been  sufficient  to  have  enabled  him  to  pay  for  constructing 
them,  and  although  the  work  to  be  done  necessarily  involved 
engineering  skill  as  well  as  labor,  he  was  not  bound  to  assume 
the  responsibility  or  the  labor  of  doing  that  which  the  defendant 
had  agreed  to  do.  Storer  v.  Great  Western  Railway,  2  Yo.  & 
Col.  Ch.  48;  Greene  v.    West  Cheshire  Railway,    L.  R.  13   Eq. 


Chap.  III.  §  3.]  BY  BREACH:  REMEDIES.  617 

44.  The  case  at  bar  is  readily  distinguishable  from  that  of 
Wollensak  v.  Briggs  (20  Bradw.  [111.]  50),  on  which  the  defendant 
much  relies.  In  that  case,  the  defendant  was  to  construct  for 
•  the  plaintiff  certain  improved  machinery  for  a  particular  purpose, 
but  no  details  were  given  as  to  the  form,  structure,  principle,  or 
mode  of  operating  the  proposed  machine.  It  was  obviously  a 
contract  too  indefinite  to  enable  the  court  to  order  its  specific 
enforcement. 

It  is  urged  that  specific  performance  of  a  part  only  of  a  con- 
tract will  not  be  ordered  when  it  is  not  in  the  power  of  the  court 
to  order  the  enforcement  of  the  whole,  and  that  it  would  not  be 
possible  to  enforce  that  portion  of  the  contract  which  relates  to 
the  application  for  letters  patent  in  Canada,  and  the  subsequent 
assignment  of  them.  But  where  two  parts  of  a  contract  are 
distinctly  separable,  as  in  the  case  at  bar,  there  is  no  reason  why 
one  should  not  be  enforced  specifically,  and  the  plaintiff  compen- 
sated in  damages  for  the  breach  of  the  other. 

When  a  contract  relates  to  but  a  single  subject,  and  it  is  impos- 
sible for  the  defendant  to  perform  it,  except  partially,  the  plain- 
tiff is  entitled  to  the  benefit  of  such  partial  performance,  and  ta 
compensation,  if  it  be  possible  to  compute  what  is  just,  so  far  as 
it  is  unperformed.  It  was  therefore  held  in  Davis  v.  Parker  (14 
Allen,  94),  that  where  one  had  agreed  to  convey  land  with  release 
of  dower,  and  was  unable  to  procure  a  release  of  dower,  the 
purchaser  was  entitled  to  a  conveyance  without  such  release, 
with  an  abatement  from  the  purchase  money  of  the  value  of  the 
wife's  interest  at  the  time  of  conveyance.  See  also  Milkman  v. 
Ordway,  106  Mass.  232,  253 ;  Curran  v.  Holyoke  Water  Power  Co., 
116  Mass.  90. 

We  have  assumed,  in  favor  of  the  defendant's  contention,  that 
the  only  relief  that  the  plaintiff  could  obtain  for  the  breach  of 
that  portion  of  the  agreement  which  relates  to  the  application 
for  a  patent  in  Canada,  for  the  improvements  which  the  defendant 
had  made,  would  be  in  damages.  We  have  not  intended  thus  to 
decide.  That  equity,  by  virtue  of  its  control  over  the  persons 
before  the  court  takes  cognizance  of  many  things  which  they  may 
do  or  be  able  to  do  abroad,  while  they  are  themselves  personally 
here,  will  not  be  controverted.     One  may  be  enjoined  from  prose- 


618  DISCHARGE  OF  CONTRACT.  [Part  V. 

outing  a  suit  abroad.  He  may  be  compelled  to  convey  land 
situated  abroad,  although  the  conveyance  must  be  according  to 
the  laws  of  the  foreign  country,  and  must  be  sent  there  for 
record.  Pingree  v.  Coffin,  12  Gray,  288 ;  Dehon  v.  Foster,  4  Allen, 
545;  Cunningham  v.  Butler,  142  Mass.  47;  Newton  v.  Bronsoii,  13 
N.  Y.  587;  Bailey  v.  Ryder,  10  N.  Y.  363. 

There  is  nothing  to  show  that  the  defendant,  in  making  his 
application  in  Canada  for  the  patent,  is  compelled  to  leave  the 
State,  any  more  than  he  would  be  compelled  to  do  so  if  he  was  an 
applicant  at  Washington.  The  grant  of  such  a  patent  is  an  act 
of  administration  only.  If  it  were  to  be  granted  here,  the  party 
•would  be  ordered  to  make  application.  It  was  held  in  Eunstetler 
V.  Atkinaon  (Mac Arthur  &  Mackey  382),  that  where  a  formal 
assignment  of  an  invention  had  not  been  made,  but  a  valid 
agreement  had  been  made  to  assign,  equity  would  order  the  party 
to  make  the  formal  assignment,  and  also  to  make  application  for 
the  patent  which,  in  such  case,  would  issue  to  the  assignee.  The 
laws  of  Canada,  which  we  can  know  only  as  facts,  are  not  before 
us  by  any  allegations  as  to  them.  If  all  that  is  required  by  them 
is  a  formal  application  in  writing  by  the  inventor,  there  would 
seem  to  be,  from  the  allegations  of  the  bill,  sufficient  reason  why 
the  defendant  should  be  required  to  make  and  forward  it,  or  place 
it  in  the  hands  of  the  plaintiff  to  be  forwarded  to  the  Canadian 
authorities. 

In  any  event,  as  the  application  is  preliminary  only  to  obtain- 
ing letters  patent  for  the  purpose  of  assigning  them  to  the  plain- 
tiff, the  averments  of  the  bill  taken  in  connection  with  the  terms 
of  the  agreement  set  forth  a  good  reason  why  the  plaintiff  may 
ask  an  assignment  of  his  title  to  the  improvements  in  question 
from  the  defendant,  so  far  as  the  Dominion  of  Canada  is  con- 
cerned, and  also  why  the  defendant  should  be  restrained  from 
alienating  or  in  any  way  incumbering  any  right  he  may  have  to 
letters  patent  from  Canada,  if  the  plaintiff  should  decide  to  seek 
his  remedy  in  this  form,  rather  than  in  damages  for  breach  of  this 

part  of  the  contract. 

Demurrer  overruled.* 

1  "  While  it  may  be  conceded  that  in  general  a  coiui;  of  equity  will  not 
take  upon  itself  to  make  such  decree  where  chattel  property  alone  is  con- 


Chap.  m.  §3.]  BY  BREACH:   REMEDIES.  619 

b.    Injunction. 
CORT  V.  LASSARD  et  cU. 

18  OREGON,  221.  — 1889. 

Lord,  J.  This  is  a  suit  wherein  the  plaintiff,  who  is  a 
theatrical  manager,  seeks  to  enjoin  and  prevent  the  defendants, 
who  are  acrobats,  from  performing  at  a  rival  theater  in  the  same 
place.  The  plaintiff  alleges,  among  other  things,  that  the  plain- 
tiff and  defendants  entered  into  a  contract  whereby  it  was  agreed 
that  the  defendants  were  to  perform  as  acrobats,  exclusively  for 
the  plaintiff,  during  a  period  of  six  weeks,  at  a  salary  of  $60  per 
week,  etc.,  that  the  plaintiff  has  performed  all  the  conditions  of 
his  said  contract,  and  gone  to  large  expense  in  advertising,  etc., 
and  would  have  derived  large  emoluments  from  the  performance 
of  the  defendants,  which  are  alleged  to  be  unique  and  attractive ; 
that  said  defendants,  after  performing  for  the  plaintiff  for  the 
space  of  three  weeks,  refused  to  perform  longer,  and  engaged 
themselves  to  perform  as  acrobats  at  another  theater  mentioned, 
in  said  city;  and  that  said  performance  of  the  said  defendants 
will  attract  large  crowds,  etc.,  and  will  largely  diminish,  if 
permitted  to  be  given,  the  receipts  of  the  plaintiff,  and  cause  an 
irreparable  loss,  etc.,  and  diminish  the  attractions  of  his  said 
theater,  etc. ;  that  the  said  defendants  are  entirely  impecunious, 
and  unable  to  respond  to  an  action  for  a  breach  of  the  contract, 
etc.  The  answer  denies  nearly  all  the  material  allegations,  but 
admits  the  hiring,  etc.,  and  then  avers  affirmatively  that  the 
plaintiff  failed  to  fulfill  his  part  of  the  contract,  etc.,  and  that 
the  plaintiff  discharged  them,  etc. ;  all  of  which  was  put  in  issue 
by  the  reply.  Upon  all  the  issues  presented  by  the  pleadings, 
the  finding  of  the  court  was  favorable  to  the  plaintiff,  with  this 
exception :  "  That  the  performance  of  the  said  defendants  was  not 
of  an  unique  or  unusual  character,  but  that  of  an  ordinary  acrobat 

cerned,  its  jurisdiction  to  do  so  is  no  longer  to  be  doubted,  and  it  is  believed 
that  no  good  reason  exists  against  its  exercise  in  any  case  where  compensa- 
tion in  damages  would  not  furnish  a  complete  and  satisfactory  remedy." 
—  Danforth,  J.,  in  Johnson  v.  Brooks,  93  N.  Y.  337.  See  also  Bothholz  v. 
Schwartz,  46  N.  J.  Eq.  477  ;  Gottschalk  v.  Stein,  69  Md.  51  ;  Eckstein  v. 
Downing,  64  N.  H.  248 ;  Thurston  v.  Arnold,  43  Iowa,  43,  ante,  p.  615. 


620  DISCHARGE  OF  CONTRACT.  [Part  V. 

and  tumbler,  which  could  have  been  easily  supplied,  with  little 
or  no  delay  or  expense ;  and  that  said  service  was  of  a  common 
and  ordinary  character,  and  not  such  as  could  be  enjoined  in 
equity  for  a  breach  of  contract  to  perform,"  etc.  As  a  result, 
the  court  found,  as  a  conclusion  of  law,  that  the  plaintifE  was  not 
entitled  to  any  relief  in  equity,  and  that  his  suit  be  dismissed. 
The  contention  of  counsel  for  the  plaintiff  is  to  this  effect; 
(1)  That  it  is  immaterial  whether  the  performance  is  unique,  or 
involves  special  knowledge  or  skill ;  and  (2)  that  the  finding  is 
contrary  to  the  evidence,  which  will  show  that  the  performance 
was  unique  and  unusual.  In  this  case,  there  is  no  negative 
clause  in  the  contract;  but  the  suit,  as  decided  by  the  court, 
assumes  and  admits  that  such  a  stipulation  is  not  a  prerequisite 
to  the  exercise  of  jurisdiction,  but  that  it  is  enough  to  warrant 
equity  to  interfere  if  the  contract  alleged  to  have  been  broken 
stipulated  for  services  which  are  unique  and  extraordinary  in 
their  character,  or  which  involve  special  skill  or  knowledge  or 
ability,  and  provided  that  such  services  were  to  be  rendered  at  a 
particular  place  or  places,  and  for  a  specified  time. 

The  question  whether  a  court  of  equity  will  apply  the  preven- 
tive remedy  of  injunction  to  contracts  for  the  services  of  pro- 
fessional workers  of  special  merit,  or  leave  them  to  the  remedy 
at  law  for  damages,  has  been  the  subject  of  much  discussion,  and 
the  existence  of  the  jurisdiction  fully  established.  It  is  not, 
perhaps,  possible,  nor  is  it  necessary,  to  reconcile  the  decisions; 
but  the  ground  of  the  jurisdiction,  as  now  exerted,  rests  upon  the 
inadequacy  of  the  legal  remedy.  In  an  early  English  case,  where 
the  jurisdiction  was  invoked  to  prevent  the  actor  Kean  from 
performing  at  another  theater  upon  a  contract  for  personal  ser- 
vices, at  which  there  was  a  stipulation  to  the  effect  that  he  should 
not  perform  at  any  other  theater  in  London  during  the  period  of 
his  engagement,  it  was  held,  as  the  court  could  not  enforce  the 
positive  part  of  the  contract,  it  would  not  restrain  by  injunction 
a  breach  of  the  negative  part.  Kemble  v.  Kean,  6  Sim.  333. 
But  this  case  was  expressly  overruled  in  Lumley  v.  Wagner  (1  De 
Gex,  M.  &  G.  604)  upon  a  like  contract  for  personal  services,  to 
sing,  during  a  certain  period  of  time,  at  a  particular  theater,  and 
not  to  sing  elsewhere  without  written  authority,  upon  the  ground 


Chap.  III.  §  3.]  BY  BREACH:   REMEDIES.  621 

that  the  positive  and  negative  stipulations  of  such  contract  formed 
but  one  contract,  and  that  the  court  would  interfere  to  prevent 
the  violation  of  the  negative  stipulation,  although  it  could  not 
enforce  the  specific  performance  of  the  entire  contract.  In 
■delivering  this  opinion,  among  other  things,  the  Lord  Chancellor 
said: 

"  The  agreement  to  sing  for  the  plaintiff  during  three  months  at  his 
theater,  and  during  that  time  not  to  sing  for  anybody  else,  is  not  a  cor- 
relative contract.  It  is,  in  effect,  one  contract ;  and  though,  beyond  all 
doubt,  this  court  could  not  interfere  to  enforce  the  specific  performance 
of  the  whole  of  this  contract,  yet,  in  all  sound  construction,  and  accord- 
ing to  the  true  spirit  of  the  agreement,  the  engagement  to  perform  for 
three  months  at  one  theater  must  necessarily  exclude  the  right  to  per- 
form at  the  same  time  at  another  theater.  It  was  clearly  intended  that 
J.  Wagner  was  to  exert  her  vocal  abilities  to  the  utmost  to  aid  the 
theater  to  which  she  agreed  to  attach  herself.  I  am  of  opinion  that  if 
she  had  attempted,  even  in  the  absence  of  any  negative  stipulation,  to 
perform  at  another  theater,  she  would  have  broken  the  spirit  and  true 
meaning  of  the  contract,  as  much  as  she  would  with  reference  to  the 
contract  into  which  she  has  actually  entered." 

In  Montague  v.  Flockton  (L.  R.  16  Eq.  189)  it  was  held  that  an 
actor  who  enters  into  a  contract  to  perform  for  a  certain  period 
at  a  particular  theater  may  be  restrained  by  injunction  from 
performing  at  any  other  theater  during  the  pendency  of  his 
engagement,  notwithstanding  that  the  contract  contains  no 
negative  cause  restricting  the  actor  from  performing  elsewhere. 
Referring  to  Lumley  v,  Wagner,  supra,  the  Vice-Chancellor  said : 

"  It  happened  that  the  contract  did  contain  a  negative  stipulation,  and 
finding  it  there.  Lord  St.  Leonard  relied  upon  it;  but  I  am  satisfied  that, 
if  it  had  not  been  there,  he  would  have  come  to  the  same  conclusion,  and 
granted  the  injunction  on  the  grounds  that  Mdlle.  Wagner,  having  agreed 
to  perform  at  Mr.  Lumley's  theater,  could  not  at  the  same  time  be  per- 
mitted to  perform  at  Mr.  Gye's.  But,  however  that  may  be,  it  is  compara- 
tively unimportant,  because  the  subsequent  authorities  have  completely 
settled  this  point." 

As  a  result  of  these  English  authorities,  while  conceding  that 
specific  performance  of  such  contracts  could  not  be  enforced,  the 
jurisdiction  is  established  that  relief  may  be  granted  on  a  contract 
for  such  services,  even  though  it  contains  no  negative  clause, 


622  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

upon  the  ground  that  a  contract  to  act  or  play  at  a  particular 
place  for  a  specified  time  necessarily  implies  a  prohibition  against 
performing  at  any  other  place  during  that  period.  The  American 
courts,  while  they  recognize  the  existence  of  the  jurisdiction, 
have  exhibited  much  hesitancy  in  applying  it  to  such  enlarged 
uses.  Until  Daly  v.  Smith  (49  How.  Pr.  150)  was  decided,  the 
doctrine  of  Lumley  v.  Wagner,  supra,  was  either  entirely  rejected 
or  only  partially  accepted.  Sanquirico  v.  Benedetti,  1  Barb.  315; 
Hamhlin  v.  Dinneford,  2  Edw.  Ch.  528;  Fredricks  v.  Mayer,  13 
How.  Pr.  566;  Butler  v.  Galletti,  21  How.  Pr,  465;  Burton  v. 
Marshall,  4  Gill.  487;  Hayes  v.  Willio,  11  Abb.  Pr.  (N.  S.)  167. 
In  that  case  (Daly  v.  Smith,  supra)  the  authorities  are  carefully 
discriminated,  and  the  injunction  was  granted  restraining  an 
actress  from  violating  her  agreement  to  play  at  the  plaintiff's 
theater  for  a  stated  period;  and  the  case  is  on  all  fours  with 
Lumley  v.  Wagner,  supra.  See  also  Hahn  v.  Society,  42  Md. 
465;  McCaull  v.  Braham,  16  Fed.  Eep.  37.  In  Fredricks  v. 
Mayer  (13  How.  Pr.  567)  and  Butler  v.  Galletti  (21  How.  Pr. 
466)  the  court  indicates  the  principle  that  where  the  services 
involve  the  exercise  of  powers  of  the  mind,  as  of  writers  or  per- 
formers, which  are  purely  and  largely  intellectual,  they  may  form 
a  class  in  which  the  court  will  interfere,  upon  the  ground  that 
they  are  individual  and  peculiar. 

In  these  cases  the  element  of  mind  furnishes  the  rule  of  dis- 
tinction and  decision,  as  distinguished  from  what  is  mechanical 
and  material,  and  would  exclude  professional  workers,  such  as 
dancers  and  acrobats,  whose  performances  are  largely  mechanical, 
however  unique  or  extraordinary  such  performance  may  be.  But 
it  is  apprehended  that  this  distinction  cannot  be  maintained,  for 
the  fact  is  that  such  actors  d^  often  possess  special  merit  of 
extraordinary  qualifications  in  their  line,  which  makes  their  pro- 
fessional performances  distinctly  personal  and  peculiar;  and  that, 
in  case  of  their  default  on  a  contract  for  services,  there  would  be 
the  same  difficulty  in  supplying  their  places,  or  in  obtaining 
from  others  the  same  service,  as  would  happen  with  actors  whose 
merits  were  largely  intellectual,  showing  the  same  reason  to  exist 
as  much  in  the  one  case  as  the  other  for  the  application  of  the 
preventive  remedy  by  injunction.     Relative  to  this  subject,  the 


Chap.  m.  §3.]  BY  BREACH;   REMEDIES.  62S 

authorities  indicate  that  the  American  courts  have  refused  to 
interfere,  unless  there  was  a  negative  clause  forbidding  the  ser- 
vices sought  to  be  enjoined.  Such  a  stipulation  existed  in  the 
contract  in  Daly  v.  Smith,  supra,  upon  which  relief  was  granted, 
although  the  opinion  is  broad  enough  to  include  contracts  without 
such  stipulations,  when  the  facts  show  that  the  contract  is  reason- 
able, the  complainant  without  fault,  and  that  he  has  no  adequate 
remedy  at  law.  To  my  mind,  this  is  the  correct  principle  to 
apply  to  such  cases,  even  though  the  contract  contains  no  nega- 
tive stipulation ;  for,  in  the  nature  of  things,  a  contract  to  act  at 
a  particular  theater  for  a  specified  time  necessarily  implies  a 
negative  against  acting  at  any  other  theater  during  that  time. 
The  agreement  to  perform  at  a  particular  theater  for  a  particular 
time,  of  necessity  involves  an  agreement  not  to  perform  at  any 
other  during  that  time.  According  to  the  true  sprit  of  such  an 
agreement,  the  implication  precluding  the  defendant  from  acting 
at  any  other  theater  during  the  period  for  which  he  has  agreed  to 
act  for  the  plaintiff  follows  as  inevitably  and  logically  as  if  it 
was  expressed.  So  that,  according  to  all  the  authorities,  where 
one  contracts  to  render  personal  service  to  another  which  requires 
special  merit  or  qualifications  in  the  professional  worker,  and,  in 
case  of  default,  the  same  service  is  not  easily  obtained  from 
others,  although  the  court  will  not  interfere  to  enforce  the  specific 
performance  of  the  whole  contract,  yet  it  will  exert  its  preventive 
power  to  restrain  its  breach.  While  it  is  true  that  the  court 
cannot  enforce  the  affirmative  part  of  such  contract,  and  compel 
the  defendant  to  act  or  perform,  it  can  enjoin  its  breach,  and 
compel  him  to  abstain  from  acting  elsewhere  than  at  the  plaintiff's 
theater.  The  principle  upon  which  this  doctrine  rests  is  that 
contracts  for  such  services  are  individual  and  peculiar,  because  of 
their  special  merit  or  unique  character,  and  the  inadequacy  of  the 
remedy  at  law  to  compensate  for  their  breach  in  damages. 

"Where,"  says  Professor  Pomeroy,  "a  contract  stipulates  for  a  special, 
unique,  or  extraordinary  personal  service  or  acts,  or  for  such  services  or 
acts  to  be  rendered  or  done  by  a  person  having  special,  unique,  and 
extraordinary  qualifications,  as,  for  example,  by  an  eminent  actor,  singer, 
artist,  and  the  like,  it  is  plain  that  the  remedy  at  law  of  damages  for  its 
breach  might  be  wholly  inadequate,  since  no  amount  of  money  recovered 


€24  DISCHARGE  OF  CONTRACT.  [Part  V. 

by  the  plaintiff  might  enable  him  to  obtain  the  same,  or  the  same  kind 
of  services  or  acts  elsewhere,  or  by  employing  any  other  person."  Pom. 
Eq.  Jur.,  §  1343. 

Damages  for  a  breach  of  such  contracts  are  not  only  difficult  to 
ascertain,  but  cannot,  with  any  certainty,  be  estimated;  nor  could 
the  plaintiff  procure,  by  means  of  any  damages,  the  same  ser- 
vices in  the  labor  market,  as  in  the  case  of  an  ordinary  contract 
of  employment  between  an  artisan,  a  laborer,  or  a  clerk,  and  their 
employer. 

It  results,  then,  that  if  the  services  contracted  for  by  the 
plaintiff  to  be  rendered  by  the  defendants  were  unique  or  extraor- 
dinary, involving  such  special  merit  or  qualifications  in  them 
as  to  make  such  services  distinctly  personal  and  peculiar,  so  that 
in  case  of  a  default  by  them,  the  same  or  like  services  could  not 
be  easily  procured,  nor  be  compensated  in  damages,  the  court 
would  be  warranted  in  applying  its  preventive  jurisdiction  and 
granting  relief;  but  otherwise,  or  denied,  if  such  services  were 
ordinary,  and  without  special  merit,  and  such  as  could  be  readily 
supplied  or  obtained  from  others  without  much  difficulty  or 
expense.  But  the  present  case  is  far  from  being  one  of  such 
character  as  falls  under  the  principle  of  the  authorities  in  which 
the  preventive  remedy  by  injunction  has  been  allowed.  There  is 
absolutely  nothing  in  the  evidence  to  show  that  the  performances 
of  the  defendants  were  unique  or  of  any  special  merit.  The 
plaintiff  himself  will  not  even  admit  that  they  are;  while  others 
say  the  performances  were  "great,"  "pretty  good,"  "do  a  fair 
act,"  etc.;  and  others,  that  their  performances  were  merely  that 
of  the  ordinary  acrobat,  and  that  there  would  be  no  trouble  in 
supplying  their  places,  or,  as  one  of  a  good  deal  of  professional 
experience  says,  "in  getting  a  thousand  to  do  just  as  good 
variety  business." 

Indeed,  according  to  our  view  of  the  evidence,  the  plaintiff 
fails  to  make  a  case  within  the  principle  in  which  equity  allows 
a  relief  for  a  breach  of  contract  for  personal  services,  and  the 
court  below  committed  no  error  in  dismissing  the  bill. 


Chap.  III.  §  4.]  BY  BREACH:    REMEDIES.  t)25 

§  4.   Discharge  of  right  of  action  arising  from  breach  of  contract. 

(i.)  Discharge  by  consent  of  the  parties. 

a.  Release. 

KIDDEE  V.  KIDDER  et  al. 
33  PENNSYLVANIA  STATE,  268.  — 1869, 

Assumpsit  on  a  promissory  note.  Judgment  for  defendant. 
Plaintiff  brings  error. 

On  the  trial,  the  defendants  gave  in  evidence  the  following 
release  executed  by  the  plaintiff: 

"  William  W.  Kidder  ^     ,^  t>i         * 

Common  Fleas  of 


__  ,       rr.,,^'      ,^    .    „    ,    r  AVarren  County,  Pa. 
Nelson  Kidder  and  0ms  Hall. 

"I  hereby  release  Nelson  Kidder  from  all' individual  liability  for  the 
claim  upon  which  the  above  suit  is  based ;  so  that  if  I  fail  in  recovering 
judgment  in  the  above  suit,  said  Nelson  Kidder  shall  be,  and  is  hereby, 
released  from  all  individual  liability  whatever  in  the  premises. 

"  W.  W.  Kidder. 

"  Warren,  Pa.,  Jan.  9th,  1857." 

The  court  below  instructed  the  jury  that  this  was  a  release  of 
the  cause  of  action,  and  that  the  plaintiff  could  not  recover. 

To  this  instruction  the  plaintiff  excepted;  and  a  verdict  and 
judgment  having  been  given  for  the  defendants,  he  removed  the 
cause  to  this  court,  and  here  assigned  the  same  for  error. 

Thompson,  J,  A  release  under  seal  is  sometimes  called  a 
technical  release ;  although  in  equity  it  has  no  greater  effect  than 
a  parol  release,  yet  it  differs  from  the  latter  in  one  quality 
materially,  it  is  self-sustaining,  the  seal  implying  a  consideration. 
Not  so  is  it  with  a  release  not  under  seal.  There  a  consideration 
of  some  sort  is  necessary  to  support  it.  2  Dan.  C.  Pr.  766;  White- 
Mil  V.  Wilson,  3  Penn.  R.  405;  7  Barr,  100;  1  Barr,  445;  1  Bawle. 
Wentz  V.  Dehaven  (1  S.  &  R.  312),  it  is  thought,  sustains  a  differ- 
ent doctrine.  There  the  release  was  in  parol;  that  is,  it  was  not 
under  seal,  and  expressed  no  consideration.  It  was  sustained  on 
the  ground  that  the  release  of  the  mortgage  was  by  way  of 
advancement  to  a  child.     This  was  inferred  from  the  form  of  the 


626  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

writing  and  forbearance  to  sue  by  the  intestate  during  his  life. 
Had  it  been  expressed,  the  case  would  have  doubtless  stood  firm 
upon  a  consideration.  But  that  case  has  not  been  followed.  In 
Kennedy  v.  Ware  (1  Barr,  445),  Gibson,  C.  J.,  linds  fault  with  hia 
apparent  support  of  it  in  Whitehill  v.  Wilson  (3  Penn.  R.)  and 
adds,  "  Wentz  v.  Dehaven  is  not  to  be  sustained  on  any  ground." 

The  release  in  question,  in  this  case,  is  without  a  seal,  and 
without  any  consideration  expressed.  As  a  release  it  was  void. 
It  was  nudum  jyactwn,  and  should  have  been  so  held  by  the  court. 

The  defendant  in  error,  feeling  the  force  of  the  want  of  con- 
sideration, as  a  dernier  resort  has  endeavored  to  give  effect  to 
the  release  as  a  gift  to  the  releasor  of  one-half  of  the  demand. 
But  this  is,  if  possible,  a  more  hopeless  undertaking  than  that  of 
supporting  the  release  without  a  consideration.  It  was  not  an 
executed  gift,  even  if  the  instrument  would  bear  the  interpreta- 
tion that  a  gift  was  intended;  because  the  instrument  to  be  given 
was  not  delivered.  If,  then,  it  was  but  an  agreement  to  give,  it 
could  not  be  enforced  without  a  consideration,  any  more  than 
could  the  release.  On  this  point,  the  case  In  re  Campbell's  Estate 
(7  Barr,  100)  need  only  be  cited.  There  it  is  said  by  Gibson, 
C.  J.,  that  "the  gift  of  a  bond,  note,  or  any  other  chattel,  there- 
fore, cannot  be  made  by  words  in  fiUuro,  or  by  words  in  presenti, 
unaccompanied  by  such  delivery  of  the  possession  as  makes  the 
disposal  of  the  thing  irrevocable." 

But  even  if  there  had  been  a  consideration  expressed,  it  seema 
to  me  that  the  release  was  so  qualified  as  not  to  touch  this  case, 
but  only  to  operate,  as  all  such  releases  do  in  equity,  as  an  agree- 
ment not  to  pursue  the  releasee  individually.  He  is  "hereby 
released  from  all  individual  liability  whatever  in  the  premises," 
does  not  touch  the  case  on  trial  of  joint  liability.  But  it  is  not 
necessary  to  pursue  this,  as  the  points  already  noticed  rule 
this  case. 

Judgment  reversed,  and  a  venire  facias  de  novo  awarded.^ 

1  See  also  Hale  v.  Spaulding,  146  Mass.  482,  ante,  p.  487 ;  Collyer  v.  Moul- 
ton,  9  R.  I.  90,  ante,  p.  522. 


Chap.  UI.  §4.]  BY  BREACH:   REMEDIES.  Ci7 

6.   Accord  and  satisfaction. 

KROMER  V.   HEIM. 
75  NEW  YORK,  574.  — 1879. 

Appeal  from  order  of  the  General  Term  of  the  Superior  Court 
of  the  city  of  New  York,  affirming  an  order  of  special  term  deny- 
ing a  motion  on  the  part  of  defendant  to  set  aside  an  execution 
issued  upon  judgment  herein,  and  to  have  the  judgment  satisfied 
of  record. 

On  June  24,  1876,  plaintiff  obtained  a  judgment  herein  for 
$4334.08.  On  July  26,  1876,  and  pending  a  stay  of  execution, 
plaintiff's  attorney  executed  and  delivered  to  defendant  a  written 
stipulation,  in  and  by  which  plaintiff  agreed  to  accept  in  settle- 
ment of  the  judgment,  if  paid  within  a  year,  $3000  in  cash  and 
an  assignment  of  defendant's  interest  in  a  certain  patent  right 
and  of  the  assets  of  such  patent  business,  or  to  accept  $1000  in 
cash,  $250  down  and  the  balance  in  instalments,  and  merchandise 
to  be  delivered  in  amounts  stated,  sufficient,  with  the  cash  pay- 
ments, to  reduce  the  judgment  to  $1000,  and  an  assignment  of 
said  patent  interests.  Defendant  paid  the  $250  down,  and  made 
the  other  cash  payments  and  deliveries  of  merchandise,  as  speci- 
fied in  the  second  alternative  of  the  stipulation,  until  the  judg- 
ment was  reduced  to  less  than  $1000,  all  of  which  payments  were 
received  by  plaintiff  without  objection.  Defendant  then  executed 
and  tendered  to  plaintiff  an  assignment  of  the  patent  interests  as 
required,  which  plaintiff  declined  to  accept,  but  issued  an  execu- 
tion to  collect  the  balance  of  the  judgment. 

Andrews,  J.  "Accord,"  says  Sir  Wm.  Blackstone,  "is  a 
satisfaction  agreed  upon  between  the  party  injuring  and  the 
party  injured;  which,  when  performed,  is  a  bar  to  all  actions 
upon  this  account."  3  Bl.  Com.  15.  An  accord  executory  with- 
out performance  accepted  is  no  bar ;  and  tender  of  performance  is 
insufficient.  Bac.  Ahr.  tit.  Accord  and  Satisfaction,  C.  So  also 
accord  with  part  execution  cannot  be  pleaded  in  satisfaction. 
The  accord  must  be  completely  executed  to  sustain  a  plea  of 
accord  and  satisfaction.  Bac.  Ahr.  tit.  Accord  and  Satisfaction,  A; 
Cock  V.  Honychurch,  T.  Ray.  203;  Allen  v.  Harris,  1  Ld.  Ray. 


628  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

122;  Lynn  v.  Bruce,  2  H.  Bl.  317.  In  Peytoe's  Case  (9  Co.  79)  it 
is  said,  "  and  every  accord  ought  to  be  full,  perfect,  and  complete ; 
for  if  divers  things  are  to  be  done  and  performed  by  the  accord, 
the  performance  of  part  is  not  sufficient,  but  all  ought  to  be 
performed."  The  rule  that  a  promise  to  do  another  thing  is  not 
a  satisfaction,  is  subject  to  the  qualification  that  where  the 
parties  agree  that  the  new  promise  shall  itself  be  a  satisfaction 
of  the  prior  debt  or  duty,  and  the  new  agreement  is  based  upon  a 
good  consideration,  and  is  accepted  in  satisfaction,  then  it  oper- 
ates as  such,  and  bars  the  action.  Evans  v.  Powis,  1  Exch.  601 ; 
Kinsler  v.  Pope,  5  Strobhart,  126;  Pars,  on  Cont.  683,  note. 

An  exception  to  the  general  rule  on  this  subject  has  been 
allowed  in  cases  of  composition  deeds,  or  agreements  between  a 
debtor  and  his  creditors ;  and  they  have  been  held,  upon  grounds 
peculiar  to  that  class  of  instruments,  to  bar  an  action  by  a 
separate  creditor,  who  had  signed  the  composition  to  recover  his 
debt,  although  the  composition  agreement  was  still  executory. 
Good  v.  Cheesman,  2  Barn.  &  Ad.  335 ;  Bayley  v.  Homan,  3  Bing. 
]N.  C.  915.  The  doctrine  which  has  sometimes  been  asserted  that 
mutual  promises  which  give  a  right  of  action  may  operate  and 
are  good,  as  an  accord  and  satisfaction  of  a  prior  obligation, 
must,  in  this  State,  be  taken  with  the  qualification  that  the  intent 
"was  to  accept  the  new  promise,  as  a  satisfaction  of  the  prior 
obligation.  Where  the  performance  of  the  new  promise  was  the 
thing  to  be  received  in  satisfaction,  then,  until  performance, 
there  is  not  complete  accord;  and  the  original  obligation  remains 
in  force.  Russell  v.  Lytle,  6  Wend.  390;  Daniels  v.  Hallenbeck, 
19  Id.  408;  Hawley  v.  Foote,  Id.  516;  Tlie  Brooklyn  Bank  v. 
DeGrauw,  23  Id.  342;   Tilton  v.  Alcott,  16  Barb.  598. 

Applying  the  well-settled  principles  governing  the  subject  of 
accords  to  this  case,  the  claim  that  the  plaintiff's  judgment  is 
satisfied  cannot  be  maintained.  There  is  no  ground  to  infer  that 
the  agreement  of  July  26,  1876,  was  intended  by  the  parties  to 
be  or  was  accepted  as  a  substitute  for  or  satisfaction  of  the  plain- 
tiff's judgment.  It  was  in  effect  a  proposition  on  the  part  of  the 
plaintiff,  in  the  alternative,  to  accept  $3000  in  cash,  if  paid 
within  one  year,  and  the  assignment  of  the  patent  and  avails  of 
the  patent  business,  in  full  of  the  judgment  of  $4334.08,  or  to 


Chap.  HI.  §  4.]  BY  BREACH :   REMEDIES.  629 

accept  $1000  in  cash,  in  instalments,  and  the  balance  in  merchan- 
dise, until  the  judgment  should  be  reduced  to  $1000;  and  for  that 
balance  to  accept  the  assignment  of  the  patent  interests. 

The  defendant  had  the  election  between  the  alternatives  pre- 
sented by  the  plaintiff.  He  elected  the  latter,  and  paid  the 
$1000,  and  supplied  the  merchandise,  until  the  debt  was  reduced 
to  $1000,  and  then  tendered  the  assignment  of  the  patent  inter- 
ests, which  the  plaintiff  refused  to  accept. 

The  judgment  clearly  was  to  remain  in  force  until  the  satis- 
faction under  the  new  agreement  was  complete.  It  is  the  case 
of  an  accord  partly  executed.  So  far  as  the  plaintiff  accepted 
performance,  his  claim  was  extinguished.  So  far  as  it  was  un- 
executed, the  judgment  remained  in  full  force;  and  however 
indefensible  in  morals  it  may  be  for  the  plaintiff  to  refuse  to 
abide  by  the  agreement  in  respect  to  the  patent  interests,  he  was 
under  no  legal  obligation  to  accept  the  assignment  tendered ;  and 
he  had  the  legal  right  to  enforce  the  judgment  for  the  balance 
remaining  unpaid. 

It  is  clear  that  the  right  to  supply  the  merchandise  was  for  the 
benefit  of  the  defendant.  The  plaintiff  gave  him  the  option  to 
pay  $3000  in  cash,  and  assign  the  patent  interests,  or  to  pay 
$3334.08  in  merchandise  and  assign  the  patent  interests.  The 
merchandise  was  to  be  furnished  on  "  as  favorable  terms  as  would 
be  allowed  by  Hoyt  &  Co.,  or  New  York  rates  for  cash  sales." 
It  gave  the  plaintiff  no  benefit  beyond  what  he  would  derive  by 
any  purchase  in  the  open  market  of  the  same  kind  of  goods.  It 
is  quite  clear  that  the  defendant  preferred  to  pay  $3334.08  in 
merchandise  to  paying  $3000  in  cash. 

We  think  that  no  distinction  arises  upon  the  circumstances  to 
take  the  case  out  of  the  general  rule,  that  an  unexecuted  accord 
cannot  be  treated  as  a  satisfaction. 

The  order  should  be  affirmed.     All  concur. 

Order  afl&rmed. 


630  DISCHAKGE  OF  CONTRACT.  [Part  V. 

ALDEN   V.   THURBER  et  al. 

149  MASSACHUSETTS,  271.  — 18fc9. 

Contract  for  breach  of  agreement  to  sell  goods.  Verdict  for 
defendant. 

Morton,  C.  J.  The  defendants  agreed  to  sell  to  the  plaintiff 
about  ten  thousand  pounds  of  pure  raspberry  jam.  They  sent  the 
jam  to  the  plaintiff  at  Boston,  and  he  remitted  to  them  $1000 
in  part  payment  of  the  agreed  price.  After  the  receipt  of  the 
jam  the  plaintiff  found  and  claimed  that  it  was  not  pure  rasp- 
berry jam,  such  as  the  contract  called  for.  Some  correspondence 
ensued  between  the  parties,  and  on  January  22,  1883,  the  defend- 
ants wrote  to  the  plaintiff  as  follows : 

"  I  regret  very  much  your  dissatisfaction  about  that  lot  of  raspberry 
jam.  Having  seen  the  attorney's  letter,  I  spoke  to  Mr.  H.  K.  Thurber 
about  it,  and  after  discussing  the  matter,  he  desires  me  to  say  that,  not- 
withstanding the  fact  that  Mr.  Chase  insists  that  the  goods  were  like  the 
sample,  he  is  willing  to  receive  the  whole  lot  back  and  credit  it  up  to 
you,  together  with  all  freight  charges,  and  in  this  way  settle  the  matter, 
as  we  do  not  care  to  lose  your  trade,  and  we  always  desire  to  give  our 
customers  satisfaction.     Advise  us  when  and  how  you  ship  the  jam." 

Upon  the  receipt  of  this  letter,  the  plaintiff  sent  back  the  jam, 
except  one  keg  which  had  been  sold,  and  requested  the  defendant 
to  "remit  our  money  at  once."  The  defendants  thereupon 
credited  the  plaintiff  with  the  jam  returned,  and  the  expenses  of 
freight  and  cartage,  and  remitted  to  the  plaintiff  the  balance  of 
the  $1000  due  him. 

This  was  a  mutual  rescission  of  the  contract.  The  letter  of  the 
defendants  was  an  offer  to  settle  and  compromise  the  controversy 
between  the  parties.  The  acts  and  conduct  of  the  plaintiff  were 
an  acceptance  of  that  offer.  This  was  a  waiver  of  the  right  to 
sue  for  any  preceding  breach  of  the  contract.  The  performance 
by  the  defendants  of  the  new  agreement  operated  as  an  accord  and 
satisfaction  for  any  breach,  and  discharged  the  old  contract. 
Such  was  clearly  the  intention  of  the  defendants,  and  as  the 
plaintiff  accepted  their  offer  unconditionally,  and  thus  induced 
them  to  perform  it,  he  cannot  now  say  that  he  had  a  concealed 


Chap.  III.  §  4.]        BY  BREACH:  REMEDIES.  631 

intention  not  to  discharge  the  prior  breaches  of  the  contract. 
This  would  be  bad  faith.     Rogers  v.  Rogers,  139  Mass.  440. 

For  these  reasons,  we  are  of  opinion  that  the  Superior  Court 
rightly  directed  a  verdict  for  the  defendants  on  the  first  count. 

Judgment  on  the  verdict.* 


(u.)  Discharge  by  the  judgment  of  a  court  of  competent  jurisdiction. 
MILLEE  V.   COVERT. 

1  WENDELL   (N.  Y.),  487.— 1828. 

Action  for  work  and  labor.  Set-off  by  defendant  for  hay  sold 
and  delivered.     Judgment  for  defendant. 

Plaintiff  proved  a  claim  for  work  and  labor  for  $4.16.  Defend- 
ant proved  the  sale  and  delivery  to  plaintiff  of  three  tons  of  hay 
at  $8  a  ton. 

Plaintiff  proved  that  before  the  beginning  of  this  suit  the 
defendant  had  sued  out  an  attachment  against  plaintiff,  on  the 
trial  of  which  defendant  proved  the  sale  and  delivery  of  one  ton 
and  nineteen  hundredweight  of  hay  on  a  contract  for  three  tons, 
and  said  if  A.  R.  were  present  he  could  prove  the  whole,  but  that 
he  would  reserve  the  remainder  as  there  were  accounts  between 
the  parties.  Judgment  for  the  one  ton  and  nineteen  hundred- 
weight had  been  paid. 

The  court  refused  to  charge  that  defendant  could  not  set  off 
the  remainder  of  the  demand  in  this  action,  and  charged  that  he 
was  not  barred  by  the  former  suit. 

Sutherland,  J.  The  court  below  erred  in  permitting  Covert, 
the  defendant,  to  prove  and  set  off  against  Miller  his  account  for 
the  balance  of  the  three  tons  of  hay  sold  and  delivered  to  him  in 
January,  1827.  The  sale  of  the  hay  was  by  one  single  indivisible 
contract.  Miller  agreed  to  purchase  three  tons  of  hay  from 
Covert,  and  Covert  agreed  to  sell  it  to  him  if  he  had  so  much  to 
spare,  and  in  the  course  of  a  few  days  delivered  the  whole.  It 
is  perfectly  settled,  that  if  a  plaintiff  bring  an  action  for  a  part 

1  See  also  McCreery  v.  Day,  119  N.  Y.  1,  ante,  p.  624. 


632  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

only  of  an  entire  and  indivisible  demand,  the  verdict  and  judg- 
ment in  that  action  are  a  conclusive  bar  to  a  subsequent  suit  for 
another  part  of  the  same  demand.  The  cases  of  Smith  v.  Jones 
(15  Johns.  B..  229),  of  Farrington  &  Smith  v.  Payne  (15  Johns.  R. 
432),  of  Willard  v.  Sperry  (16  Johns.  R.  121),  and  Phillips  v. 
Berick  (16  Johns.  R.  136)  are  precisely  in  point.  If  Covert  could 
not  have  brought  an  action  for  the  residue  of  the  three  tons  of 
hay,  he  of  course  could  not  avail  himself  of  it  by  way  of  set-off 

when  sued  by  Miller. 

Judgment  reversed. 


VANUXEM   et  al  v.   BURR. 

161  MASSACHUSETTS,  386.  — 1890. 

Contract  upon  a  promissory  note.  Defense,  former  suit. 
Judgment  for  defendant. 

The  following  facts  were  agreed: 

"  The  former  action  therein  referred  to  was  an  action  between 
the  same  parties  begun  before  the  maturity  of  .the  note  now  in 
suit;  the  declaration  therein  contained  three  counts,  one  upon  a 
promissory  note,  and  two  upon  a  special  agreement  to  procure  the 
indorsements  of  the  defendant's  mother  upon  the  last-named  note 
and  two  others,  one  of  which  was  the  note  sued  on  in  this  case. 
After  judgment  had  been  entered  for  the  plaintiffs  in  the  present 
suit  in  the  municipal  court,  and  the  appeal  taken  by  the  defend- 
ant had  been  duly  entered  in  the  Superior  Court,  the  plaintiffs 
recovered  judgment  in  said  former  suit  in  the  Superior  Court  by 
default,  and  by  agreement  damages  were  assessed  at  the  amount 
due  on  said  three  notes,  including  the  one  now  sued  on." 

The  judge  refused  to  enter  judgment  for  the  plaintiffs,  and 
found  for  the  defendant. 

Holmes,  J.  This  is  an  action  upon  a  promissory  note  made 
by  the  defendant.  The  only  defense  is,  that  in  another  action 
upon  a  contract  to  procure  the  defendant's  mother's  indorsement 
to  this  note  and  to  two  others,  the  plaintiffs,  since  the  present  suit 
was  brought,  have  recovered  judgment  against  the  defendant  for 
damages  assessed  by  agreement  at  a  sum  equal  to  the  amount  due 


Chap.  m.  §4.]  BY  BREACH:   REMEDIES.  QSd^ 

on  the  three  notes.  If  this  judgment  is  not  a  bar,  it  is  admitted 
that  the  plaintiffs  are  entitled  to  recover. 

The  two  contracts  were  both  in  existence  at  the  same  time. 
They  were  distinct  from  each  other  in  form,  as  appears  from  the 
statement  of  them.  They  were  also  distinct  in  substance.  Sup- 
posing that  the  defendant  could  do  no  more  to  bind  himself  per- 
sonally to  pay  the  money  to  the  plaintiffs  than  he  did  by  making 
the  note,  still  his  promise  to  get  the  security  of  an  indorser 
affected  other  things  besides  his  personal  payment  or  his  personal 
obligation  to  pay.  Its  performance  or  breach  affected  the  plain- 
tiffs' power  to  discount  the  note  before  it  was  due,  and  the  prob- 
ability of  their  getting  payment  from  another  whom  the  defendant 
might  be  able  to  persuade  to  indorse,  when  he  could  not  or  would 
not  induce  her  to  pay  if  she  had  not  indorsed.  As  the  contracts 
were  both  in  existence,  and  were  different,  and  as  they  were  both 
broken,  it  is  plain  that  the  plaintiffs  have  had  two  different  causes 
of  action,  and  there  is  no  need  to  refer  to  the  tests  of  difference 
which  have  been  laid  down  in  the  books.  Eastman  v.  Cooper,  15 
Pick.  276,  286;  Lechmere  v.  Fletcher,  1  Cr.  &  M.  623,  636.  The 
question  arises  solely  on  the  effect  of  the  judgment. 

What  we  mean  when  we  say  that  a  contract  is  legally  binding 
is,  that  it  imposes  a  liability  to  an  action  unless  the  promised 
event  comes  to  pass,  subject  to  whatever  qualifications  there  may 
be  to  the  absoluteness  of  the  promise.  Generally,  if  a  man  is 
content  to  make  two  legally  binding  contracts,  he  consents  to 
accept  the  legal  consequence  of  making  two  instead  of  one, 
namely,  liability  to  a  judgment  upon  each  unless  he  performs  it. 
It  would  be  anomalous  if  a  judgment  without  satisfaction  upon 
one  cause  of  action  were  held  to  be  a  bar  to  a  suit  upon  another 
and  distinct  cause  of  action.  No  doubt,  two  contracts  may  be 
such  that  performance  of  one  of  them,  or  satisfaction  of  a  judg- 
ment upon  one  of  them,  would  prevent  a  recovery  upon  the  other, 
either  altogether  or  for  more  than  nominal  damages.  In  this 
commonwealth  the  decisions  have  gone  somewhat  further  than 
elsewhere  in  treating  satisfaction  of  one  judgment  as  an  absolute 
bar  to  another  action.  Gilmore  v.  Carr,  2  Mass.  171 ;  Savage  v. 
Stevens,  128  Mass.  254.  But  instances  are  too  numerous  and 
familiar  to  need  extended  mention,  where  the  mere  recovery  of  a 


634  DISCHARGE   OF  CONTRACT.  [Part  V. 

judgment  is  held  no  bar  to  another  action,  although  the  satisfac- 
tion of  it  would  be.  Simonds  v.  Center,  6  Mass.  18;  Porter  v. 
Ingraham,  10  Mass.  88;  Elliott  v.  Hayden,  104  Mass.  180;  Byers 
V.  Franklin  Coal  Co.,  106  Mass.  131,  136.  This  principle  is 
applied,  not  only  to  actions  against  different  parties,  such  as  the 
maker  and  indorser  of  a  note,  or  joint  tort-feasors,  but  to  actions 
against  the  same  individual  when  he  has  given  different  obliga- 
tions in  respect  of  what  is  in  substance  the  same  debt.  Thus, 
judgment  upon  a  note  given  by  an  obligor  as  collateral  security 
for  his  bond  is  no  bar  to  a  subsequent  action  upon  the  bond. 
Lord  V.  Bigelotv,  124  Mass.  185,  189;  Drake  v.  Mitchell,  3  East, 
251;  Lechmere  v.  Fletcher,  1  Cr.  &  M.  623;  Fairchild  v.  Holly, 
10  Conn.  474;  Davis  v.  Anable,  2  Hill  (N.  Y.),  339;  Burnheimer 
V.  Hart,  27  Iowa,  19.  See  Greenfield  v.  Wilson,  13  Gray,  384; 
Moore  v.  Loring,  106  Mass.  455;  Miller's  River  National  Bank  v. 
Jefferson,  138  Mass.  Ill;  Stillwell  v.  Bertrand,  22  Ark.  379;  Corn 
Exchange  Ins.  Co.  v.  Babcock  (No.  2),  8  Abb.  Pr.  (N.  S.)  256; 
United  States  v.  Ciishman,  2  Sumner,  426,  440. 

The  principle  of  the  cases  last  cited  is  decisive  of  the  one  at 
bar.  No  distinction  favorable  to  the  defendant  can  be  taken 
between  an  agreement  made  as  itself  collateral  security,  and  an 
agreement  to  furnish  collateral  security.  If  there  were  any 
difference,  it  would  be  in  favor  of  the  plaintiffs;  for  the  collateral 
contracts  recovered  on  in  the  cases  cited  were  simply  other  con- 
tracts of  the  defendant  to  pay  money,  whereas  the  contract  of 
this  defendant  was  a  contract  to  get  a  third  person  to  indorse,  as 
we  have  stated.  It  is  true,  that  in  most  cases  there  were  other 
parties  defendant  in  the  first  or  second  suit.  But  that  circum- 
stance had  nothing  to  do  with  the  ground  of  the  decisions,  as 
indeed  it  could  not  have  had  by  any  technical  rule.  The  ground 
was  that  stated  by  Lord  Ellenborough  in  Drake  v.  Mitchell,  and 
approved  by  this  court  in  Lord  v.  Bigelow :  "  A  judgment  recov- 
ered in  any  form  of  action  is  still  but  a  security  for  the  original 
cause  of  action,  until  it  be  made  productive  in  satisfaction  to  the 
party;  and  therefore  till  then  it  cannot  operate  to  change  any 
other  collateral  concurrent  remedy  which  the  party  may  have." 
Parsons,  C.  J.,  states  the  law  in  the  same  way:  "A  judgment  in 
a  suit,  where  the  action  is  given  as  a  remedy  merely  cumulative, 


€hap.  ni.  §4.]        BY  BREACH:  REMEDIES.  635 

is  no  bar,  unless  such  judgment  has  been  satisfied;  for,  although 

there  may  be  two  remedies,  there  can  be  but  one  satisfaction." 

Storer  v.  Storer,  6  Mass  390,  393. 

The  technical  effect  of  the  judgment  as  a  bar  would  be  the 

same,  whether  the  defendant  in  both  suits  were  the  same,  or  other 

defendants  were  joined  in  any  one  of  them.     The  rule  as  stated 

by  the  courts  in  all  the  cases  applies  with  equal  force,  whichever 

may  be  the  fact.     If  we  were  to  depart  from  that  rule,  and  to  say 

that  a  man  should   have   but  one  judgment,  although   he   had 

different  causes  of  action,  when  we  thought  he  could  get  from  a 

single  judgment  all  the  satisfaction   he  was  likely  to  get,  we 

should  be  legislating,  instead  of  following  the  precedents,  and 

legislating  in  very  doubtful  accord  with  the  contracts  of  the 

parties. 

Exceptions  sustained. 


{iii.)  Discharge  by  lapse  of  time. 
MANCHESTER  et  al.   v.  BRAEDNER. 

107  NEW  YORK,  346.— 1887. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court  in  the  first  judicial  department,  entered  upon  an  order 
made  January  9,  1885,  which  affirmed  a  judgment  in  favor  of 
plaintiff  entered  upon  the  report  of  a  referee. 

This  action  was  commenced  June  20,  1882,  to  recover  for  build- 
ing materials  furnished  and  delivered  by  plaintiffs  to  defendant. 
The  defense  was  the  statute  of  limitations. 

It  appeared  that  defendant  in  February,  1876,  entered  into  an 
agreement  with  one  Hoover,  who  was  engaged  as  contractor  in 
building  certain  houses,  to  do  all  the  plastering  for  a  sum  agreed 
upon,  payable  in  instalments  as  the  work  progressed.  Plaintiffs 
agreed  to  furnish  the  materials,  defendant  agreeing  to  pay  there- 
for in  cash  as  wanted.  In  pursuance  of  this  agreement  plaintiffs 
furnished,  between  March  1  and  June  12,  1876,  materials  from 
time  to  time  as  ordered.  About  that  time  Hoover  became  embar- 
rassed and  abandoned  the  work.  The  sub-contractors,  and  among 
them  defendant,  entered  into  an  arrangement  with  Hoover   to 


636  DISCHARGE  OF  CONTRACT.  [Part  V, 

continue  the  work,  and  defendant  delivered  to  plaintiffs  three 
orders  on  Hoover,  dated  June  21,  1876,  for  sums  aggregating  the 
amount  of  their  bill,  payable,  as  the  work  progressed,  from  the 
sums  coming  to  him  under  his  contract.  Defendant  resumed  his 
work,  but  in  a  few  days  abandoned  it  and  refused  to  go  on  with 
the  same. 

Andrews,  J.  When  one  delivers  to  another  an  order  on  a 
third  person  to  pay  a  specified  sum  of  money  to  the  person  to 
whom  the  order  is  given,  the  natural  import  of  the  transaction  is, 
that  the  drawee  is  indebted  to  the  drawer  in  the  sum  mentioned 
in  the  order,  and  that  it  was  given  to  the  payee  as  a  means  of 
paying  or  securing  the  payment  of  his  debt.  In  other  words,  it 
implies  the  relation  of  debtor  and  creditor  between  the  parties  to 
the  extent  of  the  sum  specified  in  the  order  and  a  willingness  on 
the  part  of  the  debtor  to  pay  the  debt.  The  transaction  may  be 
consistent  with  a  different  relation  and  another  purpose,  but  in 
the  absence  of  explanation,  that  is  its  natural  and  ordinary 
meaning.  See  Bogert  v.  Morse,  1  N.  Y.  377.  The  oral  evidence 
shows  that  the  defendant  was  owing  the  plaintiffs  the  amount 
specified  in  the  several  orders  of  June  21,  1876,  and  that  they 
were  given  to  secure  the  payment  of  the  debt,  thus  fully  cor- 
roborating the  inferences  deducible  from  the  orders  themselves. 
We  think  the  orders  constituted  an  acknowledgment  in  writing  of 
the  debt,  within  section  110  of  the  Code,  and  continued  the  debt 
for  the  period  of  six  years  from  their  date.  The  decisions  as  to 
what  is  a  sufficient  acknowledgment  of  a  debt,  to  take  it  out  of 
the  statute,  are  very  numerous  and  not  altogether  harmonious. 
It  seems  to  be  the  general  doctrine  that  the  writing,  in  order  to 
constitute  an  acknowledgment,  must  recognize  an  existing  debt, 
and  that  it  should  contain  nothing  inconsistent  with  an  intention 
on  the  part  of  the  debtor  to  pay  it.  But  oral  evidence  may  be 
resorted  to,  as  in  other  cases  of  written  instruments,  in  aid  of  the 
interpretation.  Consistently  with  this  rule,  it  has  been  held  that 
oral  evidence  is  admissible  to  identify  the  debt  and  its  amount, 
or  to  fix  the  date  of  the  Avriting  relied  upon  as  an  acknowledg- 
ment, when  these  circumstances  are  omitted  (Kincaid  v.  Archi- 
bald, 73  ISr.  Y.  189;  Lechmere  v.  Fletcher,  3  Tyrw.  450;  Bird  v. 
Gammon,   3  Bing.  N.   C.    883),   or   to    explain   ambiguities.     1 


Chap.  III.  §  4.]  BY  BREACH:  REMEDIES.  637 

JSmith's  Lead.  Cas.  960,  and  cases  cited.  The  promise  to  be 
inferred  from  the  order  was  not  conditional  in  the  sense  that 
the  debt  Was  to  be  paid  only  out  of  the  fund  in  the  hands  of  the 
drawee.  At  most,  there  was  an  appropriation  of  that  fund  for 
the  payment  of  the  debt,  but  the  language  of  the  orders  did  not 
import  that  the  debt  was  to  be  paid  only  out  of  the  fund  against 
which  they  were  drawn.  See  Winchell  v.  Hicks,  18  N.  Y.  558 ; 
Smith  V.  Ryan,  66  Id.  352.  The  defendant  by  his  own  act  in 
abandoning  the  contract  with  Hoover,  the  drawee,  prevented  the 
payment  of  the  orders  and  left  him  subject  to  the  general  obliga- 
tion of  payment  resting  upon  all  debtors. 

The  judgment  should  be  affirmed.     All  concur. 

Judgment  affirmed. 


ALLEN  V.   COLLIER. 

70  MISSOURI,   138.  — 1879. 

Norton,  J.  The  defendant  in  this  case  interposed  the  plea  of 
the  statute  of  limitations  in  bar  of  plaintiff's  right  of  action  on 
a  note  executed  by  his  intestate  to  plaintiff,  dated  January  10, 
1864,  for  $134,  due  from  its  date.  To  take  the  case  from  under 
the  operation  of  the  statute  plaintiff  offered  in  evidence  a  certain 
writing  contained  in  the  private  account-book  of  defendant's 
intestate,  signed  by  said  intestate,  purporting  to  be  a  will  written 
in  pencil.  Said  writing  was  not  attested  and  was  found  among 
the  papers  of  the  intestate  after  his  death,  and  contained  the  fol- 
lowing words :  "  That  out  of  my  estate  she  (alluding  to  his  wife) 
shall  pay  all  my  just  debts,  including  a  debt  due  my  mother  of 
about  $400." 

The  only  question  presented  in  the  case  is  whether  the  said 
writing  was  such  an  acknowledgment  as  would  prevent  the  opera- 
tion of  the  limitation  law.  The  court  below  held  that  it  was  not 
sufficient,  and  gave  effect  to  the  defendant's  plea  of  the  statute, 
and  this  action  of  the  court  is  assigned  for  error.  There  is  a 
conflict  of  the  authorities  as  to  whether  an  acknowledgment  or 
promise  in  writing,  signed  by  the  party  to  be  bound,  if  made  to 
a  stranger,  would  be  Sufficient  to  take  a  case  from  under  the  opera- 


638  DISCHARGE  OF  CONTRACT.  [Part  V. 

tion  of  the  statute  of  limitations,  but  there  is  no  conflict,  as  to 
the  necessity  for  such  promise  or  acknowledgment  being  made  to 
some  person,  either  to  the  creditor  or  his  representative,  or  to  a 
stranger.  A  promise  or  acknowledgment  implies  that  it  is  made 
to  somebody,  and  in  every  promise  there  must  necessarily  be 
a  promisor  and  promisee.  The  will  in  question  was  never 
attested,  and  was,  therefore,  no  will.  A  mere  writing  acknowl- 
edging a  debt,  which  is  retained  by  the  person  making  it,  and 
which  is  never  delivered  either  to  the  creditor  or  any  one  else, 
cannot  have  the  effect  of  preventing  the  operation  of  the  statute. 
In  the  case  of  Merriam  v.  Leonard  (6  Cush.  151),  where  the 
acknowledgment  of  the  debt  was  contained  in  a  mortgage  duly 
executed  and  acknowledged,  which  was  never  delivered  to  the 
mortgagee,  but  was  found  after  the  mortgagor's  death  among  his 
papers.  Justice  Shaw  held  that  it  did  not  amount  to  an  acknowl- 
edgment of  the  debt  or  of  a  willingness  or  intention  to  pay  from 
which  a  promise  could  be  implied.  The  deed  was  never  delivered, 
and  of  course  was  not  an  instrument  by  which  the  signer  was 
bound.     Judgment  affirmed.     All  concur  except  Judge  Napton. 


Chap.  IV.  §  1.]  BY  IMPOSSIBILITY.  639 


CHAPTER   IV. 

IMPOSSIBILITY  OF  PERFORMANCE. 
§  1.   General  principles. 

ANDERSON   v.   MAY. 

60  MINNESOTA,  280.  — 1892. 

Action  for  price  of  seeds.  Defense,  damages  for  breach  of 
contract.     Verdict  for  plaintiff.     Defendant  appeals. 

GiLFiLLAN,  C.  J.  The  defendant  having  alleged  as  a  counter- 
claim a  contract  in  June,  1890,  between  him  and  plaintiff,  whereby 
the  latter  agreed  to  sell  and  deliver  to  the  former,  on  or  before 
November  15th,  certain  quantities  of  specified  kinds  of  beans, 
and  that  he  failed  so  to  do  except  as  to  a  part  thereof,  the  plain- 
tiff, in  his  reply,  alleged  in  substance  that  the  contract  was  to 
deliver  the  beans  from  the  crop  that  he  should  raise  that  year  from 
his  market  gardening  farm  near  Red  Wing.  Upon  the  trial  the 
contract  was  proved  by  letters  passing  between  the  parties. 
From  these  it  fairly  appears  that  the  beans  to  be  delivered  were 
to  be  grown  by  plaintiff,  though  it  cannot  be  gathered  from  them 
that  he  was  to  grow  the  beans  on  any  particular  land.  They 
contain  no  restriction  in  that  respect.  There  can  be  no  question 
that,  if  grown  by  him,  and  of  the  kinds  and  quality  specified, 
defendant  would  have  been  obliged  to  accept  the  beans,  though 
not  grown  on  any  land  previously  cultivated  by  plaintiff.  The 
contract,  therefore,  was,  in  effect,  to  raise  and  sell  and  deliver 
the  quantities,  kinds,  and  quality  of  beans  specified, — a  contract 
in  its  nature  possible  of  performance. 

As  an  excuse  for  not  delivering  the  entire  quantity  contracted 
for,  the  plaintiff  relies  on  proof  of  the  fact  that  an  early 
unexpected  frost  destroyed  or  injured  his  crop  to  such  extent 
that  he  was  unable  to  deliver  the  entire  quantity. 


640  DISCHARGE  OF  CONTRACT.  [Part  V. 

What,  in  tlie  way  ol  subsequently  arising  impossibility  for  the 
party  to  perform,  will  suffice  as  excuse  for  non-performance  of  a 
contract,  is  well  settled  in  the  decisions;  the  only  apparent 
difference  in  them  arising  from  the  application  of  the  rules  to 
particular  circumstances.  The  general  rule  is  as  well  stated  as 
anywhere  in  2  Chit.  Cont.  1074,  thus :  "  Where  the  contract  is  to 
do  a  thing  which  is  possible  in  itself,  or  where  it  is  conditioned 
on  any  event  which  happens,  the  promisor  will  be  liable  for  a 
breach  thereof,  notwithstanding  it  was  beyond  his  power  to  per- 
form it;  for  it  was  his  own  fault  to  run  the  risk  of  undertaking 
to  perform  an  impossibility,  when  he  might  have  provided  against 
it  by  his  contract.  And  therefore,  in  such  cases,  the  performance 
is  not  excused  by  the  occurrence  of  an  inevitable  accident,  or 
other  contingency,  although  it  was  not  foreseen  by,  or  within 
the  control  of,  the  party."  An  application  of  this  rule  is  fur- 
nished by  Cowley  v.  Davidson,  13  Minn.  92  (Gil.  86).  What  is 
sometimes  called  an  "exception  to  the  rule"  is  where  the  con- 
tract is  implied  to  be  made  on  the  assumed  continued  existence 
of  a  particular  person  or  thing,  and  the  person  or  thing  ceases  to 
exist,  as,  where  it  is  for  personal  service,  and  the  person  dies,  or 
it  is  for  repairs  upon  a  particular  ship  or  building,  and  the  ship 
or  building  is  destroyed.  An  agreement  to  sell  and  deliver  at 
a  future  time  a  specified  chattel  existing  when  the  agreement  is 
made  would  come  under  this  exception.  The  exception  was 
extended  further  than  in  any  other  case  we  have  found  in  Howell 
V.  Coupland,  L.  R.  9  Q.  B.  462.  That  was  a  contract  to  sell  and 
deliver  a  certain  quantity  from  a  crop  to  be  raised  on  a  particular 
piece  of  land  and  the  entire  crop  was  destroyed  by  blight.  The 
court  held  the  contract  to  be  to  deliver  part  of  a  specific  thing, 
to  wit,  of  the  crop  to  be  grown  on  a  given  piece  of  land,  and  held 
it  to  come  within  the  rule  that,  where  the  obligation  depends  on 
the  assumed  existence  of  a  specific  thing,  performance  is  excused 
by  the  destruction  of  the  thing  without  the  parties'  fault. 
Without  intimating  whether  we  would  follow  that  decision  in  a 
similar  case,  we  will  say  that  the  case  is  unlike  this,  in  that  in 
this  case  the  plaintiff  was  not  limited  or  restricted  to  any  par- 
ticular land.  It  was  not  an  undertaking  to  sell  and  deliver  part 
of  a  specific  crop,  but  a  general  undertaking  to  raise,  sell,  and 


Chap.  IV.  §  1.]  BY  IMPOSSIBILITY.  641 

deliver  the  specified  quantity  of  beans.  We  have  been  cited  to 
and  found  no  case  holding  that,  where  one  agrees  generally  to 
produce,  by  manufacture  or  otherwise,  a  particular  thing,  per- 
formance being  possible  in  the  nature  of  things,  he  may  be 
excused  from  performance  by  the  destruction,  before  completion 
or  delivery,  of  the  thing,  from  whatever  cause,  except  the  act  of 
the  other  party.  Applications  of  the  general  rule,  where  the 
thing  agreed  to  be  produced  was,  before  completion,  destroyed 
without  the  party's  fault,  are  furnished  in  Adams  v.  Nichols,  19 
Pick.  275,  279;  School  Dist.  v.  Dauchy,  25  Conn,  530;  and  Trustees 
v.  Bennett,  27  N.  J.  Law,  513,  approved  and  followed  in  Stees  v. 
Leonard,  20  Minn.  494  (Gil.  448).  Where  such  causes  may 
intervene  to  prevent  a  party  performing,  he  should  guard  against 

them  in  his  contract. 

Order  reversed. 


DERMOTT  V.   JONES. 
2  WALLACE   (U.  S.),  1.— 1864. 

Action  for  contract  price  of  a  building.  Defendant  seeks  to 
recoup  for  amount  expended  in  perfecting  the  work.  Judgment 
for  plaintiff. 

Plaintiff  contracted  to  build  a  house  for  defendant  on  defend- 
ant's soil,  and  covenanted  that  he  would  procure  and  supply  all 
matters  requisite  for  the  execution  of  the  work  "  in  all  its  parts 
and  details,  and  for  the  complete  finish  and  fitting  for  use  and 
occupation  of  all  the  houses  and  buildings,  and  the  several  apart- 
ments of  the  house  and  buildings,  to  be  erected  pursuant  to  the 
plan  of  the  work  described  and  specified  in  the  said  schedule ;  and 
that  the  work,  and  the  several  parts  and  parcels  thereof,  shall  be 
executed,  finished,  and  ready  for  use  and  occupation,  and  be 
delivered  over,  so  finished  and  ready,"  at  a  day  fixed.  Jones 
built  the  house  according  to  the  specifications,  except  in  so  far  as 
Miss  Dermott  had  compelled  him  —  according  to  his  account  of 
things  —  to  deviate  from  them.  Owing,  however,  to  a  latent 
defect  in  the  soil,  the  foundation  sank,  the  building  became  badly 
cracked,  uninhabitable,  and  so  dangerous  to  "passers-by  that  Miss 


DISCHARGE  OK  COXrRACT.  [Pabt  V. 

Dermott  was  compelled  to  take  it  down,  to  renew  the  foundation 
with  artificial  "floats,"  and  to  rebuild  that  part  of  the  structure 
which  had  given  way.  This  she  did  at  a  large  expense.  As 
finished  on  the  artificial  foundations  the  building  was  perfect. 

Jones  having  sued  Miss  Deriuott,  in  the  Federal  Court  for  the 
District  of  Columbia,  for  the  price  of  building,  her  counsel  asked 
the  court  to  charge  that  she  was  entitled  to  "  recoup  "  the  amount 
which  it  was  necessary  for  her  to  expend  in  order  to  render  the 
cracked  part  of  the  house  fit  for  use  and  occupation  according- 
to  the  plan  and  specifications;  an  instruction  which  the  court 
refused  to  give.  The  court  considered,  apparently,  that  even 
under  the  covenant  made  by  Jones,  and  above  recited,  he  was  not 
responsible  for  injury  resulting  from  inherent  defects  in  the 
ground,  the  same  having  been  Miss  Dermott's  own;  and  judgment 
went  accordingly.  Error  was  taken  here.  Some  other  questions 
were  presented  in  the  course  of  the  trial  below,  and  referred  to 
here;  as,  for  example.  How  far,  when  a  special  contract  has  been 
made,  a  plaintiff  must  sue  upon  W^  how  far  he  may  recover  in  a 
case  where,  as  was  said  to  have  been  the  fact  here,  the  plaintiff 
had  abandoned  his  work,  leaving  it  unfinished?  how  far  "accep- 
tance "  —  when  such  acceptance  consisted  only  in  a  party's 
treating  as  her  own  a  house  built  on  her  ground  —  waives  non_ 
fulfillment,  there  being  no  bad  faith  in  the  matter?  and  some 
questions  of  a  kindred  kind.  The  most  important  question  in 
the  case,  however,  was  the  refusal  of  the  court  to  charge,  as 
requested,  in  regard  to  the  "  recoupment " :  and  the  correctness  of 
that  refusal  rested  upon  the  effect  of  Jones'  covenant  to  deliver, 
tit  for  use  and  occupation,  in  connection  with  the  latent  defect  of 
soil  upon  which  the  foundation  was  built. 

Mr.  Justice  Swayne.  The  defendant  in  error  insists  that 
all  the  work  he  was  required  to  do  is  set  forth  in  the  specifica- 
tions, and  that,  having  fulfilled  his  contract  in  a  workmanlike 
manner,  he  is  not  responsible  for  defects  arising  from  a  cause  of 
which  he  was  ignorant,  and  which  he  had  no  agency  in  producing. 

Without  examining  the  soundness  of  this  proposition,  it  is 
sufiicient  to  say  that  such  is  not  the  state  of  the  case.  The 
specifications  and  the  instrument  to  which  they  are  annexed  con- 
stitute the  contract.     They  make  a  common  context,  and  must  be 


Chap.  IV.  §  1.]  BY  IMPOSSIBILITY.  643 

construed  together.  In  that  instrument  the  defendant  in  error 
made  a  covenant.  That  covenant  it  was  his  duty  to  fulfill,  and  he 
■was  bound  to  do  whatever  was  necessary  to  its  performance. 
Against  the  hardship  of  the  case  he  might  have  guarded  by  a 
provision  in  the  contract.  Kot  having  done  so,  it  is  not  in  the 
power  of  this  court  to  relieve  him.  He  did  not  make  that  part 
of  the  building  "fit  for  use  and  occupation."  It  could  not  be 
occupied  with  safety  to  the  lives  of  the  inmates.  It  is  a  well- 
settled  rule  of  law,  that  if  a  party  by  his  contract  charge  himself 
with  an  obligation  possible  to  be  performed,  he  must  make  it 
good,  unless  its  performance  is  rendered  impossible  by  tlie  act  of 
God,  the  law,  or  the  other  party.  Unforeseen  difficulties,  how- 
ever great,  will  not  excuse  him.  Paradine  v.  Jane,  Aleyn,  27; 
Beale  v.  Thompson,  3  Bosanquet  «&  Puller,  420  j  Beehe  v.  Johnson, 
19  Wendell,  500;  3  Comyn's  Digest,  93. 

The  application  of  this  principle  to  the  class  of  cases  to  which 
the  one  under  consideration  belongs  is  equally  well  settled.  If  a 
tenant  agree  to  repair,  and  the  tenement  be  burned  down,  he  is 
bound  to  rebuild.  Bullock  v.  Dommitt,  6  Term,  650.  A  com- 
pany agreed  to  build  a  bridge  in  a  substantial  manner,  and  to 
keep  it  in  repair  for  a  certain  time.  A  flood  carried  it  away.  It 
was  held  that  the  company  was  bound  to  rebuild.  Brecknock 
Company  v.  Pritchard,  Id.  750.  A  person  contracted  to  build  a 
house  upon  the  land  of  another.  Before  it  was  completed  it  was 
destroyed  by  fire.  It  was  held  that  he  was  not  thereby  excused 
from  the  performance  of  his  contract.  Adams  v.  Nichols,  19 
Pickering,  275.  Brumby  v.  Smith,  3  Alabama,  123,  is  to  the  same 
effect.  A  party  contracted  to  erect  and  complete  a  building  on  a 
certain  lot.  By  reason  of  a  latent  defect  in  soil  the  biiilding  fell 
down  before  it  was  completed.  It  was  held  (School  Trustees  v. 
Bennett,  3  Dutcher,  513,  a  case  in  Kew  Jersey,  cited  by  counsel) 
that  the  loss  must  be  borne  by  the  contractor.  The  analogies 
between  the  case  last  cited  and  the  one  under  consideration  are 
very  striking.  There  is  scarcely  a  remark  in  the  judgment  of 
the  court  in  that  case  that  does  not  apply  here.  Under  such 
circumstances  equity  cannot  interpose.  Gates  v.  Chreen,  4  Paige, 
365;  Holtzapffel  v.  Baker,  18  Vesey,  115. 

The   principle   which   controlled    the    decision    of   the   cases 


644  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

referred  to  rests  upon  a  solid  foundation  of  reason  and  justice. 
It  regards  the  sanctity  of  contracts.  It  requires  parties  to  do 
what  they  have  agreed  to  do.  If  unexpected  impediments  lie  in 
the  way,  and  a  loss  must  ensue,  it  leaves  the  loss  where  the  con- 
tract places  it.  If  the  parties  have  made  no  provision  for  a 
dispensation,  the  rule  of  law  gives  none.  It  does  not  allow  a 
contract  fairly  made  to  be  annulled,  and  it  does  not  permit  to  be 
interpolated  what  the  parties  themselves  have  not  stipulated. 

We  are  of  opinion  that  the  plaintiff  below  was  entitled  to 
recover,  but  that  the  court,  in  denying  to  the  defendant  the  right 
of  recoupment,  committed  an  error  which  is  fatal  to  the  judgment. 

We  might  here  terminate  our  examination  of  the  case ;  but  as 
it  will  doubtless  be  tried  again, —  and  the  record  presents  several 
other  points  to  which  our  attention  has  been  directed, — we  deem 
it  proper  to  express  our  views  upon  such  of  them  as  seem  to  be 
material. 

While  a  special  contract  remains  executory  the  plaintiff  must 
sue  upon  it.  When  it  has  been  fully  executed  according  to  its 
terms,  and  nothing  remains  to  be  done  but  the  payment  of  the 
price,  he  may  sue  on  the  contract,  or  in  indebitatus  assumpsit,  and 
rely  upon  the  common  counts.  In  either  case  the  contract  will 
determine  the  rights  of  the  parties. 

When  he  has  been  guilty  of  fraud,  or  has  wilfully  abandoned 
the  work,  leaving  it  unfinished,  he  cannot  recover  in  any  form  of 
action.  Where  he  has  in  good  faith  fulfilled,  but  not  in  the 
manner  or  not  within  the  time  prescribed  by  the  contract,  and  the 
other  party  has  sanctioned  or  accepted  the  work,  he  may  recover 
upon  the  common  counts  in  indebitatus  assumpsit. 

He  must  produce  the  contract  upon  the  trial,  and  it  will  be 
applied  as  far  as  it  can  be  traced;  but  if,  by  the  fault  of  the 
defendant,  the  cost  of  the  work  or  materials  has  been  increased, 
in  so  far,  the  jury  will  be  warranted  in  departing  from  the  con- 
tract prices.  In  such  cases  the  defendant  is  entitled  to  recoup 
for  the  damages  he  may  have  sustained  by  the  plaintiff's  devia- 
tions from  the  contract,  not  induced  by  himself,  both  as  to  the 
manner  and  time  of  the  performance. 

There  is  great  conflict  and  confusion  in  the  authorities  upon 
this  subject.     The  propositions  we  have  laid  down  are  reasonable 


Chap.  IV.  §2.]  BY  IMPOSSIBILITY.  646 

and  justj  and  they  are  sustained  by  a  preponderance  of  the  best 
considered  adjudications.  Cutter  v.  Poioell,  2  Smith's  Leading 
Cases,  1,  and  notes ;  Chitty  on  Contracts,  612,  and  notes. 

Judgment  reversed,  and  the  cause  remanded  for  further  pro- 
ceedings in  conformity  with  this  opinion. 


§  2.  EzceptionB. 

(i.)  Legal  impossibility. 

COEDES  V.  MILLER. 
39  MICHIGAN,  581.  — 1878. 

Assumpsit  on  covenant  in  a  lease.     Defendant  brings  error. 

CooLEY,  J.  Miller,  on  the  fourth  day  of  October,  1872,  rented 
of  Cordes,  for  the  term  of  ten  years,  a  wooden  building  in  Grand 
Rapids,  at  a  specified  annual  rent.  The  lease  contained  a  cov- 
enant on  the  part  of  Cordes  that  "if  said  building  burns  down 
during  this  lease,  said  Cordes  agrees  to  rebuild  the  same  in  a  suit- 
able time,  for  said  Miller."  Miller  went  into  possession  and 
occupied  the  building  for  a  restaurant  and  saloon  until  May  26, 
1874,  when  it  was  destroyed  by  tire.  Within  a  week  Miller 
notified  Cordes  to  rebuild,  and  some  preparation  to  do  so  would 
appear  to  have  been  made  by  the  removal  of  the  debris  of  the 
fire.  June  15,  1874,  the  common  council  of  Grand  Eapids  passed 
an  ordinance  prohibiting  the  erection  of  wooden  buildings  within 
certain  limits  which  embraced  the  site  where  the  burned  building 
had  stood.  Cordes  afterwards  went  on  and  prepared  plans  and 
specifications  for  a  larger  brick  building,  and  contracted  for 
putting  it  up.  Miller  declined  to  examine  the  plans  or  to  say 
anything  about  them,  but  in  substance  he  said  that  when  the 
building  was  completed  he  would  move  into  it.  It  was  completed 
in  November,  and  in  December  Miller  moved  into  a  part  of  it, 
which  was  considered  by  the  parties  as  being  equivalent  to  the 
old  building.  Complaining  then  that  the  new  building  was  not 
put  up  in  a  suitable  time,  he  brought  this  suit  on  the  covenant. 

The  principal  question  in  the  case  is  whether  such  a  suit  can 


646  DISCHARGE  OF  CONTRACT.  [Part  V. 

be  maintained.  No  question  is  made  of  the  validity  of  the  city 
ordinance,  and  it  is  urged  on  behalf  of  the  lessor  that  as  the 
putting  up  of  such  a  structure  as  was  originally  leased  was 
thereby  rendered  impossible,  the  covenant  was  discharged.  Brady 
V.  Insurance  Co.,  11  Mich.  425.  On  the  other  hand,  it  is  argued 
that  rebuilding  is  not  impossible;  it  is  only  rebuilding  of  a 
specified  material  that  is  forbidden;  and  that  Cordes,  when  he 
rented  his  building  and  agreed  to  rebuild  in  case  of  fire,  took 
upon  himself  all  the  risks  of  being  compelled  to  make  use  of 
some  other  material  than  wood,  as  much  as  he  did  the  risk  of  the 
rise  in  the  cost  of  materials.  Some  stress  is  also  laid  upon  the 
fact  that  the  lease  did  not  mention  the  material  of  which  the  old 
building  was  constructed.     The  court  below  sustained  the  action. 

If  this  judgment  is  correct,  then  Cordes  had  placed  himself 
under  legal  obligation  not  only  to  put  up  a  new  building  of  some 
more  substantial  material  than  wood,  no  matter  how  much  greater 
might  be  the  cost,  and  to  turn  it  over  to  Miller  for  the  term  at 
the  same  rent,  no  matter  how  much  more  the  occupation  might 
be  worth.  Moreover,  he  would  be  obliged  to  reproduce  the  old 
building,  as  near  as  the  change  in  material  would  permit,  and 
could  not  compel  his  lessee  to  accept  a  building  differently 
planned,  subdivided,  and  arranged,  even  though  it  might  be 
better  and  at  least  equally  convenient.  In  other  words,  in  the 
enforced  change  of  material  Cordes  could  not  consult  his  own 
interest  in  making  such  modifications  as  the  change  Avould  be 
likely  to  render  important  and  desirable,  but  would  be  tied  down 
to  the  plan  and  arrangement  of  a  building  which  it  might  be  well 
enough  to  reproduce  in  the  old  material,  but  which  would  never 
be  chosen  if  the  material  were  to  be  brick,  stone,  or  iron. 

We  cannot  think  this  the  fair  construction  of  the  lease. 
Cordes  covenanted  to  rebuild,  if  destroyed  by  fire,  the  building 
he  leased;  but  did  not  covenant  that  if  not  allowed  to  rebuild 
that,  he  would  put  up  another  on  the  same  plan,  of  more  sub- 
stantial and  presumably  more  costly  material.  Had  the  exact 
contingency  which  has  since  happened  been  in  the  minds  of  the 
parties  at  the  time,  it  is  scarcely  conceivable  that  the  lessor  would 
have  consented  to  put  up  a  brick  building  in  place  of  the  one 
leased,  and  to  receive  for  it  the  same  rent  the  wood  building 


Chap.  IV.  §  2.]  BY  IMPOSSIBILITY.  647 

brought  him,  when  its  probable  rental  value  would  be  consider- 
ably greater,  and  its  cost  presumably  more. 

Had  this  been  an  agreement  by  a  builder  to  rebuild  the  old 
building,  it  would  scarcely  be  urged  that  the  covenant  would  bind 
him  to  erect  a  new  one  differing  from  it  so  radically  as  would  a 
brick  or  a  stone  structure  from  one  of  wood.  Had  Cordes  been 
selling  this  land  to  Miller  with  a  similar  agreement  respecting 
the  building,  it  would  be  equally  plain  that  the  change  in  the  law 
could  not  work  a  change  in  his  contract  so  seriously  increasing 
his  responsibility.  But  in  principle  the  cases  suggested  would 
not  differ  from  this  in  the  least.  Cordes  undertook  for  something 
which  by  a  change  in  the  law  has  become  illegal;  and  his  cov- 
enant has  thereby  been  discharged. 

In  this  case  Cordes  prepared  accommodations  for  Miller  which 
the  latter  has  accepted  and  now  occupies.  But  they  were  differ- 
ent from  the  old,  and  Miller  could  not  have  been  compelled  to 
accept  them.  The  arrangement  was  therefore  one  outside  the 
lease, —  not  one  in  compliance  with  its  terms.  Probably  the 
course  of  the  parties  has  in  effect  been  equivalent  to  an  offer  on 
one  side  and  an  acceptance  on  the  other  of  the  new  quarters  in 
place  of  the  old  and  under  the  old  lease;  but  no  question  con- 
cerning that  arrangement  arises  here. 

The  judgment  must  be  reversed,  and  judgment  entered  for 
Cordes  with  costs  of  both  courts. 

The  other  justices  concurred.* 


HUGHES  V.  WAMSUTTA  MILLS. 

11  ALLEN  (Mass.),  201.  — 1865. 

Contract  for  work.     Verdict  for  plaintiff. 

Plaintiff  agreed  that  if  he  left  without  giving  two  weeks'  notice 
he  should  receive  nothing  for  wages  due.  He  was  arrested  and 
convicted  of  a  crime  and  sentenced  to  jail.  The  damage  to 
defendant  from  want  of  notice  was  greater  than  the  wages  due. 

BiGELOw,  C.  J.  The  question  at  issue  between  the  parties  to 
this  suit  depends  entirely  on  the  construction  of  the  contract 
*  See  also  Jamieson  v.  Indiana  Nat.  Gas  Co.,  128  Ind.  555. 


648  DISCHARGE  OF  CONTRACT.  [Part  V. 

under  which  the  plaintiff  was  employed.  This,  we  think,  is 
misapprehended  by  the  counsel  for  the  defendants.  The  inter- 
pretation which  he  seeks  to  put  on  the  stipulation  that  the 
plaintiff  was  to  receive  no  wages  if  he  left  the  defendants'  service 
without  giving  two  weeks'  previous  notice  of  his  intention  so  to 
do,  is  inconsistent  with  the  terms  of  the  stipulation,  and  too 
narrow  to  be  a  fair  or  reasonable  exposition  of  the  intention  of 
the  parties.  The  stipulation  clearly  had  reference  only  to  a 
voluntary  abandonment  of  the  defendants'  employment,  and  not 
one  caused  vi  majore,  whether  by  the  visitation  of  God  or  other 
controlling  circumstances.  Clearly  the  abandonment  must  have 
been  such  that  the  plaintiff  could  have  foreseen  it;  he  could  give 
notice  only  of  such  departure  as  he  could  anticipate,  and  the 
stipulation  that  he  was  to  have  the  privilege  of  leaving  after 
giving  two  weeks'  notice  without  forfeiting  his  wages  implied 
that  the  forfeiture  was  to  take  place  only  when  it  would  be 
within  his  power  to  give  the  requisite  notice.  It  certainly  cannot 
be  contended  that  the  stipulation  was  absolute;  that  he  was  to 
receive  no  wages  in  case  of  leaving  without  notice,  whatever  may 
have  been  the  cause  of  his  abandonment  of  the  service.  It  is 
settled  that  absence  from  sickness  or  other  visitation  of  God 
would  not  work  a  forfeiture  of  wages  under  such  a  contract. 
Fuller  V.  Brown,  11  Met.  440.  Pari  ratione,  any  abandonment 
caused  by  unforeseen  circumstances  or  events,  and  which  at  the 
time  of  their  occurrence  the  person  employed  could  not  control  or 
prevent  from  operating  to  terminate  his  employment,  ought  not 
to  operate  to  cause  a  forfeiture  of  wages. 

It  may  be  said  that  in  the  case  at  bar  the  commission  of  the 
offense  for  which  the  plaintiff  was  arrested  was  his  voluntary  act, 
and  that  the  consequences  which  followed  after  it  and  led  to  his 
compulsory  departure  from  the  defendants'  service  are  therefore 
to  be  regarded  as  bringing  this  case  within  the  category  of  a 
voluntary  abandonment  of  his  employment.  But  the  difficulty 
with  this  argument  is,  that  it  confounds  remote  with  proximate 
causes.  The  same  argument  might  be  used  in  case  of  inability 
to  continue  in  service  occasioned  by  sickness  or  severe  bodily 
injury.  It  might  be  shown  in  such  a  case  that  some  voluntary 
act  of  imprudence  or  carelessness  led  directly  to  the  physical 


Chap.  IV.  §  2.]  BY  IMPOSSIBILITY.  649 

consequences  which  disabled  a  party  from  continuing  his  service 
under  a  contract.  The  true  and  reasonable  rule  of  interpretation 
to  be  applied  to  such  contracts  is  this :  To  work  a  forfeiture  of 
wages,  the  abandonment  of  the  employer's  service  must  be  the 
direct,  voluntary  act,  or  the  natural  and  necessary  consequence 
of  some  voluntary  act  of  the  person  employed,  or  the  result  of 
some  act  committed  by  him  with  a  design  to  terminate  the  con- 
tract or  employment,  or  render  its  further  prosecution  impossible. 
But  a  forfeiture  of  wages  is  not  incurred  where  the  abandonment 
is  immediately  caused  by  acts  or  occurrences  not  foreseen  or 
anticipated,  over  which  the  person  employed  had  no  control,  and 
the  natural  and  necessary  consequence  of  which  was  not  to  cause 
the  termination  of  the  employment  of  a  party  under  a  contract 
for  services  or  labor. 

It  results  from  these  views  that  the  plaintiff  has  not  forfeited 
his  wages  by  any  breach  of  his  contract,  and  that  he  is  entitled 
to  recover  the  full  amount  due  to  him  for  services,  without  any 
deduction  for  damages  alleged  to  have  been  suffered  by  the 
defendants  in  consequence  of  his  sudden  departure  from  their 

employment. 

Judgment  on  the  verdict. 


(it.)    Destmction  of  subject  matter. 
DEXTER  V.   NORTON  et  al. 

47   NEW  YORK,   62.  — 1871. 

Appeal  from  a  judgment  entered  upon  an  order  of  the  General 
Term  of  the  Supreme  Court  in  the  first  judicial  district,  overrul- 
ing plaintiff's  exceptions,  and  directing  judgment  dismissing  the 
complaint,  in  accordance  with  ruling  of  the  court  at  circuit. 

This  action  is  brought  to  recover  damages  for  a  breach  of  a 
contract  to  sell  and  deliver  cotton.  Defendants,  on  the  5th  day 
of  October,  1865,  at  the  city  of  New  York,  agreed  to  sell  and 
deliver  to  the  plaintiff  607  bales  of  cotton,  bearing  certain  marks 
and  numbers,  specified  in  the  contract,  at  the  price  of  forty-nine 
cents  per  pound,  and  fourteen  bales,  bearing  marks  and  numbers. 


650  DISCHARGE  OF  CONTRACT.  [Part  V. 

specified  in  the  written  contract,  at  the  price  of  forty -three 
cents  per  pound,  the  cotton  to  be  paid  for  on  delivery.  Defend- 
ants delivered  to  the  plaintiff  460  bales  of  the  said  cotton,  the 
remaining  161  bales  were  accidentally  destroyed  by  fire  without 
fault  or  negligence  of  the  defendants.  Cotton  rose  in  value  after 
the  sale,  and  plaintiff  claimed  to  recover  the  increase  on  the  161 
bales.  The  court  dismissed  the  complaint,  upon  the  ground  that 
a  fulfillment  of  the  contract  by  the  sellers  had  become  impossible 
by  the  destruction,  without  their  fault,  of  the  subject  matter  of 
the  sale,  and  they  were,  therefore,  excused  from  the  obligation  to 
perform  their  agreement.     Plaintiff  excepted. 

Church,  C.  J.  The  contract  was  for  the  sale  and  delivery  of 
specific  articles  of  personal  property.  Each  bale  sold  was 
designated  by  a  particular  mark,  and  there  is  nothing  in  the 
case  to  show  that  these  marks  were  used  merely  to  distinguish 
the  general  kind  or  quality  of  the  article,  but  they  seem  to  have 
been  used  to  describe  the  particular  bales  of  cotton  then  in 
possession  of  the  defendant.  Nor  does  it  appear  that  there  were 
other  bales  of  cotton  in  the  market  of  the  same  kind,  and  marked 
in  the  same  way.  The  plaintiff  would  not  have  been  obliged  to 
accept  any  other  cotton  than  the  bales  specified  in  the  bought  note. 

The  contract  was  executory,  and  various  things  remained  to  be 
done  to  the  161  bales  in  question  by  the  sellers  before  delivery. 
The  title,  therefore,  did  not  pass  to  the  vendee,  but  remained  in 
the  vendor.     Joyce  v.  Adams,  8  N.  Y.  291. 

This  action  was  brought  by  the  purchaser  against  the  vendor 
to  recover  damages  for  the  non-delivery  of  the  cotton,  and  the 
important  and  only  question  in  the  case  is,  whether  upon  an 
agreement  for  the  sale  and  delivery  of  specific  articles  of  personal 
property,  under  circumstances  where  the  title  to  the  property 
does  not  vest  in  the  vendee,  and  the  property  is  destroyed  by  an 
accidental  fire  before  delivery  without  the  fault  of  the  seller,  the 
latter  is  liable  upon  the  contract  for  damages  sustained  by  the 
purchaser. 

The  general  rule  on  this  subject  is  well  established,  that  where 
the  performance  of  a  duty  or  charge  created  by  law  is  prevented 
by  inevitable  accident  without  the  fault  of  the  party  he  will  be 
excused,  but  where  a  person  absolutely  contracts  to  do  a  certain 


Chat.  IV.  §  2.]  BY  IMPOSSIBILITY.  051 

thing  not  impossible  or  unlawful  at  the  time,  he  will  not  be 
excused  from  the  obligations  of  the  contract  unless  the  perform- 
ance is  made  unlawful,  or  is  prevented  by  the  other  party. 

Neither  inevitable  accident,  nor  even  those  events  denominated 
acts  of  God  will  excuse  him,  and  the  reason  given  is  that  he 
might  have  provided  against  them  by  his  contract.  Paradine  v. 
Jane,  Aleyn,  27;  Harmony  v.  Bingham,  12  N.  Y.  99;  Tompkins 
v.  Dudley,  25  N.  Y.  272. 

But  there  are  a  variety  of  cases  where  the  courts  have  implied 
a  condition  in  the  contract  itself,  the  effect  of  which  was  to 
relieve  the  party  when  the  performance  had,  without  his  fault, 
become  impossible ;  and  the  apparent  confusion  in  the  authorities 
has  grown  out  of  the  difficulty  in  determining  in  a  given  case 
whether  the  implication  of  a  condition  should  be  applied  or  not, 
and  also  in  some  cases  in  placing  the  decision  upon  a  wrong 
basis.  The  relief  afforded  to  the  party  in  the  cases  referred  to 
is  not  based  upon  exceptions  to  the  general  rule,  but  upon  the 
construction  of  the  contract. 

For  instance,  in  the  case  of  an  absolute  promise  to  marry,  the 
death  of  either  party  discharges  the  contract,  because  it  is 
inferred  or  presumed  that  the  contract  was  made  upon  the 
condition  that  both  parties  should  live. 

So  of  a  contract  made  by  a  painter  to  paint  a  picture,  or  an 
author  to  compose  a  work,  or  an  apprentice  to  serve  his  master  a 
specified  number  of  years,  or  in  any  contract  for  personal  services 
dependent  upon  the  life  of  the  individual  making  it,  the  contract 
is  discharged  upon  the  death  of  the  party,  in  accordance  with  the 
condition  of  continued  existence,  raised  by  implication,  2  SmitKs 
Leading  Cases,  50. 

The  same  rule  has  been  laid  down  as  to  property:  "As  if  A 
agrees  to  sell  and  deliver  his  horse  Eclipse  to  B  on  a  fixed  future 
day,  and  the  horse  die  in  the  interval,  the  obligation  is  at  an 
end."  Benjamin  on  Sales,  424.  In  replevin  for  a  horse,  and 
judgment  of  retomo  habendo,  the  death  of  the  horse  was  held  a 
good  plea  in  an  action  upon  the  bond.  12  Wend.  589.  In  Taylor 
v.  Caldwell  (113  E.  C.  L.  E.  824)  A  agreed  with  B  to  give  him  the 
use  of  a  music  hall  on  specified  days,  for  the  purpose  of  holding 
concerts,  and  before  the  time  arrived  the  building  was  accidentally 


652  DISCHARGE  OF  CONTRACT.  [Part  V, 

burned;  held,  that  both  parties  were  discharged  from  the  con- 
tract. Blackburn,  J.,  at  the  close  of  his  opinion,  lays  down  the 
rule  as  follows ;  "  The  principle  seems  to  us  to  be,  that  in  con- 
tracts in  which  the  performance  depends  on  the  continued  exist- 
ence of  a  given  person  or  thing,  a  condition  is  implied  that  the 
impossibility  of  performance,  arising  from  the  perishing  of  the 
person  or  thing,  shall  excuse  the  performance."  And  the  reason 
given  for  the  rule  is,  "  because  from  the  nature  of  the  contract, 
it  is  apparent  that  the  parties  contracted  on  the  basis  of  the  con- 
tinued existence  of  the  particular  person  or  thing." 

In  School  District  No.  1  v.  Dauchy  (25  Conn.  530)  the  defendant 
had  agreed  to  build  a  school-house  by  the  first  of  May,  and  had  it 
nearly  completed  on  the  twenty-seventh  of  April,  when  it  was 
struck  by  lightning  and  burned;  and  it  was  held,  that  he  was 
liable  in  damages  for  the  non-performance  of  the  contract.  But 
the  court,  while  enforcing  that  general  rule  in  a  case  of  evident 
hardship,  recognizes  the  rule  of  an  implied  condition  in  case  of 
the  destruction  of  the  specific  subject  matter  of  the  contract; 
and  this  is  the  rule  of  the  civil  law.  Pothier  on  Contracts  and 
Sale,  art.  4,  §  1,  p.  31. 

We  were  referred  to  no  authority  against  this  rule.  But  the 
learned  counsel  for  the  appellant,  in  his  very  able  and  forcible 
argument,  insisted  that  the  general  rule  should  be  applied  in  this 
case.  While  it  is  difficult  to  trace  a  clear  distinction  between 
this  case  and  those  where  no  condition  has  been  implied,  the 
tendency  of  the  authorities,  so  far  as  they  go,  recognizes  such  a 
distinction,  and  it  is  based  upon  the  presumption  that  the  parties 
contemplated  the  continued  existence  of  the  subject  matter  of  the 
contract. 

The  circumstances  of  this  case  are  favorable  to  the  plaintiff. 
The  property  was  merchandise  sold  in  the  market.  The  defend- 
ant could,  and  from  the  usual  course  of  business,  we  may  infer, 
did  protect  himself  by  insurance;  but  in  establishing  rules  of 
liability  in  commercial  transactions,  it  is  far  more  important  that 
they  should  be  uniform  and  certain  than  it  is  to  work  out  equity 
in  a  given  case.  There  is  no  hardship  in  placing  the  parties 
(especially  the  buyer)  in  the  position  they  were  in  before  the 
contract  was  made.     The  buyer  can  only  lose  the  profits  of  the 


Chap.  IV.  §2.]  BY  IMPOSSIBILITY.  653 

purchase;  the  seller  may  lose  the  whole  contract  price,  and  if 
his  liability  for  non-delivery  should  be  established,  the  enhanced 
value  of  the  property.  After  considerable  reflection,  I  am  of  the 
opinion  that  the  rule  here  indicated  of  an  implied  condition  in 
case  of  the  destruction  of  the  property  bargained,  without  fault 
of  the  party,  will  operate  to  carry  out  the  intention  of  the 
parties  under  most  circumstances,  and  will  be  more  just  than  the 
contrary  rule.  The  buyer  can  of  course  always  protect  himself 
against  the  effect  of  the  implied  condition,  by  a  provision  in  the 
contract  that  the  property  shall  be  at  the  risk  of  the  seller. 

Upon  the  grounds  upon  which  this  rule  is  based  of  an  implied 
condition,  it  can  make  no  difference  whether  the  property  was 
destroyed  by  an  inevitable  accident,  or  by  an  act  of  God,  the  condi- 
tion being  that  the  property  shall  continue  to  exist.  If  we  were 
creating  an  exception  to  the  general  rule  of  liability,  there  would 
be  force  in  the  considerations  urged  upon  the  argument,  to  limit 
the  exception  to  cases  where  the  property  was  destroyed  by  the 
act  of  God,  upon  grounds  of  public  policy,  but  they  are  not  mate- 
rial in  adopting  a  rule  for  the  construction  of  the  contract  so  as 
to  imply  a  condition  that  the  property  was  to  continue  in  exist- 
ence. It  can  make  no  difference  how  it  was  destroyed,  so  long 
as  the  party  was  not  in  any  degree  in  fault.  The  minds  of  the 
parties  are  presumed  to  have  contemplated  the  possible  destruc- 
tion of  the  property,  and  not  the  manner  of  its  destruction;  and 
the  supposed  temptation  and  facility  of  the  seller  to  destroy  the 
property  himself,  cannot  legitimately  operate  to  affect  the  prin- 
ciple involved. 

The  judgment  must  be  affirmed. 

Allen,  Grover,  and  Rapallo,  J  J.,  concur;  Peckham  and 
FoLGER,  JJ..  dissent. 

Judgment  affirmed.^ 

1  See  also  Stewart  v.  Stone,  127  N.  Y.  500.  Where  plaintiff  has  contracted 
to  do  something  on  a  chattel  or  building  which  is  destroyed  after  part  per- 
formance, he  may  recover  for  the  part  performed.  Cleary  v.  Solder,  120 
Mass.  210.  In  Nihlo  v.  Binsse  (3  Abb.  App.  Dec.  375)  this  is  put  on  the 
ground  that  defendant  impliedly  contracts  to  keep  the  chattel  or  building  in 
existence. 


654  DISCHARGE  OP  CONTRACT.  [Part  V. 

WILMINGTON  TRANSPORTATION  CO.  v.   O'NEIL 

98  CALIFORNIA,  1.  — 1893. 

Action  on  contract.  Defense,  impossibility  of  performance. 
Judgment  for  plaintiff.     Defendant  appeals. 

Defendant  chartered  plaintiff's  boat,  covenanting  to  return  the 
same  in  good  condition,  and  should  it  "  be  lost  or  damaged  to  the 
extent  that  it  cannot  be  put  in  the  same  good  condition  as  when 
received  ...  to  pay  .  .  .  the  sum  of  $3500 "  for  the  same. 
The  boat  was  lost  in  a  storm  without  negligence  on  the  part  of 
defendant. 

Van  Clief,  C.  .  .  .  The  defendant  appeals  from  the  judg- 
ment and  contends :  1.  That  the  answer  raised  a  material  issue 
as  to  whether  the  lighter  was  lost  by  inevitable  accident;  2.  That 
the  sum  to  be  paid  ($3500)  in  case  the  lighter  should  be  lost  or 
damaged,  etc.,  was  not  intended  to  be  fixed  or  liquidated  damages, 
and  that  such  intention  does  not  appear  from  the  agreement 
properly  construed;  and  3.  That  if  the  sum  of  $3500  was  in- 
tended as  liquidated  damages,  the  agreement,  to  that  extent,  is 
made  void  by  sections  1670  and  1671  of  the  Civil  Code. 

I  think  the  first  point  cannot  be  sustained  by  the  authorities. 
The  defendant  expressly  promised  to  pay  in  case  the  lighter 
should  be  lost,  without  any  provision  or  qualification  in  the  con- 
tract as  to  the  manner  or  cause  of  such  loss.  Where  a  party  has 
expressly  undertaken,  without  any  qualification,  to  do  anything 
not  naturally  or  necessarily  impossible  under  all  circumstances, 
and  does  not  do  it,  he  must  make  compensation  in  damages, 
though  the  performance  was  rendered  impracticable,  or  even 
impossible,  by  some  unforeseen  cause  over  which  he  had  no 
control,  but  against  which  he  might  have  provided  in  his  con- 
tract. Wharton  on  Contracts,  §§  311,  314,  and  authorities  there 
cited,  particularly  ScJ^ool  District  v.  Daitchy,  25  Conn.  530;  68 
Am.  Dec.  371;  Harmony  v.  Bingham,  12  N.  Y.  99;  62  Am.  Dec. 
142;  Tompkins  v.  Dudley,  25  N.  Y.  272;  82  Am.  Dec.  349.  It  is 
to  be  observed,  however,  that  the  contract  here  is  not  merely  to 
return,  or  to  redeliver  the  lighter  to  plaintiff,  but  also  to  pay 
$3500  in  case  the  lighter  should  ha  lost;   and  that  there  is  no 


Chap.  IV.  §  2.]  BY  IMPOSSIBILITY.  655 

pretense  that  such  payment  has  been  rendered  impossible  or 
impracticable  by  any  cause;  so  that  the  alleged  casus  can  apply 
only  to  the  promise  to  redeliver  the  lighter,  while  the  action  is 
based  solely  upon  the  alleged  breach  of  the  promise  to  pay  in 
case  the  lighter  should  be  lost. 

If  I  am  not  mistaken  in  this  view  of  the  nature  of  the  case,  the 
issue  as  to  the  cause  of  the  loss  is  wholly  immaterial.  The 
possibility  of  a  loss  was  foreseen  and  provided  for  in  the  agree- 
ment, whereby  the  defendant  unqualifiedly  obligated  himself  to 
pay  in  the  event  of  a  loss  from  any  cause ;  and  the  only  qualifi- 
cation or  limitation  of  this  obligation  by  the  law  is  that  it  would 
not  bind  the  defendant  in  case  the  loss  had  been  caused  by  the 
culpable  negligence  or  other  wrongful  act  of  the  plaintiff,  of 
which  there  is  no  pretense. 

[On  the  second  and  third  points  the  court  decides  in  favor  of 
the  defendant.] 

I  therefore  conclude  that  the  judgment  should  be  reversed  and 
the  cause  remanded  for  a  new  trial,  with  leave  to  the  parties  to 
amend  their  pleadings  if  so  advised. 

For  the  reasons  given  in  the  foregoing  opinion  the  judgment  is 
reversed  and  the  cause  remanded  for  a  new  trial,  with  leave  to 
the  parties  to  amend  their  pleadings  if  so  advised. 


{Hi.)  Death  or  disability  of  a  party  in  contract  for  personal  service. 
SPALDING  et  al   v.  ROSA   et  al. 

71  NEW  YORK,  40.  — 1877. 

Appeal  from  judgment  of  the  General  Term  of  the  Supreme 
Court,  in  the  third  judicial  department,  in  favor  of  defendants, 
entered  upon  an  order  overruling  exceptions  and  directing  a 
judgment  upon  an  order  on  trial  dismissing  plaintiffs'  complaint. 

This  action  was  brought  by  plaintiffs,  who  were  the  owners 
and  managers  of  the  Olympic  Theater,  in  St.  Louis,  to  recover 
damages  for  an  alleged  breach  of  contract  by  defendants.  By 
the  contract,  defendants  agreed  to  furnish  the  "Wachtel  Opera 


666  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

Troupe,"  to  give  four  performances  per  week  at  plaintiffs'  theater 
for  two  weeks,  commencing  the  26th  or  27th  February,  1872, 
plaintiffs  to  receive  twenty  per  cent  of  the  gross  receipts,  up  to 
^1800  per  week,  and  defendants  the  balance.  Prior  to  the  time 
specified  in  the  contract,  Wachtel,  who  was  the  chief  singer  and 
attraction,  and  who  gave  the  name  to  the  troupe,  was  taken  sick, 
and  at  the  time  was  unable  to  sing.  Defendants  in  consequence 
did  not  furnish  the  troupe  at  the  time  specified. 

The  court  at  the  close  of  the  evidence  directed  a  dismissal  of 
the  complaint,  to  which  plaintiffs'  counsel  duly  excepted.  Excep- 
tions were  ordered  to  be  heard  at  first  instance  at  General  Term. 

Allen,  J.  The  contract  of  the  defendants  was  for  four  per- 
formances per  week  for  two  weeks,  commencing  on  the  26th  or 
27th  of  February,  1872,  by  the  "Wachtel  Opera  Troupe,"  at  the 
plaintiffs'  theater  in  St.  Louis. 

The  "  Wachtel  Opera  Troupe  "  was  well  known  by  its  name  as 
the  company  at  the  time  of  making  the  contract,  performing  in 
operas,  under  temporary  engagements,  at  the  principal  theaters 
and  opera-houses  in  the  larger  cities  of  the  United  States,  and 
composed  of  Wachtel  as  the  leader  and  chief  attraction,  and  from 
whom  the  company  took  its  name,  and  those  associated  with  him 
in  different  capacities,  and  taking  the  different  parts  in  the 
operatic  exhibitions  for  which  they  were  engaged.  The  proof  of 
the  fact  that  there  was  a  troupe  or  company  known  by  that  name, 
was  competent,  as  showing  what  particular  company  was  in  the 
minds  of  the  contracting  parties,  and  intended,  by  the  terms 
used,  and  as  there  was  no  controversy  upon  this  subject,  and  no 
ambiguity  arising  out  of  the  extrinsic  evidence,  there  was  no 
question  of  fact  for  the  jury. 

Wachtel  had  acquired  a  reputation  in  this  country,  as  well  as 
in  Europe,  as  a  tenor  singer  of  superior  excellence;  and,  in  the 
language  of  the  witnesses,  had  made  a  "  decided  hit "  in  his  pro- 
fessional performances  here.  It  was  his  name  and  capabilities 
that  gave  character  to  the  company,  and  constituted  its  chief 
attraction  to  connoisseurs  and  lovers  of  music,  filling  the  houses 
in  which  he  appeared.  His  connection  with  the  company  was  the 
inducement  to  the  plaintiffs  to  enter  into  the  contract,  and  give 
the  troupe  eighty  per  centum  of  the  gross  receipts  of  the  houses. 


Chap.  IV.  §  2.]  BY  IMPOSSIBILITY.  667 

one-half  of  which  went  to  Wachtel.  Both  the  plaintiffs  testified 
that  it  was  Wachtel's  popularity  and  capabilities  as  a  singer 
upon  which  they  relied  to  fill  their  theater  and  reimburse  them- 
selves for  their  expenses  and  make  a  profit.  The  appearance  of 
Wachtel  in  the  operas  was  the  principal  thing  contracted  for,  and 
the  presence  of  the  others  of  the  company  was  but  incidental  to 
the  employment  and  appearance  of  the  "famous  German  tenor." 
The  place  of  any  other  member  of  the  company  could  have  been 
supplied,  but  not  so  of  Wachtel.  His  presence  was  of  the  essence 
of  the  contract,  and  his  part  in  the  performances  could  not  be 
performed  by  a  deputy  or  any  substitute.  The  plaintiffs  would 
not  have  been  bound  to  accept,  and  would  not  have  accepted  the 
services  of  the  troupe  under  the  contract  without  Wachtel;  it 
would  not  have  been  the  "  Wachtel  Opera  Troupe  "  contracted  for 
without  him. 

There  is  no  dispute  as  to  the  facts.  The  only  question  is  one 
of  law,  as  to  the  effect  of  the  sickness,  and  consequent  inability 
of  Wachtel  to  fulfill  the  engagement,  upon  the  obligations  of  the 
defendants.  So  far  as  this  question  is  concerned,  it  must  be 
treated  as  if  the  contract  was  for  the  performance  by  Wachtel 
alone;  as  if  he  was  the  sole  performer  contracted  for.  This 
follows  from  the  conceded  fact  that  his  presence  was  indispen- 
sable to  the  performance  of  the  services  agreed  to  be  rendered  by 
the  entire  company.  In  this  view  of  the  case,  the  legal  question 
is  very  easy  of  solution,  and  can  receive  but  one  answer.  The 
sickness  and  inability  of  Wachtel  occurring  without  the  fault  of 
the  defendants,  constitutes  a  valid  excuse  for  the  non-performance 
of  the  contract.  Contracts  of  this  character,  for  the  personal 
services,  whether  of  the  contracting  party  or  of  a  third  person, 
requiring  skill,  and  which  can  only  be  performed  by  the  particu- 
lar individual  named,  are  not,  in  their  nature,  of  absolute  obliga- 
tion under  all  circumstances.  Both  parties  must  be  supposed  to 
contemplate  the  continuance  of  the  ability  of  the  person  whose 
skilled  services  are  the  subject  of  the  contract,  as  one  of  the  con- 
ditions of  the  contract.  Contracts  for  personal  services  are  sub- 
ject to  this  implied  condition,  that  the  person  shall  be  able  at 
the  time  appointed  to  perform  them;  and  if  he  dies,  or  without 
fault  on  the  part  of  the  covenantor  becomes  disabled,  the  obliga- 


658  DISCHARGE  OF  CONTRACT.  [Pabt  V> 

tion  to  perform  is  extinguished.     This   is   so  well   settled  by 

authority  that  it  is  unnecessary  to  do  more  than  refer  to  a  few  of 

the  authorities  directly  in  point.     People  v.  Manning,  8  Cow. 

297;  Jones  y.  Judd,  4  K.Y.411;  Clark  v.  Gilbert,  26  :N'.Y.279;. 

Wolfe  V.  Hoices,  24  Barb.  174,  666  j  20  N.  Y.  197;  Gray  v.  Murray, 

3  Johns.  Ch.  R.  167;  Robinson  v.  Davison,  L.  R.  6  Excheq.  269; 

Boast  V.  FiHh,  Id. ;  4  Com.  Pleas,  1.     The  same  principle  was 

applied  in  Dexter  v.  Norton  (47  X.  Y.  62)  and  for  the  same  rea-^ 

sons,  to  a  contract  for  the  delivery  of  a  quantity  of  specified  cotton 

destroyed  by  fire,  without  the  fault  of  the  vendor,  intermediate 

the  time  of  making  the  executory  contract  of  sale  and  the  tima 

for  the  delivery. 

The  judgment  must  be  affirmed.     All  concur,  except  Folger, 

J.,  absent. 

Judgment  affirmed.^ 

1  See  also  Lacy  v.  Getman,  119  N.  Y.  109 ;  Parker  v.  Macomber,  17  R.  I. 
674 ;  Dickinson  v.  Calahan''s  AdrnWa,  19  Pa.  St.  227,  ante,  p.  479. 

Note.  Wilful  abandonment  of  contract  prevents  recovery  for  benefits, 
already  conferred  by  party  in  default,  and  renders  him  liable  to  respond  in 
damages  for  the  breach.  Stark  v.  Parker,  2  Pick.  267  ;  Lawrence  v.  Miller, 
86  N.  Y.  131.  Contra :  Britton  v.  Turner,  6  N.  H.  481.  But  where  full  per- 
formance by  plaintiff  is  impossible  he  may  recover  for  benefits  conferred. 
Wolfe  V.  Howes,  20  N.  Y.  197 ;  Green  v.  Gilbert,  21  Wis.  395  ;  Manhattan 
Life  Ins.  Co.  v.  Buck,  93  U.  S.  24.  For  recovery  for  benefits  conferred  upon 
abandonment  of  illegal  contract,  see  Duval  v.  Wellman,  ante,  p.  402  ;  Ber- 
nard V.  Taylor,  ante,  p.  407. 


Chap.  V.  §  1.]  BY  OPERATION  OF  LAW.  669 


CHAPTER   V. 

DISCHARGE  OF  CONTRACT  BY  OPERATION  OF  LAW. 
§  1.    Merger. 

CLIFTON  V.  JACKSON  lEON  CO. 

74  MICHIGAN,  183.  — 1889. 

Trespass.     Defendant  brings  error. 

Campbell,  J.  Plaintiff  sued  defendant  for  trespass  in  cutting 
his  timber  in  the  winter  of  1885-6.  The  defense  set  up  was  that 
the  timber,  though  on  plaintiff's  land,  belonged  to  defendant. 
This  claim  was  based  on  the  fact  that  on  September  22,  1877,  a 
little  more  than  eight  years  before  the  trespass,  defendant  made 
a  contract  to  sell  the  land  trespassed  on  to  plaintiff,  but  with  this, 
reservation : 

"  Reserving  to  itself,  its  assigns  and  corporate  successors,  the  owner- 
ship of  pine,  butternut,  hemlock,  beech,  maple,  birch,  iron-wood,  or  other 
timber  suitable  for  sawing  into  lumber,  or  for  making  into  fire-wood  or 
charcoal,  now  on  said  tract  of  land,  and  also  the  right  to  cut  and  remove 
any  or  all  of  said  timber,  at  its  option,  at  any  time  within  ten  years  from 
and  after  the  date  of  these  presents." 

There  were  some  unimportant  provisions,  also,  not  now  mate- 
rial. Plaintiff  showed  that  on  November  4,  1885,  the  defendant 
conveyed  to  him  the  land  in  question  by  full  warranty  deed,  and 
with  no  exceptions  or  reservations  whatever.  The  testimony  of 
defendant's  agent,  who  cut  the  land,  tended  to  prove  that  when 
the  cutting  was  done  the  defendant's  manager  did  not  dispute 
plaintiff's  title,  but  gave  the  agent  to  understand  that  it  belonged 
to  plaintiff,  but  that  some  arrangement  would  be  made  about  it; 
that  plaintiff  was  then  absent,  and  there  was  no  conversation  with 
him  or  his  wife  on  the  subject.  The  bill  of  exceptions  certifies 
that  no  other  evidence  was  given  concerning  the  right  to  cut 


660  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

timber.     Upon  these  facts  the  court  held  that  the  deed  conveyed 
the  right  in  the  timber  to  plaintiff,  and  that  he  owned  it. 

Had  no  deed  been  made,  it  is  agreed  that  the  reservation  would 
have  prevailed.  But  a  previous  contract  cannot  contradict  or 
control  the  operation  of  a  deed.  It  was  competent  for  defendant 
to  relinquish  any  contract  reservation,  and  a  deed  which  grants 
and  warrants  without  any  reservation  has  that  effect.  We  do  not 
hold  that  if  the  deed  were  so  made  by  some  mistake  within  the 
cognizance  of  equity  the  mistake  might  not  be  corrected.  Neither 
need  we  consider  whether,  after  such  a  deed,  there  might  not  be 
such  dealings  as  to  render  such  timber-cutting  lawful,  by  license, 
express  or  implied.  In  this  case  there  was  no  testimony  tending 
to  show  that  the  deed  was  not  supposed  and  intended  to  close  up 
all  the  rights  of  the  parties. 

The  judgment  must  be  affirmed. 


§  2.    Alteration  or  loss  of  a  'written  instrument. 
SMITH  V.  MACE. 

44  NEW  HAMPSHIRE,   553.  — 1863. 

Assumpsit  to  recover  a  balance  due  on  the  sale  of  lands.  Ver- 
dict for  plaintiff. 

Defendants  gave  plaintiff  two  notes  for  $300  and  $400,  which 
they  alleged  had  been  altered  by  inserting  the  word  "  annually  " 
after  the  rate  of  interest.  The  court  charged  that  if  the  word 
"  annually  "  was  wrongfully  and  fraudulently  inserted,  the  notes 
would  be  void,  but  the  debt  would  not  be  paid  and  the  plaintiff 
might  recover. 

Bellows,  J.  The  principal  question  in  this  case  arises  upon 
the  instructions  to  the  jury,  that  although  the  notes  given  for  the 
price  of  the  land  would  be  rendered  void  by  fraudulent  altera- 
tion, yet  the  debt  would  still  remain,  and  the  plaintiff  might 
recover  upon  the  general  count. 

The  ground  taken  by  the  plaintiff  is,  that  the  notes  were  not 
payment  of  the  price,  unless  so  a,greed  by  the  parties,  and  that 


Chap.  V.  §  2.]  BY  OPERATION  OF  LAW.  661 

upon  the  production  of  the  notes  at  the  trial,  or  proof  of  their 
loss  or  destruction,  the  plaintiff  might  recover  upon  the  original 
consideration.  Assuming  that  the  notes  were  to  be  regarded 
strictly  as  collateral  security,  the  position  of  the  plaintiff  might, 
perhaps,  be  tenable ;  but  we  think  they  are  not  to  be  so  regarded, 
but  rather  as  payment,  upon  condition  that  the  notes  are  produc- 
tive at  maturity;  and  in  the  meantime  suspending  the  vendor's 
right  of  action ;  therefore  in  case  the  notes  of  a  third  person  are 
received  for  the  price  of  the  property  sold,  the  vendor  is  bound  to 
use  due  diligence  to  charge  such  third  person,  or  his  laches  will 
operate  to  discharge  the  original  contract;  and  the  fact  that  no 
recovery  can  be  had  without  producing  or  accounting  for  the  note 
received,  is  inconsistent  with  the  position  that  it  is  held  in  such 
cases  strictly  as  collateral  security.  So  also  the  discharge  of  the 
notes  by  a  release  would  discharge  also  the  original  contract ;  and 
we  think  that  the  same  effect  would  be  produced  by  such  a 
fraudulent  alteration  of  the  notes  by  the  vendor  as  would  render 
them  void. 

In  the  case  of  such  an  alteration  the  policy  of  the  law  makes 
the  note  wholly  void,  upon  the  ground  stated  in  Master  v.  J  filler 
(4  D.  &  E.  345),  that  "  a  man  shall  not  take  the  chance  of  com- 
mitting a  fraud,  and,  when  the  fraud  is  detected,  recover  on  the 
instrument  as  originally  made."  This  sound  and  salutary  prin- 
ciple, based  as  it  is  upon  high  moral  considerations,  and  long  and 
well  established  in  both  the  English  and  American  courts,  would 
be  rendered  entirely  inert  in  respect  to  the  original  promisee,  if, 
when  detected  in  the  fraudulent  alteration  of  the  written  promise, 
he  might  recover,  upon  a  promise  implied  by  law,  the  amount  of 
the  original  obligation.  It  would  in  fact  be  changed  into  a  mere 
technical  objection  to  the  form  of  the  action,  which  is  utterly 
inconsistent  with  the  policy  which  dictated  it. 

These  views  are  fully  sustained  by  the  well  considered  case  of 
Martendale  v.  Follet  (1  IST.  H.  95),  which  is  often  cited,  and,  so 
far  as  we  have  observed,  never  questioned.  The  same  doctrine 
is  fully  recognized  in  Wheelock  v.  Freeman,  13  Pick.  165.  In 
both  these  cases  notes  were  given  for  the  price  of  property  sold, 
and  payable,  the  former  in  merchantable  neat  stock,  and  the 
latter  in  stock  in  one  year,  or  money  in  two.     In  both  the  altera- 


662  DISCHAllGE  OF  CONTRACT.  [1  aiit  V. 

tions  affected  tlie  mode  of  payment,  and  in  both  it  was  decided 
that  no  recovery  could  be  had  upon  the  original  consideration. 

In  Arrison  v.  Harmstead  (2  Penn.  St.  191)  there  was  a  deed  of 
land,  reserving  rent,  and  after  the  delivery,  it  being  in  the  hands 
of  the  scrivener,  it  was  altered  by  the  grantor;  held,  in  an  action 
for  the  rent,  with  counts  for  use  and  occupation,  etc.,  that  the 
plaintiff  could  not  recover,  either  on  the  deed  or  for  use  and 
occupation;  for,  although  the  land  passed  by  the  deed,  the  estate 
of  the  grantor  was  destroyed,  as  a  penalty  for  the  fraud  in  mak- 
ing the  alteration.  The  case  is  well  considered,  and  the  court 
say:  "If  a  bond,  note,  or  other  instrument  for  the  payment  of 
money  be  altered,  and  thereby  avoided  by  the  obligor,  it  has 
never  been  suffered,  or  even  attempted  to  recover  on  the.  original 
contract;  as,  for  example,  for  money  lent.  It  is  a  mistake  to 
suppose  the  evidence  of  title  only  is  avoided.  The  whole  contract 
becomes  void,  and  it  is  held,  as  a  principle  of  policy,  that  the 
fraudulent  party  may  lose,  but  can  gain  nothing  by  his  fraud." 
See  also  Miller  v.  Gilleland,  19  Penn.  St.  119. 

In  White  V.  Hass  (32  Ala.  430)  it  is  laid  down  that  although 
a  promissory  note,  not  under  seal,  may  not  be  a  merger  of  the 
contract  for  which  it  was  given,  yet  the  payee  cannot  recover  on 
the  original  consideration,  when  his  recovery  on  the  note  is 
defeated  by  proof  of  material  alteration  by  him,  without  the 
assent  of  the  maker,  which  renders  the  note  void.  The  court 
say,  "  as  the  note  was  at  first  valid,  there  can  be  no  recovery  on 
the  contract  unless  the  note  still  continues  valid,  and  is  produced 
in  evidence,  or  proved  to  have  been  lost  by  time  or  accident;  and 
to  allow  the  payee,  after  he  had  designedly  made  a  material 
alteration  in  the  note,  without  the  assent  of  the  maker,  to  recover 
upon  the  contract  for  which  the  note  was  given,  would  be  to 
depart  from  the  sound  and  just  principle  that  no  one  shall  be 
permitted  to  take  the  chance  of  committing  a  fraud  without  run- 
ning any  risk  by  the  event,  when  it  is  detected." 

In  Whitmer  v.  Frye  (10  Mo.  348)  it  was  held,  that  where  a 
party  by  his  own  act  alters  an  instrument,  so  that  it  cannot  be 
the  foundation  of  any  legal  remedy,  he  will  not  be  permitted  to 
prove  the  covenant,  or  promise  contained  in  it,  by  any  other 
evidence;    and  that  this  principle  will  prevent  a  resort  to  the 


Chap.  V.  §  2]  BY  OPERATION  OF  LAW.  663 

common  counts  in  order  to  sustain  the  plaintiff's  right  of 
recovery.  This  case  is  cited  by  counsel  in  White  v.  Hass  (32 
Ala.  430)  and  was  a  case  of  a  sealed  instrument,  but  no  stress 
was  put  upon  that.  See  also  1  Greenl.  Ev.,  §  568,  and  note  4; 
Newell  V.  Mayherry,  3  Leigh,  250;  Mills  v.  Starr,  2  Bailey,  359, 
cited  in  2  Smith's  L.  C.  (5th  Am.  ed.)  961. 

So  it  is  held  that  where  a  note,  given  at  the  time  when  the 
liability  occurs,  is  usurious,  and  therefore  void  by  the  New  York 
law,  no  recovery  can  be  had  upon  a  general  count  for  the  sum 
justly  due,  for  the  whole  transaction  is  infected;  and  yet  the 
money  justly  due  is  good  consideration  for  a  subsequent  express 
promise;  but  the  law  will  raise  no  promise  by  implication.  Rice 
V.  Welling,  5  Wend.  595;  Early  v.  Mahon,  19  Johns.  147;  Ham- 
mond V.  Hopping,  13  Wend.  505. 

In  Blade  v.  Noland  (12  Wend.  173)  the  suit  was  upon  a  note, 
destroyed  or  lost,  and  for  the  work  and  labor  of  which  the  note 
was  given;  and  it  was  held  that  proof  that  the  note  was  volun- 
tarily and  deliberately  burnt  will  not  authorize  the  secondary 
proof  of  its  contents,  or  entitle  the  plaintiff  to  resort  to  the 
original  consideration.  Clute  v.  Small  (17  Wend.  238)  takes  a 
distinction  between  an  innocent  alteration,  though  unauthorized, 
and  a  fraudulent  alteration.  The  court,  Cowen,  J.,  says:  "To 
allow  a  holder  the  privilege  of  destroying  his  note  and  thus 
bringing  himself  to  the  original  consideration,  would  put  it  in 
his  power  to  acquire  an  advantage  by  a  wrongful  suppression  of 
testimony;  "  and  he  says  of  Atkinson  v.  Haydon  (2  Ad.  &  El.  628) 
that  the  question  arose  upon  pleading,  and  for  aught  that  appeared 
the  alteration  was  made  under  an  honest  mistake  of  right,  and  he 
says  perhaps  this  distinction  should  be  adopted. 

To  the  point  that  although,  technically  speaking,  such  a  note 
is  not  regarded  as  an  extinguishment  of  an  antecedent  debt,  yet 
is  treated  as  payment  suh  modo ;  or  a  payment  on  condition  that 
the  note  prove  to  be  productive,  are  the  cases  of  Angel  v.  Felton, 
S  Johns.  149;  Burdick  v.  Green,  15  Johns.  247;  Ward  v.  Evans, 
2  Ld.  Raym.  928. 

To  entitle  the  vendor,  then,  to  maintain  a  suit  on  the  original 
promise,  or  for  money  had  and  received,  the  note  must  be  pro- 
duced and  canceled  at  the  trial,  or  otherwise  accounted  for;  and 


664  DISCHARGE  OF  CONTRACT.  [Part  V. 

regularly  it  should  appear  that  the  note,  when  so  produced,  still 
continues  valid,  and  not  discharged  or  avoided.  Such  is  the 
doctrine  distinctly  of  Martendale  v.  Follet,  and  also  of  White  v. 
Mass,  32  Ala.  430.  If  fraudulently  altered  by  the  vendor  its 
identity  is  destroyed,  and  he  shall  not  be  permitted  to  explain 
it  by  showing  his  own  turpitude.  The  vendor  therefore  has  lost 
the  power  to  produce  the  note;  and  by  his  own  fraudulent  act 
designed  to  injure  the  vendee  or  debtor;  and  he  cannot,  consist- 
ently with  sound  public  policy,  be  permitted  to  recover  on  the 
original  consideration,  and  thus,  by  merely  changing  the  form  of 
action,  avoid  the  consequences  of  his  crime.  The  rule  which, 
seeks  to  punish  the  offender  by  destroying  the  claim  which  is  thus 
tampered  with,  has  no  such  formal  or  technical  foundation,  but 
stands  upon  the  broad  foundations  of  public  policy,  which  treats 
such  an  act  as  a  virtual  discharge  of  the  debt,  as  much  as  if  it 
had  been  released. 

We  are  aware  that  it  is  laid  down  (in  Chit,  on  Bills,  184),  that 
in  such  cases  the  party  may  resort  to  the  original  promise, 
although  it  is  said  (on  page  598)  that  where  a  party  is  discharged 
by  the  alteration  of  the  bill,  or  the  laches  of  the  holder,  the 
plaintiff  cannot  resort  to  the.  general  counts. 

The  authority  upon  which  Mr.  Chitty  relies  for  the  position 
that  he  cannot  resort  to  the  general  counts  is  Atkinson  v.  Hay- 
don,  2  Ad.  &  El.  628;  but  it  appears  upon  examination  that  a 
fraudulent  alteration  was  not  alleged  in  the  pleading;  furnishing 
ground  for  the  distinction  suggested  by  Cowen,  J.,  in  Clute  v. 
Small  (17  Wend.  238),  before  adverted  to.  The  decision,  more- 
over, was  simply  announced  by  the  court,  and  no  reasons  for  it 
assigned.  On  the  other  hand,  in  Powell  v.  Divett  (15  East,  29),  it 
was  held  that  a  material  alteration  in  a  sale  note  avoids  it,  and 
that  no  action  could  be  maintained  on  the  contract  evidenced  by  it. 

Reference  has  also  been  made  to  the  case  of  alterations  of  bills 
and  notes  without  a  new  stamp,  but  it  will  be  seen  at  once  that 
this  class  of  cases  is  not  in  point,  inasmuch  as  the  alteration  is 
not  fraudulent;  but,  although  made  with  the  consent  of  both 
parties,  is  rendered  void  by  positive  statute. 

The  other  exceptions  are  all  overruled,  but,  for  errors  in  the 
instructions  adverted  to,  there  must  be 

A  new  trial. 


Ohap.  V.  S  2.]  BY  OPERATION  OF  LAW.  66ft 

CLOUGH  V.    SEAT  et  al. 

49  IOWA,   111.  — 1878. 

Action  on  promissory  note,  and  for  foreclosure  of  a  mortgage. 
Defense,  alteration,  by  cutting  off  from  the  bottom  the  words  "  Ave 
will  pay  fifteen  per  cent  interest  in  addition  to  the  interest  men- 
tioned in  the  above  note." 

Day,  J.  .  .  .  Appellants  insist  that  the  alteration  of  the 
note  was  fraudulent,  and  that,  therefore,  the  plaintiff  should  not 
be  permitted  to  recover  upon  the  original  consideration.  The 
answer  does  not  allege,  nor  does  the  court  find,  that  the  altera- 
tion was  fraudulent.  We  have  no  statement  that  the  abstract 
contains  all  the  evidence,  and  hence  we  cannot  review  the  findings 
of  the  court  upon  the  facts.  If,  however,  the  abstract  contains 
all  the  evidence,  and  the  case  were  in  condition  to  be  tried  de 
novo,  we  should  feel  impelled  to  find  that  the  fact  of  alteration  is 
not  established  by  a  preponderance  of  evidence.  We  are  bound 
by  the  finding  of  the  court  that  there  was  a  material  alteration, 
but  we  cannot  go  beyond  that  finding,  and  find  the  further  fact 
that  the  alteration  was  fraudulent. 

Appellants  seem  to  insist,  however,  that  the  note  embraces 
the  contract  of  the  parties,  and  supplies  the  place  of  any  implied 
promise  arising  out  of  the  borrowing  of  the  money,  and  that  the 
alteration  of  the  note,  however  innocently  made,  deprives  the  plain- 
tiff of  any  right  to  recover  upon  the  original  consideration.  We 
believe  the  better  doctrine  to  be  opposed  to  this  view.  In  Krause 
V.  Meyer  (32  Iowa,  569)  both  parties  conceded  that  if  the  altera- 
tion was  innocently  made  the  plaintiff  might  recover  upon  the 
consideration  of  the  note.  Because  of  this  concession  the  point 
was  not  determined  in  that  case.  In  Vogle  et  al.  v.  Ripper  (34 
Illinois,  100),  which  was  an  action  to  foreclose  a  mortgage 
executed  to  secure  notes  which  had  been  altered  so  as  to  draw  ten 
instead  of  six  per  cent,  the  following  language  is  employed :  "  In 
a  court  of  equity  a  mortgage  is  regarded  as  an  incident  of  the 
debt,  and,  where  a  mortgagee  has  released  or  discharged  the  debt 
by  a  fraudulent  alteration  or  destruction  of  the  written  evidence 
of  it,  he  ought  not  to  be  permitted  to  sustain  a  suit  for  its 


666  DISCHARGE  OF  CONTRACT.  [Part  V. 

recovery;  but  where  the  alteration  was  not  fraudulent,  although 
the  identity  of  the  instrument  may  be  destroyed,  we  think  it 
should  not  cancel  the  debt,  of  which  the  instrument  was  merely 
the  evidence.  If  there  Avas  no  attempt  to  defraud,  there  is  no 
reason  why  a  court  should  not  assist  the  creditor  so  far  as  it  can 
consistently."  In  this  case  there  was  a  decree  for  the  sum  due, 
and  foreclosure  of  the  mortgage.  See  also  Matteson  v.  Ellsworth, 
33  Wis.  488.  In  Parsons  on  Notes  and  Bills,  Vol.  2,  p.  572, 
respecting  alterations  of  notes  innocently  made,  it  is  said :  "  And 
though  it  is  true  that  an  avoided  note  destroyed  innocently  by  a 
material  alteration  cannot  even  be  the  evidence  of  the  original  debt, 
it  does  not  destroy  the  debt.  The  debt  is  still  obligatory,  and  may 
be  recovered  by  a  suit  on  the  original  cause  of  action."  The  case 
of  Wheelock  v.  Fi'eeman  (13  Pickering,  165),  upon  which  appellants 
rely,  was  decided  upon  the  ground  that  the  alteration  was 
fraudulent. 

It  is  claimed  that  the  court  erred  in  decreeing  the  fore- 
closure of  the  mortgage,  the  note,  which  it  was  executed  to  secure, 
having  been  rendered  void  by  a  material  alteration.  We  think 
this  action  of  the  court  was  right.  See  Vogle  v.  Ripper,  34  Illi- 
nois, 100;  Sloan  v.  Rice,  41  Iowa,  465. 

«  «  »  •  * 

Affirmed.* 


McRAVEN  V.  CRISLER. 

53  MISSISSIPPI,  5t2.— 1876. 
[Reported  herein  at  p.  577.] 


BLADE  V.   NOLAND. 

12  WENDELL  (N.  Y.),  173.  — 1834. 

Error  from  the  Jefferson  common  pleas. 

Noland  sued  Blade  in  a  justice's  court,  and  declared  on  a  note 
destroyed  or  lost,  and  for  work  and  labor.     The  defendant  pleaded 

i  Accord :  Owen  v.  Hall,  70  Md.  97  ;  Savi7igs  Bank  v.  Shaffer,  9  Neb.  1. 
Alteration  by  stranger  does  not  invalidate  instrument.  Bigelow  v.  Stilphens, 
35  Vt.  621. 


Chap.  V.  §  2.]  BY  OPERATION  OF  LAW.  CC7 

the  general  issue  and  gave  notice  of  set-off.  The  plaintiff  called 
a  witness,  and  proved  by  him  that  the  defendant  previous  to  4th 
March,  1832,  gave  the  plaintiff  a  note  for  $24.80,  payable  in  three 
months,  for  wages  due  to  him  for  work  done  for  the  defendant. 
The  plaintiff  himself  was  then  sworn,  to  prove  the  loss  of  the 
note,  and  testified  that  he  burnt  it  up  the  next  morning  after  it 
was  given.  A  witness  called  by  the  defendant  also  gave  testi- 
mony tending  to  show  that  the  note  was  burnt  by  the  plaintiff  on 
the  day  after  it  was  given.  There  however  was  proof  that  the 
note  was  in  existence  subsequent  to  the  day  on  which  the  plain- 
tiff alleged  it  was  destroyed.  There  was  also  evidence  of  pay- 
ments by  the  defendant  on  account.  The  justice  rendered 
.judgment  in  favor  of  the  plaintiff  for  $18,  besides  costs.  The 
common  pleas  of  Jefferson,  on  ceHiorari,  affirmed  the  judgment 
of  the  justice.     The  defendant  sued  out  a  writ  of  error. 

Nelson,  J.  I  concede  the  rule  insisted  on  by  the  counsel  for 
the  plaintiff  below,  to  the  fullest  extent,  borne  out  by  the 
authorities,  and  they  are  numerous ;  and  still  am  of  opinion  that 
the  plaintiff  did  not  give  such  proof  of  the  loss  of  the  note  as  to 
justify  the  secondary  proof  of  its  contents,  or  to  entitle  him  to 
resort  to  the  original  consideration.  If  there  had  been  satisfac- 
tory proof  of  the  loss  or  destruction  of  the  note,  the  omission  to 
give  a  bond  of  indemnity  under  the  statute  (2  R.  S.  406,  §§  75,  76) 
would  not  have  interfered  with  the  recovery;  for  the  provision  of 
the  statute  on  this  subject  is  limited  to  negotiable  paper.  There 
is  no  evidence  that  the  note  in  question  was  negotiable,  and  it 
seems  to  be  settled  that  the  court  will  not  presume  a  lost  note  to 
be  negotiable.     10  Joints.  R.  104;  3  Wendell,  344. 

The  proof  is,  that  the  plaintiff  deliberately  and  voluntarily 
destroyed  the  note  before  it  fell  due,  and  there  is  nothing  in  the 
case  accounting  for,  or  affording  any  explanation  of  the  act, 
consistent  with  an  honest  or  justifiable  purpose.  Such  explana- 
tion the  plaintiff  was  bound  to  give  affirmatively,  for  it  would  be 
in  violation  of  all  the  principles  upon  which  inferior  and  secon- 
dary evidence  is  tolerated,  to  allow  a  party  the  benefit  of  it  who  has 
wilfully  destroyed  the  higher  and  better  testimony.  The  danger 
of  this  very  abuse  of  a  relaxation  of  the  general  rule  greatly 
retarded  its  introduction  into  the  law  of  evidence,  and  it  was  for 


668  DISCHARGE  OF  CONTRACT.  [Part  V, 

a  long  time  confined  to  a  few  extreme  cases,  such  as  burning  of 
houses,  robbing,  or  some  unavoidable  accident.  It  was  contended 
by  Chancellor  Lansing,  in  the  case  of  Livingston  v.  Rogers  (2 
Johns.  Cas.  488),  after  an  examination  of  all  the  leading  cases  on 
the  subject,  that  secondary  evidence  was  not  admissible  to  prove 
the  contents  of  a  paper,  where  the  original  had  been  lost  by  the 
negligence  or  laches  of  the  party  or  his  attorney.  He  failed  to 
convince  the  court  of  errors  to  adopt  his  views  in  a  case  where 
the  negligence  was  not  so  great  as  to  create  suspicion  of  design. 
Further  than  this  I  could  not  consent  to  extend  the  rule.  I  have 
examined  all  the  cases  decided  in  this  court,  where  this  evidence 
has  been  admitted,  and  in  all  of  them  the  original  deed  or  writing 
was  lost,  or  destroyed  by  time,  mistake,  or  accident,  or  was  in 
the  hands  of  the  adverse  party.  Where  there  was  evidence  of 
the  actual  destruction  of  it,  the  act  was  shown  to  have  taken  place 
under  circumstances  that  repelled  all  inference  of  a  fraudulent 
design.  2  Johns.  Cas.  488;  2  Caines,  363;  10  Johns.  R.  374,  363; 
11  Id.  446;  8  Id.  149;  3  Coiven,  303;  8  Id.  77;  3  Wendell,  344; 
Peak's  Ev.  972  (Am.  ed.);  10  Co.  88,  Leyfield's  case;  3  T.  R. 
161;  8  East,  288,  9;   Gilb.  Ev.  97. 

In  Leyfield's  case  Lord  Coke  gives  the  obvious  reasons  why 
the  deed  or  instrument  in  writing  should  be  produced  in  court : 
1.  To  enable  the  court  to  give  a  right  construction  to  it  from  the 
words;  2.  To  see  that  there  are  no  material  erasures  or  inter- 
lineations ;  3.  That  any  condition,  limitation,  or  power  of  revoca- 
tion may  be  seen;  for  these  reasons  oyer  is  required  in  pleading 
a  deed.  But  he  says,  in  great  and  notorious  extremities,  as  by 
casualty  of  fire,  etc.,  if  it  shall  appear  to  the  judges  that  the 
paper  is  burnt,  it  may  be  proved  by  witnesses  so  as  not  to  add 
affliction  to  affliction. 

The  above  is  in  brief  the  foundation  of  the  rule  in  these  cases 
of  secondary  proof  of  instruments  in  writing,  and  it  has  been 
much  relaxed  and  extended  in  modern  times  from  necessity,  and 
to  prevent  a  failure  of  justice ;  yet  I  believe  no  case  is  to  be  found 
where,  if  a  party  has  deliberately  destroyed  the  higher  evidence, 
without  explanation  showing  affirmatively  that  the  act  was  done 
with  pure  motives,  and  repelling  every  suspicion  of  a  fraudulent 
design,  that  he  has  had  the  benefit  of  it.     To  extend  it  to  such  a 


Chap.  V.  §  3.]  BY  OPERATION  OF  LAW.  669 

case  would  be  to  lose  sight  of  all  the  reasons  upon  which  the  rule 
is  founded,  and  to  establish  a  dangerous  precedent.  We  know  of 
no  honest  purpose  for  which  a  party,  without  any  mistake  or 
misapprehension,  would  deliberately  destroy  the  evidence  of  an 
existing  debt;  and  we  will  not  presume  one. 

From  the  necessity  and  hardship  of  the  case,  courts  have 
allowed  the  party  to  be  a  competent  witness  to  prove  the  loss  or 
destruction  of  papers;  but  it  would  be  an  unreasonable  indul- 
gence, and  a  violence  of  the  just  maxim  that  no  one  shall  take 
advantage  of  his  own  wrong,  to  permit  this  testimony  where  he 

has  designedly  destroyed  it. 

Judgment  reversed.* 


§  3.   Discharge  by  bankruptcy. 

REED  V.   PIERCE. 

36  MAINE,  455.  — 1853. 

Action  on  covenants  broken.    Defense,  discharge  in  bankruptcy. 

In  1833  defendant  mortgaged  land  to  A.,  and  in  1835  con- 
veyed the  land  to  plaintiff  with  covenants  that  it  was  free  from 
incumbrances  and  that  he  would  warrant  and  defend  it  against 
all  lawful  claims.  In  1851  the  mortgagee  entered  and  took 
possession,  to  regain  which  plaintiff  paid  $1169.86  in  discharge 
of  the  mortgage.  Defendant  introduced  as  a  bar  to  the  suit  his 
discharge  in  bankruptcy  dated  in  1842,  and  the  schedule  of  debts 
showing  the  amount  then  due  on  the  mortgage  to  A. 

Appleton,  J.  The  defendant  conveyed  to  the  plaintiff  by 
deed  of  warranty,  premises,  which  at  the  time  were  subject  to 
mortgage,  and  has  since  received  his  discharge  in  bankruptcy. 
At  the  time  of  his  application  and  discharge,  the  notes  secured 
by  mortgage  were  outstanding  and  no  entry  had  been  made  by 
the  mortgagee  for  the  purpose  of  foreclosure.  Subsequently  the 
mortgage  was  foreclosed  and  the  plaintiff  was  evicted  by  the 
paramount  title  of  the  mortgagee.  This  suit  is  brought  on 
the  several  covenants  of  the  defendant's  deed,  in  bar  to  the  main- 
tenance of  which  the  defendant  has  pleaded  his  discharge. 

1  Cf.  Steele  v.  Lord,  70  N.  Y.  280. 


670  DISCHARGE  OF  CONTRACT.  [Pakt  V. 

The  covenant  against  incumbrances  was  broken  at  the  time  of 
the  conveyance.  The  damages  to  which  the  plaintiff  was  entitled 
were  readily  ascertainable.  If  he  had  paid  the  mortgage  notes, 
the  sum  paid  would  have  been  the  measure  of  damages.  If  the 
incumbrances  had  not  been  removed  and  there  had  been  no  action 
on  the  part  of  the  mortgagee  to  enforce  his  mortgage,  the  plain- 
tiff's damages  would  have  been  nominal.  To  this  covenant,  as  ' 
it  was  broken  before  the  defendant's  bankruptcy,  and  as  the 
plaintiff  might  have  proved  his  claim  for  its  breach,  the  dis- 
charge is  a  bar. 

The  several  covenants  in  a  deed  of  warranty  are  distinct ;  their 
breach  arises  at  different  times ;  is  established  by  proof  of  differ- 
ent facts,  and  damages  thereof  may  be  enforced  by  different  suits 
and  recompensed  by  different  rules  of  assessment.  It  is  obvious 
then  that  what  may  be  a  discharge  of  one  is  not  necessarily  that 
of  another  and  distinct  covenant. 

The  breach  of  the  other  covenants  was  long  after  the  discharge 
in  bankruptcy.  So  far  as  the  claims  now  in  suit  could  have  been 
proved  and  the  plaintiff  have  received  his  dividends  upon  their 
proof,  the  discharge  is  a  bar,  and  no  farther. 

The  defendant,  to  show  that  they  might  have  been  proved, 
relies  on  the  sixth  section  of  the  Bankrupt  Act,  by  which  persons 
having  uncertain  and  contingent  demands  are  permitted  to  come 
in  and  prove  such  debts  or  claims. 

The  meaning  of  the  phrase  "contingent  demand,"  and  the  cor- 
responding expression  in  the  English  bankrupt  law,  *'  debt  pay- 
able upon  a  contingency,"  has  been  definitely  settled  by  repeated 
adjudications  in  this  and  in  other  States,  as  well  as  b}'^  the 
English  courts.  In  Woodard  v.  Herbert  (24  Maine,  360)  the 
distinction  between  a  contingent  demand  and  a  contingency 
whether  there  ever  would  be  a  demand,  was  recognized  and 
adopted.  "The  contingent  or  uncertain  demands  provided  for," 
says  Shepley,  J.,  "in  the  act  of  Congress,  are  the  contingent 
demands,  which  were  in  existence  as  such,  and  in  a  condition 
that  their  value  could  be  estimated  at  the  time  when  the  party 
was  decreed  a  bankrupt."  The  same  construction  was  reaffirmed 
in  Ellis  V.  Ham,  28  Maine,  385,  and  in  Dole  v.  Warren,  32  Maine, 
94.     In  Ooss  V.  Gibson  (8  Humph.  199)  it  was  held  that  a  dis- 


Chap.  V.  §  3.]  BY  OPERATION   OF  LAW.  671 

charge  in  bankruptcy  would  not  relieve  one  surety  from  the  claim 
of  another  surety  who  had  paid  money  for  the  principal  after  the 
decree.  "  At  the  time  these  defendants  were  declared  bankrupts," 
says  Green,  J.,  "the  complainant  had  no  debt  or  demand  against 
them.  The  complainant  had  no  demand  that  could  be  proved  at 
the  time  the  defendants  were  declared  bankrupts.  The  possi- 
bility of  the  demand  that  now  exists  was  incapable  of  valuation." 
It  was  decided  in  Cake  v.  Lewis  (8  Barr.  493)  that  the  liability 
of  a  principal  to  his  guarantee  was  not  discharged  by  bankruptcy. 
In  Boorman  v.  Nash  (9  B.  &  C.  145)  the  defendant,  who  had  con- 
tracted for  a  certain  quantity  of  oil  to  be  delivered  to  him  at  a 
future  day  at  a  certain  price,  became  bankrupt  before  the  day 
arrived  and  obtained  his  certificate.  "  The  right  of  the  plain- 
tiff," says  Lord  Tenterden,  "to  maintain  this  action,  depends 
upon  the  question  whether  he  could  or  could  not  have  proved  his 
demand  under  the  commission  of  bankrupt  issued  against  the 
defendant.  It  appears  to  us  impossible  that  he  should  so  prove 
it;  for  at  the  time  when  the  commission  issued,  it  was  uncertain 
not  only  what  amount  of  damage,  but  whether  any  damage  would 
be  sustained."  A  similar  decision  was  made  in  Woolley  v.  Smith, 
54  E.  C.  L.  610. 

In  Thompson  v.  Thompson  (2  Scott,  266)  it  was  decided  that 
the  instalments  of  an  annuity,  for  the  payment  of  which  a  surety 
expressly  covenanted  in  default  of  the  grantor,  are  not  provable 
under  a  Jiat  against  the  surety,  when  such  instalments  do  not 
become  due  until  after  the  bankruptcy  of  the  surety.  "Before 
the  days  of  payment  arrive,"  said  Tindal,  C.  J.,  in  delivering 
his  opinion,  "these  instalments  are  not  only  no  debt,  but  can 
never  become  a  debt  from  the  surety,  except  in  the  event  that 
the  grantor  of  the  annuity  shall  make  default  in  such  payments. 
The  value  of  such  a  contingency  it  is  impossible  to  calculate. 
Ex  parte  Davies,  1  Dea.  115 ;  Toppin  v.  Field,  4  Ad.  &  El.  N.  S. 
387;  Hinton  v.  Acraman,  2  Man.,  Gran.  &  Scott,  369. 

In  the  South  Staffordshire  Railway  Co.  v.  Burnside  (2  Eng.  Law 
and  Eq.  418)  the  holder  of  shares  in  a  corporation,  who  became 
bankrupt,  and  received  his  certificate,  was  held  not  to  be  dis- 
charged from  his  liability  for  subsequent  calls. 

In  Hankin  v.  Bennett  (14  Eng.  Law  and  Eq.  403)  the  defendant 


672  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

executed  a  bond,  whereby  he  became  liable  as  surety  to  pay  the 
plaintiff  such  costs  as  the  plaintiff  should  in  due  course  of  law  be 
liable  to  pay  in  case  a  verdict  should  pass  for  certain  defendants 
in  an  action  of  scire  facias,  in  which  the  now  plaintiff  sued  as  a 
nominal  party.  "We  think,  however,"  says  Martin,  B.,  "this 
liability  was  not  a  debt  at  all  within  the  meaning  of  the  section. 
It  was  a  contract  to  indemnify  a  nominal  plaintiff  whose  name 
was  used  by  a  third  person,  against  such  costs  as  the  plaintiff 
would  become  liable  to  pay  if  the  defendants  should  obtain  judg- 
ment in  their  favor.  It  seems  to  us  impossible  to  consider  that 
this  is  a  debt.  It  is  a  contingent  liability,  but  not  a  contin- 
gent debt." 

The  plaintiff  could  not  have  proved  any  claim  for  breach  of  the 
covenant,  that  the  defendant  would  warrant  and  defend  the 
premises  against  the  lawful  claims  and  demands  of  all  persons, 
for  it  had  not  been  broken.  Whether  there  were  any  such  claims 
and  demands  outstanding,  and  whether  they  embraced  the  whole 
or  a  part  of  the  premises  conveyed,  was  uncertain.  If  any  such 
existed,  their  enforcement  was  dependent  on  the  will  of  those 
having  such  claims.  The  plaintiff  could  not  have  presented  any 
present  claiyi  or  existing  demand.  The  possibility  that  one 
might  arise  is  not  enough.  In  all  sales  of  personal  property  the 
title  of  the  vendee  may  be  defeated  by  adverse  and  superior 
rights.  In  such  sales  there  may  be  a  breach  of  the  implied 
warranty  of  title  by  subsequent  eviction.  The  vendee  of  real  or 
personal  property,  in  the  undisturbed  enjoyment  of  his  purchase 
and  without  any  breach  of  the  covenants,  express  or  implied,  of 
his  vendor,  can  hardly  be  considered  as  having  a  contingent 
claim,  because  of  the  possibility  that  some  unknown  claimant 
may  at  some  indefinitely  remote  period  of  time  interpose  a 
superior  title,  by  means  of  which  he  may  be  deprived  of  the 
property  purchased.  If  the  unbroken  covenants  of  a  deed,  or  the 
possible  breach  of  the  implied  warranty  of  title  in  sales  of  per- 
sonal property,  were  to  be  deemed  claims  within  the  statute,  then 
every  grantee  or  vendee  might  present  his  claim  before  the  com- 
missioner, and  the  estate  of  the  bankrupt  would  remain  unadjusted 
till  all  possibility  of  a  breach  should  be  barred  by  the  statute  of 
limitations,  for  it  could  not  before  such  time  be  known  that  they 


Chap.  V.  §  3.]  BY  OPERATION  OF  LAW.  673 

might  not  arise.  Such  a  position  would  be  entirely  at  variance 
with  the  provision  of  section  10,  which  requires  that  all  proceed- 
ings in  bankruptcy  shall  be  brought  to  a  close  within  two  years 
after  the  decree  declaring  the  bankruptcy,  if  practicable,  for  it 
would  lead  to  an  indefinite  postponement  of  the  settlement  of 
estates.  It  was  adjudged  in  Bennett  v.  Bartlett  (6  Cush.  225),  in 
relation  to  personal  property,  that  a  discharge  in  bankruptcy  was 
no  bar  to  the  creditor's  right  of  action  against  the  debtor,  on  the 
implied  warranty  of  title,  when  the  breach  occurred  after  such 
discharge.  The  reasoning  of  the  court  in  that  case  is  equally 
applicable  to  the  case  at  bar. 

The  result  is,  that  the  discharge  affords  no  defense,  except  as 
to  the  covenant  against  incumbrances,  which  alone  could  have 
been  proved. 

Defendant  defaulted.^ 

1  For  constitutional  limitations  on  discharge  in  bankruptcy  see  next 
chapter,  pp.  674-686. 


674  DISCHARGE  OF  CONTRACT.  [Part  V. 


CHAPTER  VI. 

IMPAIRMENT   OF   OBLIGATION   OF   CONTRACT  BY   STATUTE. 

"  No  State  shall  .  .  .  pass  any  .  .  .  law  impairing  the  obligation  of  con- 
tracts."^ Constitution  oj"  the  United  States,  art.  I.  sec.  10.  Similar  pro- 
Tisions  are  found  in  the  constitutions  of  most  of  the  States.  See  Stimson'f 
Am.  St.  Law,  §  393. 

§  1.   Statutes  discharging  the  obligation  of  contracts. 

(i.)  Discharge  under  bankruptcy  statutes. 

a.    As  to  antecedent  debts. 

STURGES  V.   CROWNINSHIELD. 

4  WHEATON   (U.   S.),   122.  — 1819. 

Assumpsit  against  defendant  as  maker  of  two  promissory  notes^ 
both  dated  at  New  York  on  March  22,  1811,  and  payable  one  on 
August  1,  and  one  on  August  15,  1811.  Defense,  discharge  in 
bankruptcy  under  an  act  of  the  State  of  New  York  of  April  3, 
1811.  Demurrer  to  plea.  The  judges  at  circuit  were  divided  in 
opinion,  and  the  cause  was  certified  to  the  Supreme  Court  for 
decision. 

Mr.  Chief  Justice  Marshall.  .  .  .  We  proceed  to  the  great 
question  on  which  the  cause  must  depend.  Does  the  law  of  New 
York,  which  is  pleaded  in  this  case,  impair  the  obligation  of  con- 
tracts, within  the  meaning  of  the  Constitution  of  the  United 
States? 

1  This  provision  does  not  bind  the  Congress  of  the  United  States.  Legal 
Tender  Cases,  12  Wall.  457  ;  Juilliard  v.  Greenman,  110  U.  S.  421.  An  act 
of  the  Canadian  Parliament  impairing  the  obUgation  of  contracts  will  be 
enforced  in  the  courts  of  the  United  States.  Canada  Southern  By.  Co.  v. 
Qebhard,  109  U.  S.  527.  A  judicial  decision  altering  a  construction  fixed  by 
a  previous  decision  would  seem  to  be  within  the  prohibition  as  to  antecedent 
contracts.     Gelpcke  v.  City  of  Dubuque,  1  Wall.  176,  206. 


Chap.  VI.  §  1.]  CONSTITUTIONAL  PROHIBITIONS.  675 

This  act  liberates  the  person  of  the  debtor  and  discharges  him 
from  all  liability  for  any  debt  previously  contracted  on  his  sur- 
rendering his  property  in  the  manner  it  prescribes. 

In  discussing  the  question  whether  a  State  is  prohibited  from 
passing  such  a  law  as  this,  our  first  inquiry  is  into  the  meaning 
of  words  in  common  use, — what  is  the  obligation  of  a  contract? 
and  what  will  impair  it? 

It  would  seem  difficult  to  substitute  words  which  are  more  in- 
telligible, or  less  liable  to  misconstruction,  than  those  which  are  to 
be  explained.  A  contract  is  an  agreement  in  which  a  party  under- 
takes to  do  or  not  to  do  a  particular  thing.  The  law  binds  him 
to  perform  his  undertaking,  and  this  is,  of  course,  the  obligation 
of  his  contract.  In  the  case  at  bar,  the  defendant  has  given  his 
promissory  note  to  pay  the  plaintiff  a  sum  of  money  on  or  before 
a  certain  day.  The  contract  binds  him  to  pay  that  sum  on  that 
day ;  and  this  is  its  obligation.  Any  law  which  releases  a  part 
of  this  obligation,  must,  in  the  literal  sense  of  the  word,  impair 
it.  Much  more  must  a  law  impair  it  which  makes  it  totally 
invalid,  and  entirely  discharges  it. 

The  words  of  the  constitution,  then,  are  express,  and  incapable 
of  being  misunderstood.  They  admit  of  no  variety  of  construc- 
tion, and  are  acknowledged  to  apply  to  that  species  of  contract, 
an  engagement  between  man  and  man  for  the  payment  of  money, 
which  has  been  entered  into  by  these  parties.  Yet  the  opinion 
that  this  law  is  not  within  the  prohibition  of  the  constitution  has 
been  entertained  by  those  who  are  entitled  to  great  respect,  and 
has  been  supported  by  arguments  which  deserve  to  be  seriously 
considered. 

It  has  been  contended,  that  as  a  contract  can  only  bind  a  man 
to  pay  to  the  full  extent  of  his  property,  it  is  an  implied  condi- 
tion that  he  may  be  discharged  on  surrendering  the  whole  of  it. 

But  it  is  not  true  that  the  parties  have  in  view  only  the  prop- 
erty in  possession  when  the  contract  is  formed,  or  that  its  obliga- 
tion does  not  extend  to  future  acquisitions.  Industry,  talents, 
and  integrity  constitute  a  fund  which  is  as  confidently  trusted  as 
property  itself.  Future  acquisitions  are,  therefore,  liable  for 
contracts;  and  to  release  them  from  this  liability  impairs  their 
obligation. 


676  DISCHARGE  OF  CONTRACT.  [Part  V. 

It  has  been  argued,  that  the  States  are  not  prohibited  from 
passing  bankrupt  laws,  and  that  the  essential  principle  of  such 
laws  is  to  discharge  the  bankrupt  from  all  past  obligations ;  that 
the  States  have  been  in  the  constant  practice  of  passing  insolvent 
laws,  such  as  that  of  New  York,  and  if  the  framers  of  the  Consti- 
tution had  intended  to  deprive  them  of  this  power,  insolvent 
laws  would  have  been  mentioned  in  the  prohibition;  that  the 
prevailing  evil  of  the  times,  which  produced  this  clause  in  the 
Constitution,  was  the  practice  of  emitting  paper  money,  of  making 
property  which  was  useless  to  the  creditor  a  discharge  of  his  debt, 
and  of  changing  the  time  of  payment  by  authorizing  distant 
instalments.  Laws  of  this  description,  not  insolvent  laws,  con- 
stituted, it  is  said,  the  mischief  to  be  remedied;  and  the  laws  of 
this  description,  not  insolvent  laws,  are  within  the  true  spirit 
of  the  prohibition. 

The  Constitution  does  not  grant  to  the  States  the  power  of 
passing  bankrupt  laws,  or  any  other  power;  but  finds  them  in 
possession  of  it,  and  may  either  prohibit  its  future  exercise 
entirely,  or  restrain  it  so  far  as  national  policy  may  require.  It 
has  so  far  restrained  it  as  to  prohibit  the  passage  of  any  law 
impairing  the  obligation  of  contracts.  Although,  then,  the  States 
may,  until  that  power  shall  be  exercised  by  Congress,  pass  laws 
concerning  bankrupts,  yet  they  cannot  constitutionally  introduce 
into  such  laws  a  clause  which  discharges  the  obligations  the 
bankrupt  has  entered  into.  It  is  not  admitted  that,  without  this 
principle,  an  act  cannot  be  a  bankrupt  law;  and  if  it  were,  that 
admission  would  not  change  the  Constitution,  nor  exempt  such 
acts  from  its  prohibitions. 

The  argument  drawn  from  the  omission  in  the  Constitution  to 
prohibit  the  States  from  passing  insolvent  laws,  admits  of  several 
satisfactory  answers.  It  was  not  necessary,  nor  would  it  have 
been  safe,  had  it  even  been  the  intention  of  the  framers  of  the 
Constitution  to  prohibit  the  passage  of  all  insolvent  laws,  to 
enumerate  particular  subjects  to  which  the  principle  they  intended 
to  establish  should  apply.  The  principle  was  the  inviolability  of 
contracts.  This  principle  was  to  be  protected  in  whatsoever  form 
it  might  be  assailed.  To  what  purpose  enumerate  the  particular 
modes   of  violation   which   should   be   forbidden,   when   it  was 


Chap.  VI.  §  1.]  CONSTITUTIONAL  PROHIBITIONS.  '  677 

intended  to  forbid  all?  Had  an  enumeration  of  all  the  laws 
which  might  violate  contracts  been  attempted,  the  provision  must 
have  been  less  complete,  and  involved  in  more  perplexity  than  it 
now  is.  The  plain  and  simple  declaration,  that  no  State  shall 
pass  any  law  impairing  the  obligation  of  contracts,  includes 
insolvent  laws  and  all  other  laws,  so  far  as  they  infringe  the 
principle  the  Convention  intended  to  hold  sacred,  and  no  further. 

But  a  still  more  satisfactory  answer  to  this  argument  is,  that 
the  Convention  did  not  intend  to  prohibit  the  passage  of  all 
insolvent  laws.  To  punish  honest  insolvency  by  imprisonment 
for  life,  and  to  make  this  a  constitutional  principle,  would  be  an 
excess  of  inhumanity  which  will  not  readily  be  imputed  to  the 
illustrious  patriots  who  framed  our  Constitution,  nor  to  the  people 
who  adopted  it.  The  distinction  between  the  obligation  of  a 
contract,  and  the  remedy  given  by  the  legislature  to  enforce  that 
obligation,  has  been  taken  at  the  bar,  and  exists  in  the  nature  of 
things.  Without  impairing  the  obligation  of  the  contract,  the 
remedy  may  certainly  be  modified  as  the  wisdom  of  the  nation 
shall  direct.  Confinement  of  the  debtor  may  be  a  punishment  for 
not  performing  his  contract,  or  may  be  allowed  as  a  means  of 
inducing  him  to  perform  it.  But  the  State  may  refuse  to  inflict 
this  punshment,  or  may  withhold  this  means,  and  leave  the  con- 
tract in  full  force.  Imprisonment  is  no  part  of  the  contract,  and 
simply  to  release  the  prisoner  does  not  impair  its  obligation.  No 
argument  can  be  fairly  drawn  from  the  61st  section  of  the  act 
for  establishing  a  uniform  system  of  bankruptcy,  which  militates 
against  this  reasoning.  That  section  declares  that  the  act  shall 
not  be  construed  to  repeal  or  annul  the  laws  of  any  State  then  in 
force  for  the  relief  of  insolvent  debtors,  except  so  far  as  may 
respect  persons  and  cases  clearly  within  its  purview;  and  in  such 
cases  it  affords  its  sanction  to  the  relief  given  by  the  insolvent 
laws  of  the  State,  if  the  creditor  of  the  prisoner  shall  not,  within 
three  months,  proceed  against  him  as  a  bankrupt. 

The  insertion  of  this  section  indicates  an  opinion  in  Congress 
that  insolvent  laws  might  be  considered  as  a  branch  of  the  bank- 
rupt system,  to  be  repealed  or  annulled  by  an  act  for  establishing 
that  system,  although  not  within  its  purview.  It  was  for  that 
reason  only  that  a  provision  against  this  construction  could  be 


678  DISCHARGE  OF  CONTRACT.  [Part  V. 

necessary.  The  last  member  of  the  section  adopts  the  provisions 
of  the  State  laws  so  far  as  they  apply  to  cases  within  the  purview 
of  the  act. 

This  section  certainly  attempts  no  construction  of  the  Constitu- 
tion, nor  does  it  suppose  any  provision  in  the  insolvent  laws 
impairing  the  obligation  of  contracts.  It  leaves  them  to  operate, 
so  far  as  constitutionally  they  may,  unaffected  by  the  act  of  Con- 
gress, except  where  that  act  may  apply  to  individual  cases. 

The  argument  which  has  been  pressed  most  earnestly  at  the 
bar,  is,  that  although  all  legislative  acts  which  discharge  the 
obligation  of  a  contract  without  performance,  are  within  the  very 
words  of  the  Constitution,  yet  an  insolvent  act,  containing  this 
principle,  is  not  within  its  spirit,  because  such  acts  have  been 
passed  by  colonial  and  state  legislatures  from  the  first  settlement 
of  the  country,  and  because  we  know  from  the  history  of  the 
times,  that  the  mind  of  the  Convention  was  directed  to  other 
laws  which  were  fraudulent  in  their  character,  which  enabled  the 
debtor  to  escape  from  his  obligation,  and  yet  hold  his  property, 
not  to  this,  which  is  beneficial  in  its  operation. 

Before  discussing  this  argument,  it  may  not  be  improper  to 
premise  that,  although  the  spirit  of  an  instrument,  especially  of 
a  constitution,  is  to  be  respected  not  less  than  its  letter,  yet  the 
spirit  is  to  be  collected  chiefly  from  its  words.  It  would  be 
dangerous  in  the  extreme  to  infer  from  extrinsic  circumstances, 
that  a  case  for  which  the  words  of  an  instrument  expressly  pro- 
vide shall  be  exempted  from-  its  operation.  Where  words  conflict 
with  each  other,  where  the  different  clauses  of  an  instrument  bear 
upon  each  other,  and  would  be  inconsistent  unless  the  natural 
and  common  import  of  words  be  varied,  construction  becomes 
necessary,  and  a  departure  from  the  obvious  meaning  of  words  is 
justifiable.  But  if,  in  any  case,  the  plain  meaning  of  a  provision, 
not  contradicted  by  any  other  provision  in  the  same  instrument, 
is  to  be  disregarded,  because  we  believe  the  framers  of  that 
instrument  could  not  intend  what  they  say,  it  must  be  one  in 
which  the  absurdity  and  injustice  of  applying  the  provision  to  the 
case,  would  be  so'  monstrous,  that  all  mankind  would,  without 
hesitation,  unite  in  rejecting  the  application. 

This  is  certainly  not  such  a  case.      It  is  said  the  colonial  and 


Chap.  VI.  §  1.]  CONSTITUTIONAL  PROHIBITIONS.  679 

state  legislatures  have  been  in  the  habit  of  passing  laws  of  this 
description  for  more  than  a  century ;  that  they  have  never  been 
the  subject  of  complaint,  and,  consequently,  could  not  be  within 
the  view  of  the  General  Convention. 

The  fact  is  too  broadly  stated.  The  insolvent  laws  of  many, 
indeed  of  by  far  the  greater  number  of  the  States,  do  not  contain 
this  principle.  They  discharge  the  person  of  the  debtor,  but 
leave  his  obligation  to  pay  in  full  force.  To  this  the  Constitution 
is  not  opposed. 

But,  were  it  even  true  that  this  principle  had  been  introduced 
generally  into  those  laws,  it  would  not  justify  our  varying  the 
construction  of  the  section.  Every  State  in  the  Union,  both 
while  a  colony  and  after  becoming  independent,  had  been  in  the 
practice  of  issuing  paper  money;  yet  this  practice  is  in  terms 
prohibited.  If  the  long  exercise  of  the  power  to  emit  bills  of 
credit  did  not  restrain  the  Convention  from  prohibiting  its  future 
exercise,  neither  can  it  be  said  that  the  long  exercise  of  the  power 
t(j  impair  the  obligation  of  contracts  should  prevent  a  similar 
prohibition.  It  is  not  admitted  that  the  prohibition  is  more 
express  in  one  case  than  in  the  other.  It  does  not  indeed  extend 
to  insolvent  laws  by  name,  because  it  is  not  a  law  by  name,  but  a 
principle  which  is  to  be  forbidden ;  and  this  principle  is  described 
in  as  appropriate  terms  as  our  language  affords. 

Neither,  as  we  conceive,  will  any  admissible  rule  of  construc- 
tion justify  us  in  limiting  the  prohibition  under  consideration,  to 
the  particular  laws  which  have  been  described  at  the  bar,  and 
which  furnished  such  cause  for  general  alarm.  What  were 
those  laws? 

We  are  told  they  were  such  as  grew  out  of  the  general  distress 
following  the  war  in  which  our  independence  was  established. 
To  relieve  this  distress,  paper  money  was  issued,  worthless  lands, 
and  other  property  of  no  use  to  the  creditor,  were  made  a  tender 
in  payment  of  debts ;  and  the  time  of  payment  stipulated  in  the 
contract  was  extended  by  law.  These  were  the  peculiar  evils  of 
the  day.  So  much  mischief  was  done,  and  so  much  more  was 
apprehended,  that  general  distrust  prevailed,  and  all  confidence 
between  man  and  man  was  destroyed.  To  laws  of  this  descrip- 
tion, therefore,  it  is  said,  the  prohibition  to  pass  laws  impairing 
the  obligation  of  contracts  ought  to  be  confined. 


680  DISCHARGE  OF  CONTRACT.  [Part  V. 

Let  this  argument  be  tried  by  tbe  words  of  the  section  under 
consideration. 

Was  this  general  prohibition  intended  to  prevent  paper  money? 
We  are  not  allowed  to  say  so,  because  it  is  expressly  provided, 
that  no  State  shall  "emit  bills  of  credit;"  neither  could  these 
words  be  intended  to  restrain  the  States  from  enabling  debtors  to 
discharge  their  debts  by  the  tender  of  property  of  no  real  value  to 
the  creditor,  because  for  that  subject  also  particular  provision  is 
made.  Nothing  but  gold  and  silver  coin  can  be  made  a  tender  in 
payment  of  debts. 

It  remains  to  inquire,  whether  the  prohibition  under  considera- 
tion could  be  intended  for  the  single  case  of  a  law  directing  that 
judgments  should  be  carried  into  execution  by  instalments? 

This  question  will  scarcely  admit  of  discussion.  If  this  was 
the  only  remaining  mischief  against  which  the  Constitution 
intended  to  provide,  it  would  undoubtedly  have  been,  like  paper 
money  and  tender  laws,  expressly  forbidden.  At  any  rate,  terms 
more  directly  applicable  to  the  subject,  more  appropriately 
expressing  the  intention  of  the  Convention,  would  have  been 
used.  It  seems  scarcely  possible  to  suppose  that  the  framers  of 
the  Constitution,  if  intending  to  prohibit  only  laws  authorizing 
the  payment  of  debts  by  instalment,  would  have  expressed  that 
intention  by  saying  "no  State  shall  pass  any  law  impairing  the 
obligation  of  contracts."  No  men  would  so  express  such  an 
intention.  No  men  would  use  terms  embracing  a  whole  class  of 
laws,  for  the  purpose  of  designating  a  single  individual  of  that 
class.  No  court  can  be  justified  in  restricting  such  comprehensive 
words  to  a  particular  mischief  to  which  no  allusion  is  made. 

The  fair,  and,  we  think,  the  necessary  construction  of  the  sen- 
tence, requires  that  we  should  give  these  words  their  full  and 
obvious  meaning.  A  general  dissatisfaction  with  that  lax  system 
of  legislation  which  followed  the  war  of  our  revolution  un- 
doubtedly directed  the  mind  of  the  Convention  to  this  subject. 
It  is  probable  that  laws  such  as  those  which  have  been  stated  in 
argument,  produced  the  loudest  complaints,  were  most  immedi- 
ately felt.  The  attention  of  the  Convention,  therefore,  was  par- 
ticularly directed  to  paper  money,  and  to  acts  which  enabled  the 
debtor  to  discharge  his  debt,  otherwise  than  was  stipulated  in  the 


Chap.  VI.  §  1.]  CONSTITUTIONAL  PROHIBITIONS.  681 

contract.  Had  nothing  more  been  intended,  nothing  more  would 
have  been  expressed.  But,  in  the  opinion  of  the  Convention, 
much  more  remained  to  be  done.  The  same  mischief  might  be 
effected  by  other  means.  To  restore  public  confidence  completely 
it  was  necessary  not  only  to  prohibit  the  use  of  the  particular 
means  by  which  it  might  be  effected,  but  to  prohibit  the  use  of 
any  means  by  which  the  same  mischief  might  be  produced.  The 
Convention  appears  to  have  intended  to  establish  a  great  principle, 
that  contracts  should  be  inviolable.  The  Constitution,  therefore, 
declares,  that  no  State  shall  pass  "any  law  impairing  the  obliga- 
tion of  contracts." 

If,  as  we  think,  it  must  be  admitted  that  this  intention  might 
actuate  the  Convention;  that  it  is  not  only  consistent  with,  but 
is  apparently  manifested  by,  all  that  part  of  the  section  which 
respects  this  subject;  that  the  words  used  are  well  adapted  to  the 
expression  of  it ;  that  violence  would  be  done  to  their  plain  mean- 
ing by  understanding  them  in  a  more  limited  sense ;  those  mlea 
of  construction,  which  have  been  consecrated  by  the  wisdom  of 
ages,  compel  us  to  say,  that  these  words  prohibit  the  passage  of 
any  law  discharging  a  contract  without  performance. 

By  way  of  analogy,  the  statutes  of  limitations,  and  against, 
usury,  have  been  referred  to  in  argument;  and  it  has  been  sup- 
posed that  the  construction  of  the  Constitution,  which  this  opin- 
ion maintains,  would  apply  to  them  also,  and  must  therefore  be 
too  extensive  to  be  correct. 

We  do  not  think  so.  Statutes  of  limitations  relate  to  the 
remedies  which  are  furnished  in  the  courts.  They  rather  estab- 
lish that  certain  circumstances  shall  amount  to  evidence  that  a 
contract  has  been  performed,  than  dispense  with  its  performance. 
If,  in  a  State  where  six  years  may  be  pleaded  in  bar  to  an  action 
of  assumpsit,  a  law  should  pass  declaring  that  contracts  already 
in  existence,  not  barred  by  the  statute,  should  be  construed  to  be 
within  it,  there  could  be  little  doubt  of  its  unconstitutionality. 

So  with  respect  to  the  laws  against  usury.  If  the  law  be,  that 
no  person  shall  take  more  than  six  per  centum  per  annum  for  the 
use  of  money,  and  that,  if  more  be  reserved,  the  contract  shall  be 
void,  a  contract  made  thereafter,  reserving  seven  per  cent,  would. 
have  no  obligation  in  its  commencement;   but  if  a  law  should 


682  DISCHARGE  OF  CONTRACT.  [Part  V. 

declare  that  contracts  already  entered  into  and  reserving  the  legal 
interest,  should  be  usurious  and  void,  either  in  the  whole  or  in 
part,  it  would  impair  the  obligation  of  the  contract,  and  would  be 
clearly  unconstitutional. 

This  opinion  is  confined  to  the  case  actually  under  considera- 
tion. It  is  confined  to  a  case  in  which  a  creditor  sues  in  a  court, 
the  proceedings  of  which  the  legislature,  whose  act  is  pleaded,  had 
not  a  right  to  control,  and  to  a  case  where  the  creditor  had  not 
proceeded  to  execution  against  the  body  of  his  debtor,  within  the 
State  whose  law  attempts  to  absolve  a  confined  insolvent  debtor 
from  his  obligation.  When  such  a  case  arises,  it  will  be  con- 
sidered. 

It  is  the  opinion  of  the  court,  that  the  act  of  the  State  of  New 
York,  which  is  pleaded  by  the  defendant  in  this  cause,  so  far  as 
it  attempts  to  discharge  this  defendant  from  the  debt  in  the 
declaration  mentioned,  is  contrary  to  the  Constitution  of  the 
United  States,  and  that  the  plea  is  no  bar  to  the  action. 

Certificate.  This  cause  came  on  to  be  heard  on  the  transcript 
of  the  record  of  the  Circuit  Court  of  the  United  States,  for  the 
first  circuit,  and  the  district  of  Massachusetts,  and  on  the  ques- 
tions on  which  the  judges  of  that  court  were  divided  in  opinion, 
and  was  argued  by  counsel.  On  consideration  whereof,  this  court 
is  of  opinion,  that,  since  the  adoption  of  the  Constitution  of  the 
United  States,  a  State  has  authority  to  pass  a  bankrupt  law, 
provided  such  law  does  not  impair  the  obligation  of  contracts, 
within  the  meaning  of  the  Constitution,  and  provided  there  be  no 
act  of  Congress  in  force  to  establish  a  uniform  system  of  bank- 
ruptcy, conflicting  with  such  law. 

This  court  is  further  of  opinion,  that  the  act  of  New  York, 
which  is  pleaded  in  this  case,  so  far  as  it  attempts  to  discharge 
the  contract  on  which  this  suit  was  instituted,  is  a  law  impairing 
the  obligation  of  contracts  within  the  meaning  of  the  Constitu- 
tion of  the  United  States,  and  that  the  plea  of  the  defendant  is 
not  a  good  and  sufficient  bar  of  the  plaintiff's  action. 

All  which  is  directed  to  be  certified  to  the  said  Circuit  Court.  ^ 

^  See  also  Ogden  v.  Saunders,  12  Wheat.  213 ;  Baldwin  v.  Hale,  1  Wall. 
223. 


Chap.  VI.  §  1.]  CONSTITUTIONAL  PROHIBITIONS.  683 

ROOSEVELT  v.   CEBRA  et  cU. 

17  JOHNSON    (N.Y.),   108.— 1819. 

The  plaintiff,  on  February  8,  1811,  obtained  judgment  against 
defendants  for  $3033.19;  on  June  24,  1811,  defendant  Cebra  was 
regularly  discharged  under  the  bankruptcy  act  of  April  3,  1811. 
No  execution  was  issued  until  April,  1819,  when  a  motion  was 
made  in  behalf  of  defendant  Cebra  to  set  aside  the  execution.  At 
the  time  of  making  the  contract  on  which  judgment  was  had  both 
parties  were  residents  of  New  York,  and  have  so  remained. 

Per  Curiam.  We  have  considered  this  case  since  the  last 
term.  As  the  contract  on  which  the  judgment  was  founded  was 
made  prior  to  the  passing  of  the  insolvent  act  of  the  3d  of  April, 
1811,  we  cannot  distinguish  it  from  the  case  of  Sturges  v.  Croivn- 
inshield  (4  Wheat.  122)  decided  by  the  Supreme  Court  of  the 
United  States.  The  motion  to  set  aside  the  execution  must, 
therefore,  be  denied.  Without  entering  into  a  further  discussion 
of  the  question,  we  shall  content  ourselves  with  referring  to  the 
opinion  of  this  court,  in  the  case  of  Mather  v.  Bush  (16  Johns. 
233)  at  the  last  term,  and  with  expressing  our  regret  at  the 
injurious  consequences  which  must  result  from  a  decision  which 
we  have  been  compelled  to  pronounce,  in  obedience  to  the  Consti- 
tution of  the  United  States,  and  what  is  now  the  law  of  the  land. 

Motion  denied. 


6.    As  to  foreign  creditors. 
GILMAN  V.   LOCKWOOD. 

4  WALLACE   (U.   S.),  409.  — 1866. 

Error  to  the  Circuit  Court  of  the  United  States  for  the  district 
of  Wisconsin. 

Mr.  Justice  Clifford.  Amended  plea  of  the  defendant 
admitted,  as  the  declaration  alleged,  that  the  plaintiff,  when  the 
note  was  made  and  delivered,  was  a  citizen  of  the  State  of  New 
York ;  and  that  the  defendant  was  a  citizen  of  the  State  of  Wis- 


684  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

cousin,  where  the  note  is  dated  and  was  executed.  Action  was 
assumpsit  to  recover  the  amount  of  a  certain  promissory  note, 
described  in  the  notice  of  claim  annexed  to  the  declaration. 
Defendant  pleaded  his  discharge  in  insolvency  from  all  his  debts, 
prior  to  the  commencement  of  the  action,  under  the  insolvent 
laws  of  the  State  where  he  resides,  and  where  the  contract  was 
executed  between  the  parties.  Plaintiff  demurred  specially  to 
the  plea,  and  the  defendant  joined  in  demurrer. 

Causes  of  demurrer  shown  were : 

First.     That  the  plea  tendered  an  immaterial  issue. 

Second.  That  the  insolvent  court  exceeded  its  jurisdiction  in 
attempting  to  determine  the  rights  of  the  plaintiff  under  this  con- 
tract, as  he  was  a  citizen  of  another  State,  and  never  became  a 
party  to  the  proceedings  in  insolvency. 

Third.  That  the  discharge  in  insolvency  set  up  in  defendant's 
plea  is  nugatory,  because  the  insolvent  law  of  the  State  as  to  the 
plaintiff  is  unconstitutional  and  void. 

Circuit  Court  overruled  the  demurrer  and  rendered  judgment 
for  the  defendant;  whereupon  the  plaintiff  sued  out  this  writ  of 
error  and  removed  the  cause  into  this  court. 

State  legislatures  may  pass  insolvent  laws,  provided  there  be 
no  act  of  Congress  establishing  a  uniform  system  of  bankruptcy 
conflicting  with  their  provisions,  and  provided  that  the  law  itself 
be  so  framed  that  it  does  not  impair  the  obligation  of  contracts. 
Certificates  of  discharge,  however,  granted  under  such  a  law,  can- 
not be  pleaded  in  bar  of  an  action  brought  by  a  citizen  of  another 
State  in  the  courts  of  the  United  States,  or  of  any  other  State 
than  that  where  the  discharge  was  obtained,  unless  it  appear  that 
the  plaintiff  proved  his  debt  against  the  defendant's  estate  in 
insolvency,  or  in  some  manner  became  a  party  to  the  proceed- 
ings. Insolvent  laws  of  one  State  cannot  discharge  the  contracts 
of  citizens  of  other  States ;  because  such  laws  have  no  extra  terri- 
torial operation,  and  consequently  the  tribunal  sitting  under 
them,  unless  in  cases  where  a  citizen  of  such  other  State  volun- 
tarily becomes  a  party  to  the  proceedings,  has  no  jurisdiction  of 
the  case.  Baldwin  v.  Hale,  1  Wallace,  223;  Baldwin  v.  Bank  of 
Newbury,  Id.  234. 

Unquestionably,  the  decision  in  those  cases  controls  the  present 


Chap.  VI.  §  1.]  CONSTITUTIONAL  PROHIBITIONS.  685 

case,  and  renders  further  remarks  upon  the  subject  unnecessary. 
Demurrer  should  have  been  sustained. 

Judgment   reversed  with  costs,  and  the  cause  remanded  for 
further  proceedings  in  conformity  to  the  opinion  of  this  court.  ^ 


GUERNSEY  v.  WOOD. 

130  MASSACHUSETTS,  503.— 1881. 

Contract  for  goods  sold  and  delivered.  Answer,  certificate  of 
discharge  under  the  insolvent  law  of  Massachusetts.  Certificate 
of  discharge  ruled  no  bar  to  the  action,  and  judgment  for  plaintiff. 

Plaintiff  was  a  citizen  of  Pennsylvania,  doing  business  in 
Massachusetts  under  the  name  of  the  Somerville  Flour  Mills. 
Plaintiff's  brother,  a  citizen  of  Massachusetts,  was  in  sole  charge 
of  the  Massachusetts  business.  Defendant  was  ignorant  that  the 
business  belonged  to  plaintiff,  and  supposed  that  it  belonged  to 
plaintiff's  brother  as  principal.  Defendant  contends  that  as  he 
and  the  person  from  whom  he  bought  the  goods  were  both  citizens 
of  Massachusetts,  and  the  contract  was  to  be  performed  in  Massa- 
chusetts, the  discharge  would  have  barred  an  action  as  to  that 
person  and  should  bar  this  action  as  to  the  undisclosed  principal. 

Gray,  C.  J.  The  plaintiff,  at  the  time  of  the  making  of  the 
contract  sued  on,  and  ever  since,  was  a  citizen  of  another  State. 
The  contract  being  in  fact  made  by  his  agent  in  his  behalf,  he 
had  the  right  to  sue  thereon.  Of  that  right  he  cannot  be 
deprived  by  the  insolvent  law  of  this  commonwealth  without  his 
consent.  He  does  not  give  such  consent  by  the  making  of  a  con- 
tract in  this  commonwealth,  either  by  himself  or  through  an 
agent,  even  if  the  contract  is  to  be  performed  here.  He  is  not 
shown  to  have  taken  any  part  in  the  proceedings  under  the 
insolvent  law.  The  fact  that  the  certificate  of  discharge  obtained 
by  the  defendant  under  that  law  might  have  been  pleaded  in  bar 
of  an  action  brought  by  the  agent,  who  was  a  citizen  of  this 
commonwealth,  cannot  make  it  available  in  this  action  brought 

1  Cf.  Denny  v.  Bennett,  128  U.  S.  489. 


686  DISCHARGE  OF  CONTRACT.  [Part  V. 

by  the  principal,  who  is  not  a  citizen  of  this  commonwealth  and 

who  is  not  bound  by  that  law.     Baldwin  v.  Hale,  1  Wall.  223; 

Baldwin  v.  Bank  of  Newbury,  1  Wall.  234;   Kelley  v.  Drury,  9 

Allen,  27;  Ilsley  v.  Merriam,  7  Cush.  242;  Fessenden  v.  Willey, 

2  Allen,  67. 

Exceptions  overruled. 


(tt.)  Discharge  under  stattttes  imposing  new  conditions. 
ROBIXSON   et  al.  v.   MAGEE. 

9  CALIFORNIA,   81.  — 1858. 

Burnett,  J.  This  was  an  application  to  the  District  Court  for 
a  mandamus  to  compel  the  defendant,  as  treasurer  of  Calaveras 
County,  to  pay  an  auditor's  warrant,  issued  as  evidence  of  county 
indebtedness,  before  the  passage  of  the  act  of  the  legislature  of 
May  11,  1854,  dividing  that  county,  and  organizing  the  county  of 
Amador.  The  subsequent  act  of  the  legislature,  approved  April 
27,  1855,  provided  that  "  all  persons  holding  orders  or  warrants 
upon  the  treasurer  of  Calaveras  County,  issued  prior  to  the  time 
of  the  organization  of  Amador  County  .  .  .  shall  present  the  same 
to  the  auditor  of  Calaveras  County  for  registry,  on  or  before  the 
1st  day  of  July,  1855 ;  "  and  in  case  any  such  person  should  fail 
to  so  present  his  claim,  he  should  be  forever  thereafter  barred  from 
enforcing  the  payment  thereof,  and  the  same  should  be  deemed 
canceled.  The  warrant  in  this  case  was  issued  to  the  county  judge 
for  one  quarter's  salary,  and  came  to  the  plaintiffs  by  purchase. 
The  warrant  was  presented  within  the  time  limited,  to  the  auditor, 
not  at  his  office,  but  at  the  bar-room  of  a  public  hotel.  The 
auditor  received  the  warrant,  promised  to  register  it,  and  then 
placed  it  with  the  bar-keeper  for  safe  custody,  where  it  remained 
until  after  the  expiration  of  the  time  mentioned  in  the  act,  and 
was  never  registered.  Upon  this  state  of  facts,  which  is  not  dis- 
puted by  either  party,  the  District  Court  refused  the  writ,  and  the 
plaintiffs  appealed. 

The  first  point  made  by  the  plaintiffs  is,  that  the  provision 
requiring  pre-existing  creditors  of  the  county  to  register  their 


Chap.  VI.  §  1.]  CONSTITUTIONAL  PROHIBITIONS.  687 

warrants  on  pain  of  forfeiture  of  their  claims,  is  unconstitutional 
and  void,  because  it  impairs  the  obligation  of  contracts.  The 
Constitution  of  the  United  States  provides  that  "no  State  shall 
pass  any  law  impairing  the  obligation  of  contracts."  The  same 
provision,  in  substance,  is  contained  in  the  Constitution  of  this 
State. 

It  must  be  conceded  that  the  intention  of  the  Constitution  was 
to  secure  great  practical  results.  It  is  equally  true  that  this 
provision  was  intended  to  protect  individuals.  The  powers  of 
government,  among  savage  tribes  of  men,  are  mainly  exerted  to 
protect  the  particular  community  against  other  opposing  com- 
munities. Individual  rights  are  mostly  left  to  individual  pro- 
tection. Wrongs  are  redressed  by  the  person  injured,  or  by  his 
relatives.  But  among  civilized  nations,  the  leading  intent  of 
government  is  to  regulate  and  protect  the  rights  of  the  individual. 
The  individual  surrenders  up  the  natural  rights  of  self -protection, 
and,  in  consideration  of  this  surrender,  he  receives  the  protection 
of  the  State.  Whatever  the  State,  therefore,  binds  itself  to  do, 
or  not  to  do,  must  be  observed.  If  the  constitution  of  the  State 
(as,  for  example,  that  of  Great  Britain)  merely  distributes  and 
classifies,  but  does  not  limit  the  powers  of  government,  then  its 
discretion  is  the  only  measure  of  its  powers.  But  where  a  con- 
stitution limits  the  powers  of  government,  the  State  can  only 
exercise  the  discretion  given.  It  is,  therefore,  the  peculiar  glory 
of  our  Constitution,  that  a  single  individual  can  successfully  resist 
the  claims  of  the  whole  community,  when  he  is  in  the  right. 

The  word  "obligation,"  as  found  in  this  provision,  is  not  used  in 
its  widest  sense.  It  is  the  "  obligation  of  contracts  "  that  cannot 
be  impaired.  The  obligation  of  other  things  than  contracts  is 
not  protected.  A  contract  is  a  voluntary  and  lawful  agreement, 
by  competent  parties,  for  a  good  consideration,  to  do  or  not  to  do 
a  specified  thing.  The  only  end  and  object  of  the  contract  is  the 
doing  or  not  doing  the  particular  thing  mentioned.  The  practical 
result  is  the  only  end  aimed  at  by  the  parties,  and  the  obligation 
of  the  contract  is  the  vital  binding  element  that  secures  this  prac- 
tical consummation. 

If,  then,  the  intention  of  the  Constitution  was  to  secure  great 
practical  results  by  the  protection  granted  to  individuals,  this 


688  DISCHARGE  OF  CONTRACT.  [Pabt  V. 

protection  can  only  consist  in  attaining  the  only  end  contemplated 
by  the  contract  itself.  If  that  end  be  substantially  defeated  by 
the  law,  the  operative  force  of  the  obligation  of  the  contract  is 
impaired.  Any  other  than  practical  and  efficient  protection 
■would  be  idle. 

A  criminal  statute  without  a  penalty,  and  a  civil  right  without 
a  remedy,  never  can  exist  in  the  practical  theory  of  government. 
It  is  not  the  intent  of  government  to  establish  mere  abstract  and 
inoperative  principles.  A  dormant  right,  that  cannot  be  enforced, 
is  no  right  at  all.  To  say  that  the  law  will  give  a  party  a  judg- 
ment, and  yet  refuse  an  execution  to  enforce  it,  is  to  give  him  the 
shadow  and  withhold  the  substance.  Such  a  position  would  be 
like  the  morality  of  the  debtor  who  will  never  deny  the  debtj 
would  pay  it  if  he  had  the  money,  but  never  uses  any  exertion  to 
get  it;  or  like  the  right  of  appeal  only  allowed  to  a  criminal  after 
the  sentence  has  been  executed. 

The  right  and  the  remedy,  in  the  theory  of  all  practical  and 
just  governments,  must  stand  or  fall  together.  To  deny  the  right, 
is  necessarily  to  deny  the  remedy ;  and  to  admit  the  right  and  yet 
deny  the  remedy,  is  to  impair  the  right,  and  to  render  it  either 
partially  or  wholly  inoperative.  It  is  more  consistent  to  deny 
both  the  right  and  the  consequent  remedy,  than  to  admit  the 
right,  and  then,  in  the  face  of  this  admission,  deny  its  inseparable 
incident  —  its  just  result. 

As  the  Constitution  intended  to  prohibit  the  legislature  from 
defeating  a  certain  end,  it  does  not  matter  how,  or  by  what  means, 
or  in  what  manner,  this  end  is  sought  to  be  defeated ;  the  act  is 
equally  unconstitutional.  If  the  purpose  be  defeated,  the  manner 
in  which  it  is  done  is  unimportant,  and  cannot  change  the  sub- 
stantial result.  If,  therefore,  the  act  will  not  allow  the  creditor 
a  judgment;  or,  if  a  judgment  be  allowed,  and  all  means  of 
enforcing  it  be  prohibited,  it  is  still  unconstitutional.  And  if 
both  be  allowed,  but  under  conditions  which  impair  the  right,  it 
is  equally  a  violation  of  this  provision. 

The  obligation  of  a  contract  may  be  impaired  without  being 
entirely  destroyed.  The  last  must  include  the  first,  but  the  first 
does  not  necessarily  include  the  latter.  The  act  can  no  more 
destroy,  than  it  can  impair,  the  obligation  of  a  contract. 


Chap.  VI.  §  1]  CONSTITUTIONAL  PROHIBITIONS.  689 

If  these  views  be  correct,  then  whatever  provision  of  a  statute 
substantially  defeats  the  end  contemplated  by  the  parties  in  mak- 
ing the  contract  must  impair  its  obligation.  And,  to  ascertain  the 
end  contemplated  by  them,  we  must  look  to  the  law  as  it  existed 
at  the  time  when  the  contract  was  made.  All  men  are  presumed  to 
know  the  law ;  and  the  law  then  existing  enters  into,  and  forms  a 
part  of,  the  contract,  without  any  express  stipulation  to  that 
effect.  Parties,  in  entering  into  contracts,  only  expressly  stipu- 
late as  to  matters  that  cannot  appear  without  such  stipulation. 
It  would  be  idle  for  them  to  say,  expressly,  that  they  incorporate 
in  their  agreement  the  law  then  existing. 

As  the  law  enters  into  the  contract,  and  forms  a  part  of  it,  the 
obligation  of  such  contract  must  depend  upon  the  law  existing  at 
the  time  the  contract  was  made.  The  contract  being,  then,  com- 
plete and  operative,  the  legislature  cannot,  by  a  subsequent  act, 
impair  its  obligation  by  requiring  the  performance  of  other  con- 
ditions, not  required  by  the  law  of  the  contract  itself.  The 
rights,  as  well  as  the  intentions,  of  the  parties  are  fixed  and 
ascertained  by  the  existing  law.  Therefore,  to  require  the  per- 
formance of  other  conditions  to  make  the  contract  operatiye,  is 
to  impair  its  obligation.  The  power  to  impose  conditions,  after 
the  contract  is  once  complete  and  perfect,  is  nothing  but  the 
power  to  impair  its  obligation,  and  this  the  Constitution  has 
prohibited. 

It  would  be  impracticable  to  review  the  numerous  decisions 
of  the  Federal  and  State  tribunals  upon  this  subject.  I  may, 
however,  refer  to  the  able  opinions  of  Chief  Justice  Boyle  and 
Justices  Mills  and  Ousley,  in  reference  to  the  Relief  Laws  of 
Kentucky,  and  to  the  opinion  of  Chief  Justice  Marshall,  in  the 
case  of  Sturges  v.  Crowninshield,  4  Litt,  35,  117;  4  Wheat.  191. 
For  a  more  full  expression  of  my  own  views,  I  refer  to  my  opin- 
ion in  the  case  of  Stafford  v.  Lick,  7  Cal.  479. 

For  the  reasons  stated,  I  am  constrained  to  consider  that  the 
provision  of  the  act  of  April  27,  1855,  declaring  the  claims  of 
pre-existing  creditors  forever  barred,  if  they  failed  to  comply  with 
the  new  conditions  imposed,  as  impairing  the  obligation  of  con- 
tracts, and,  therefore,  void.  It  is  not  necessary,  under  this  view 
of  the  case,  to  notice  the  other  points  made. 


690  DISCHARGE  OF  CONTKACT.  [Pabt  V. 

There  being  money  in  the  county  treasury,  applicable  to  the 
payment  of  this  warrant,  let  a  peremptory  mandate  issue. 

Field,  J.  I  concur  in  the  judgment  that  a  peremptory  manda- 
mus issue.  ^ 


COOK  V.   GOOGIXS. 

126  MASSACHUSETTS,  410.  — 1879. 

Contract  upon  a  promissory  note,  dated  January  28,  1874, 
signed  by  C.  as  maker,  and  indorsed  by  defendant  in  blank  at  its 
inception,  and  before  delivery  to  payee  (plaintiff).  Defense, 
want  of  demand  and  notice,  as  required  by  St.  of  1874,  c.  404. 
Judgment  for  plaintiff. 

By  the  court.  The  St.  of  1874,  c.  404,  which  provides  that 
"all  persons  becoming  parties  to  promissory  notes  payable  on 
time,  by  a  signature  in  blank  on  the  back  thereof,  shall  be  entitled 
to  notice  of  the  non-payment  thereof,  the  same  as  indorsers," 
cannot,  consistently  with  settled  rules  of  interpretation,  be  con- 
strued to  require,  or  to  have  been  intended  to  require,  any  addi- 
tional act  to  fix  a  liability  under  a  positive  and  unconditional 

contract  made  before  its  passage. 

Exceptions  overruled.* 


§  2.    Statutes  impairiug  the  remedy  on  contracts. 

WALKER  V.   WHITEHEAD. 

16  WALLACE   (U.   S.),  314.  — 1872. 

Action  on  a  promissory  note.  Motion  to  dismiss  because  plain- 
tiff had  not  filed  an  affidavit  of  payment  of  taxes  as  required  by 
statute.     Motion  granted. 

1  A  statute  giving  or  extending  a  period  of  redemption  of  property  sold 
upon  the  foreclosure  of  a  mortgage  impairs  the  obligation  of  a  mortgage 
executed  before  the  passage  of  the  statute.    Bronson  v.  Kinzie,  1  How.  311. 

2  Previous  to  the  passage  of  the  act  referred  to,  a  person  indorsing  in 
blank  before  delivery  to  payee  was,  in  Massachusetts,  regarded  as  a  joint- 
maker,  and  so  not  entitled  to  notice.  Union  Bank  v.  Willis,  8  Met.  604  ; 
Woods  V.  Woods,  127  Mass.  14-1. 


Chap.  VI.  §  2.]  CONSTITUTIONAL  PROHIBITIONS.  691 

This  action  was  begun  January  1,  1870,  on  a  note  dated  March 
28,  1864,  and  payable  March  19,  1865.  In  October,  1870,  the 
legislature  of  Georgia  enacted  that  in  all  actions  of  contract  then 
pending  or  thereafter  brought  on  contracts  made  prior  to  June  1, 
1865,  the  plaintiff  should  file  with  the  clerk  of  the  court  an  affi- 
davit that  all  legal  taxes  or  charges  upon  such  contract  had  been 
duly  paid  for  each  year  since  the  making  of  the  same,  and  upon  fail- 
ure to  file  such  affidavit  the  action  should,  on  motion,  be  dismissed. 

Mr.  Justice  Swayne.  .  .  .  The  contract  here  in  question  is 
within  the  predicate  of  this  act.  It  was  made  more  than  six 
years  before  the  act  was  passed.  The  act  was  retrospective  — 
denounced  a  penalty  not  before  prescribed  for  the  non-payment  of 
taxes  —  and,  if  such  delinquency  had  existed  for  a  single  year, 
confiscated  the  debt  by  making  any  remedy  to  enforce  payment 
impossible.  The  denunciation  and  the  penalty  came  together. 
There  was  no  warning  and  there  could  be  no  escape.  The  pur- 
pose of  the  act  was  plainly  not  to  collect  back  taxes  —  that  was 
neither  asked  nor  permitted  as  a  means  of  purgation  —  but  to  bar 
the  debt  and  discharge  the  debtor. 

The  act  is  not  an  ex  post  facto  law  only  because  that  phrase  in 
its  legal  sense  is  confined  to  crimes  and  their  punishment. 

The  Constitution  of  the"  United  States  declares  that  no  State 
shall  pass  any  "law  impairing  the  obligation  of  contracts."  ' 

These  propositions  may  be  considered  consequent  axioms  in  our 
jurisprudence : 

The  laws  which  exist  at  the  time  and  place  of  the  making  of  a 
contract,  and  where  it  is  to  be  performed,  enter  into  and  form  a 
part  of  it.  This  embraces  alike  those  which  affect  its  validity, 
construction,  discharge,  and  enforcement; 

Nothing  is  more  material  to  the  obligation  of  a  contract  than 
the  means  of  its  enforcement.  The  ideas  of  validity  and  remedy 
are  inseparable,  and  both  are  parts  of  the  obligation  which  is 
guaranteed  by  the  Constitution  against  impairment; 

The  obligation  of  a  contract  "  is  the  law  which  binds  the  parties 
to  perform  their  agreement."  Any  impairment  of  the  obligation 
of  a  contract  —  the  degree  of  impairment  is  immaterial  —  is  within 
the  prohibition  of  the  Constitution; 

The  States  may  change  the  remedy,  provided  no  substantial 


692  DISCHARGE  OF  CONTRACT.  [Part  V. 

right  secured  by  the  contract  is  impaired.  Whenever  such  a 
result  is  produced  by  the  act  in  question,  to  that  extent  it  is  void. 
The  States  are  no  more  permitted  to  impair  the  efficacy  of  a  con- 
tract in  this  way  than  to  attack  its  vitality  in  any  other  manner. 
Against  all  assaults  coming  from  that  quarter,  whatever  guise 
they  may  assume,  the  contract  is  shielded  by  the  Constitution. 
It  must  be  left  with  the  same  force  and  effect,  including  the  sub- 
stantial means  of  enforcement,  which  existed  when  it  was  made. 
The  guarantee  of  the  Constitution  gives  it  protection  to  that 
extent.      Von  Hoffman  v.  City  of  Quincy,  4  Wallace,  535. 

The  effect  of  these  propositions  upon  the  judgment  before  us 
requires  but  a  single  remark.  A  clearer  case  of  a  law  impairing 
the  obligation  of  a  contract,  within  the  meaning  of  the  Constitu- 
tion, can  hardly  occur. 

The  judgment  of  the  Supreme  Court  of  Georgia  is  reversed,  and 
the  cause  will  be  remanded  to  that  court  with  directions  to  enter 
a  judgment  of  reversal,  and  then  to  proceed  in  conformity  to  this 
opinion.^ 

1  "The  general  doctrine  of  this  court  on  this  subject  may  be  thus  stated: 
In  modes  of  proceeding  and  forms  to  enforce  the  contract  the  legislature  has 
the  control,  and  may  enlarge,  limit,  or  alter  them,  provided  it  does  not  deny 
a  remedy  or  so  embarrass  it  with  conditions  or  restrictions  as  seriously  to 
impair  the  value  of  the  right."  — Mr.  Justice  Woods,  in  Penniman's  Case., 
103  U.  S.  714,  720. 

"  The  abolition  of  imprisonment  for  debt  is  not  of  itself  such  a  change  in 
the  remedy  as  impairs  the  obligation  of  the  contract."     Id.  p.  720. 

"This  court  has  often  decided  that  statutes  of  limitation  affecting  exist- 
ing rights  are  not  unconstitutional,  if  a  reasonable  time  is  given  for  the 
commencement  of  an  action  before  the  bar  takes  effect."  —  Mr.  Chief  Justice 
Waite,  in  Terry  v.  Anderson,  95  U.  S.  628,  632. 

A  law  increasing  the  amount  of  a  debtor's  property  that  is  exempt  from 
levy  and  sale  on  execution  is  unconstitutional  as  to  prior  contracts.  So  also  a 
law  staying  the  remedy.  "  If  the  State  may  stay  the  remedy  for  one  fixed 
period,  however  short,  it  may  for  another,  however  long.  And  if  it  may 
exempt  property  to  the  amount  here  in  question,  it  may  do  so  to  any 
amount."  —  Edicards  v.  Kearsey,  96  U.  S.  595,  602.  So  also  a  law 
extending  the  period  of  redemption.  Bronson  v.  Kinzie,  1  How.  311.  So 
also  a  law  forbidding  the  sale  of  property  on  execution  unless  it  brings  two- 
thirds  its  appraised  value.     McCracken  v.  Hay  ward,  2  How.  608. 


Chap.  VI.  §2.]  CONSTITUTIONAL  PROHIBITIONS.  693 

FISK  V.  JEFFERSON  POLICE   JURY. 
LOUISIANA  ex  rel.  FISK  v.   SAME. 

116  UNITED  STATES,  131.  — 1885. 

Mr.  Justice  Miller.  These  cases  are  brought  before  this 
court  by  writs  of  error  to  the  Supreme  Court  of  Louisiana.  As 
they  involve  precisely  the  same  questions  between  the  same 
parties  they  may  be  decided  together. 

Josiah  Fisk,  who  was  an  attorney-at-law,  brought  three  suits 
in  the  proper  court  of  the  parish  of  Jefferson  to  recover  for  salary 
and  fees  due  him  from  the  parish  as  district  attorney,  and  he 
obtained  judgments  in  each  case  against  the  Police  Jury,  which  is 
the  governing  body  of  the  parish.  Being  unable  to  obtain  the 
payment  of  these  judgments  in  any  other  mode,  he  first  made 
application  for  a  writ  of  mandamus  to  compel  the  assessment  and 
collection  of  a  tax  for  the  payment  of  two  of  these  judgments, 
and  afterwards  for  another  writ  in  regard  to  the  third  judgment; 
the  two  judgments  being  for  his  salary  and  fees  under  one 
appointment,  and  the  other  under  a  second  appointment.  The 
inferior  court  granted  the  writ  in  one  case  and  denied  it  in  the 
other.  But,  on  appeal  to  the  Supreme  Court  of  the  State, 
the  writs  were  denied  in  both  cases. 

The  ground  of  the  jurisdiction  of  this  court  to  review  these 
judgments  is  the  assertion  by  plaintiff  in  error  that  they  were 
founded  on  a  law  of  the  State  which  impaired  the  obligation  of 
his  contract,  to  wit,  the  contract  on  which  he  procured  the  judg- 
ments already  mentioned. 

The  services  for  which  the  judgments  were  recovered  were 
rendered  in  the  years  1871,  1872,  1873,  and  1874.  During  this 
period  there  was  in  force  the  act  of  the  legislature  of  1871,  of 
which  section  7  is  as  follows : 

"  That  no  city  or  other  municipal  corporation  shall  levy  a  tax  for  any 
purpose  which  shall  exceed  two  per  centum  on  the  assessed  cash  value  of 
all  the  property  therein  listed  for  taxation,  nor  shall  the  police  jury  of 
any  parish  levy  a  tax  for  any  parish  purposes  during  any  year  which 
shall  exceed  one  hundred  per  centum  of  the  state  tax  for  that  year, 


6^4  DISCHARGE  OF  CONTRACT.  [Part  V. 

unless  such  excess  shall  be  first  sanctioned  by  a  vote  of  the  majority  of 
the  voters."     Acts  of  1871,  p.  109. 

But  by  the  Constitution  of  the  State  of  1880  it  was  declared 
that  no  parish  or  municipal  tax,  for  all  purposes  whatsoever,  shall 
exceed  ten  mills  on  the  dollar  of  valuation.  The  Police  Jury- 
showed  that  they  had  exhausted  their  power  when  the  application 
for  mandamus  was  made,  by  levying  the  full  amount  of  taxes  per- 
missible under  this  constitutional  provision,  and  the  Supreme 
Court  held  they  could  not  be  compelled  to  levy  more. 

In  answer  to  the  argument  that,  as  applied  to  plaintiff's 
case,  the  constitutional  provision  impaired  the  obligation  of  his 
contract,  the  Supreme  Court  decided  that  his  employment  as 
attorney  for  the  parish  did  not  constitute  a  contract,  either  in 
reference  to  his  regular  salary,  or  to  his  compensation  by  fees. 
And  this  question  is  the  only  one  discussed  in  the  opinion,  and  on 
that  ground  the  decision  rested. 

It  seems  to  us  that  the  Supreme  Court  confounded  two  very 
different  things  in  their  discussion  of  this  question. 

We  do  not  assert  the  proposition  that  a  person  elected  to  an 
office  for  a  definite  term  has  any  such  contract  with  the  govern- 
ment or  with  the  appointing  body  as  to  prevent  the  legislature  or 
other  proper  authority  from  abolishing  the  office  or  diminishing 
its  duration  or  removing  him  from  office.  So,  though  when 
appointed  the  law  has  provided  a  fixed  compensation  for  his  ser- 
vices, there  is  no  contract  which  forbids  the  legislature  or  other 
proper  authority  to  change  the  rate  of  compensation  for  salary  or 
services  after  the  change  is  made,  though  this  may  include  a  part 
of  the  term  of  the  office  then  unexpired.  Butler  v.  Pennsylvania, 
10  How.  402. 

But,  after  the  services  have  been  rendered,  under  a  law,  resolu- 
tion, or  ordinance  which  fixes  the  rate  of  compensation,  there 
arises  an  implied  contract  to  pay  for  those  services  at  that  rate. 
This  contract  is  a  completed  contract.  Its  obligation  is  perfect, 
and  rests  on  the  remedies  which  the  law  then  gives  for  its 
enforcement.  The  vice  of  the  argument  of  the  Supreme  Court  of 
Louisiana  is  in  limiting  the  protecting  power  of  the  constitutional 
i^rovision  against  impairing  the  obligation  of  contracts  to  express 
<ontracts,  to  specific  agreements,  and  in  rejecting  that  much  larger 


Chap.  VI.  §  2.]  CONSTITUTIONAL  PROHIBITIONS.  695 

class  in  which  one  party  having  delivered  property,  paid  money, 
rendered  service,  or  suffered  loss  at  the  request  of  or  for  the  use 
of  another,  the  law  completes  the  contract  by  implying  an  obliga- 
tion on  the  part  of  the  latter  to  make  compensation.  This  obliga- 
tion can  no  more  be  impaired  by  a  law  of  the  State  than  that 
arising  on  a  promissory  note. 

The  case  of  Fisk  was  of  this  character.  His  appointment  as 
district  attorney  was  lawful  and  was  a  request  made  to  him  by 
the  proper  authority  to  render  these  services  demanded  of  that 
office.  He  did  render  these  services  for  the  parish,  and  the 
obligation  of  the  Police  Jury  to  pay  for  them  was  complete.  Not 
only  were  the  services  requested  and  rendered,  and  the  obligation 
to  pay  for  them  perfect,  but  the  measure  of  compensation  was  also 
fixed  by  the  previous  order  of  the  Police  Jury.  There  was  here 
wanting  no  element  of  a  contract.  The  judgment  in  the  court  for 
the  recovery  of  this  compensation  concluded  all  these  questions. 
Jlallv.  Wisconsin,  103  U.  S.  5,  10;  Newton  v.  Commissioners,  100 
U.  S.  548,  659. 

The  provision  of  the  Constitution  restricting  the  limit  of  taxa- 
tion, so  far  as  it  was  in  conflict  with  the  act  of  1871,  and  as 
applied  to  the  contract  of  plaintiff,  impaired  its  obligation  by 
destroying  the  remedy  pro  tanto. 

It  is  apparent  that,  if  the  officers  whose  duty  it  is  to  assess  the 
taxes  of  this  parish,  were  to  perform  that  duty  as  it  is  governed 
by  the  law  of  1871,  the  plaintiff  would  get  his  money.  If  not  by 
a  first  year's  levy,  then  by  the  next.  But  the  constitutional 
provision  has  repealed  that  law,  and  stands  in  the  way  of  enforc- 
ing the  obligation  of  plaintiff's  contract  as  that  obligation  stood 
at  the  time  the  contract  was  made. 

It  is  well  settled  that  a  provision  in  a  state  constitution  may 
be  a  law  impairing  the  obligation  of  a  contract  as  well  as  one 
found  in  an  ordinary  statute.  We  are  of  opinion,  therefore,  that, 
as  it  regards  plaintiff's  case,  this  restrictive  provision  of  the 
Constitution  of  1880  does  impair  the  obligation  of  a  contract. 
Von  Hoffman  v.  Quincy,  4  Wall.  535;  Nelson  v.  St.  Martin's 
Parish,  111  U.  S.  716. 

The  judgments  of  the  Supreme  Court  of  Louisiana  are  reversed, 
and  the  cases  are  remanded  to  that  court  for  further  proceedings 
not  inconsistent  with  this  opinion. 


696  DISCHARGE  OF  CONTRACT.  [Part  V. 

§  3.   Is    a   judgment  a  contract  -voithin   the   constitutional  pro- 
hibition? 

O'BRIEN  V.  YOUNG. 

96  NEW  YORK,  428.  — 1884 
[Beported  herein  at  p.  76.]  * 


§  4.    Contracts  with  the  State. 

FLETCHER   v.   PECK. 
6  CRANCH   (U.   S.),  87.  — 1810. 

Action  on  covenants  in  a  deed  from  Peck  to  Fletcher.  Judg- 
ment for  defendant.     Plaintiff  brings  error. 

The  State  of  Georgia,  in  1795,  granted,  by  an  act  of  the  legisla- 
ture, a  certain  tract  of  land  in  that  State  to  "  The  Georgia  Com- 
pany," for  which  a  patent  regularly  issued.  Peck  was  a  grantee 
by  mesne  conveyances  of  a  portion  of  the  tract.  In  1803  he 
conveyed  fifteen  thousand  acres  of  his  holding  to  Fletcher,  cove- 
nanting that  the  title  given  by  the  State  of  Georgia  had  been 
legally  conveyed  to  him,  and  that  this  title  had  been  "  in  no  way 
constitutionally  or  legally  impaired  by  virtue  of  any  subsequent 
act  of  any  subsequent  legislature  of  the  said  State  of  Georgia." 
There  had  in  fact  been  an  act  passed  by  the  legislature  of  Georgia 
in  1796  annulling  the  grant  to  "The  Georgia  Company,"  on  the 
ground,  as  alleged,  that  the  grant  had  been  obtained  by  corrupt 
means.  The  question  raised  by  the  pleadings  was  whether  this 
repealing  act  constituted  a  breach  of  the  above  covenant. 

Mr.  Chief  Justice  Marshall.  .  .  .  The  Constitution  of  the 
United  States  declares  that  "no  State  shall  pass  any  bill  of 
attainder,  ex  post  facto  law,  or  law  impairing  the  obligation  of 
contracts." 

Does  the  case  now  under  consideration  come  within  this 
prohibitory  section  of  the  Constitution? 

In  considering  this  very  interesting  question  we  immediately 
ask  ourselves,  what  is  a  contract?     Is  a  grant  a  contract? 

1  Accord:  Morley  v.  Lake  Shore  Railway  Co.,  146  U.  S.  162  (1892). 


Chap.  VI.  §  4.]  CONSTITUTIONAL  PROHIBITIONS.  69T 

A  contract  is  a  compact  between  two  or  more  parties,  and  ia 
either  executory  or  executed.  An  executory  contract  is  one  in 
which  a  party  binds  himself  to  do,  or  not  to  do,  a  particular 
thing;  such  was  the  law  under  which  the  conveyance  was  made  by 
the  governor.  A  contract  executed  is  one  in  which  the  object  of 
contract  is  performed ;  and  this,  says  Blackstone,  differs  in  nothing 
from  a  grant.  The  contract  between  Georgia  and  the  purchasers 
was  executed  by  the  grant.  A  contract  executed,  as  well  as  one 
which  is  executory,  contains  obligations  binding  on  the  parties. 
A  grant,  in  its  own  nature,  amounts  to  an  extinguishment  of  the 
right  of  the  grantor,  and  implies  a  contract  not  to  reassert  that 
right.     A  party  is,  therefore,  always  estopped  by  his  own  grant. 

Since,  then,  in  fact,  a  grant  is  a  contract  executed,  and  the 
obligation  of  which  still  continues,  and  since  the  Constitution, 
uses  the  general  term  "contract,"  without  distinguishing  between 
those  which  are  executory  and  those  which  are  executed,  it  must 
be  construed  to  comprehend  the  latter  as  well  as  the  former.  A 
law  annulling  conveyances  between  individuals,  and  declaring 
that  the  grantors  should  stand  seized  of  their  former  estates,  not- 
withstanding those  grants,  would  be  as  repugnant  to  the  Consti- 
tution as  a  law  discharging  the  vendors  of  property  from  the 
obligation  of  executing  their  contracts  by  conveyance.  It  would 
be  strange  if  a  contract  to  convey  was  secured  by  the  Constitution, 
while  an  absolute  conveyance  remained  unprotected. 

If,  under  a  fair  construction  of  the  Constitution,  grants  are 
comprehended  under  the  term  "contracts,"  is  a  grant  from  the 
State  excluded  from  the  operation  of  the  provision?  Is  the  clause 
to  be  considered  as  inhibiting  the  State  from  impairing  the  obliga- 
tion of  contracts  between  two  individuals,  but  as  excluding  from 
that  inhibition  contracts  made  with  itself? 

The  words  themselves  contain  no  such  distinction.  They  are 
general,  and  are  applicable  to  contracts  of  every  description.  If 
contracts  made  with  the  State  are  to  be  exempted  from  their 
operation,  the  exception  must  arise  from  the  character  of  the 
contracting  party,  not  from  the  words  which  ax'e  employed. 

Whatever  respect  might  have  been  felt  for  the  state  sover- 
eignties, it  is  not  to  be  disguised  that  the  framers  of  the  Consti- 
tution viewed,  with  some  apprehension,  the  violent  acts  which 


698  DISCHARGE  OF  CONTRACT.  [Part  V. 

might  grow  out  of  the  feelings  of  the  moment;  and  that  the 
people  of  the  United  States,  in  adopting  that  instrument,  have 
manifested  a  determination  to  shield  themselves  and  their  prop- 
erty from  the  effects  of  those  sudden  and  strong  passions  to  which 
men  are  exposed.  The  restrictions  on  the  legislative  power  of 
the  States  are  obviously  founded  in  this  sentiment;  and  the 
Constitution  of  the  United  States  contains  what  may  be  deemed 
a  bill  of  rights  for  the  people  of  each  State. 

No  State  shall  pass  any  bill  of  attainder,  ex  post  facto  law,  or 
law  impairing  the  obligation  of  contracts. 

A  bill  of  attainder  may  affect  the  life  of  an  individual,  or  may 
confiscate  his  property,  or  may  do  both.  In  this  form  the  power 
of  the  legislature  over  the  lives  and  fortunes  of  individuals  is 
expressly  restrained.  What  motive,  then,  for  implying,  in  words 
which  import  a  general  prohibition  to  impair  the  obligation  of 
contracts,  an  exception  in  favor  of  the  right  to  impair  the  obliga- 
tion of  those  contracts  into  which  the  State  may  enter? 

The  state  legislatures  can  pass  no  ex  post  facto  law.  An  ex 
post  facto  law  is  one  which  renders  an  act  punishable  in  a  manner 
in  which  it  was  not  punishable  when  it  was  committed.  Such  a 
law  may  inflict  penalties  on  the  person,  or  may  inflict  pecuniary 
penalties  which  swell  the  public  treasury.  The  legislature  is 
then  prohibited  from  passing  a  law  by  which  a  man's  estate,  or 
any  part  of  it,  shall  be  seized  for  a  crime  which  was  not  declared, 
by  some  previous  law,  to  render  him  liable  to  that  punishment. 
Why,  then,  should  violence  be  done  to  the  natural  meaning  of 
words  for  the  purpose  of  leaving  to  the  legislature  the  power  of 
seizing,  for  public  uses,  the  estate  of  an  individual  in  the  form  of 
a  law  annulling  the  title  by  which  he  holds  that  estate?  The 
court  can  perceive  no  sufficient  ground  for  making  this  distinc- 
tion. This  rescinding  act  would  have  the  effect  of  an  ex  post 
facto  law.  It  forfeits  the  estate  of  Fletcher  for  a  crime  not 
committed  by  himself,  but  by  those  from  whom  he  purchased. 
This  cannot  be  effected  in  the  form  of  an  ex  post  facto  law,  or  bill 
of  attainder;  why,  then,  is  it  allowable  in  the  form  of  a  law 
annulling  the  original  grant? 

The  argument  in  favor  of  presuming  an  intention  to  except  a 
case,  not  excepted  by  the  words  of  the  Constitution,  is  susceptible 


Chap.  VI.  §  4.]  CONSTITUTIONAL  PROHIBITIONS.  699 

of  some  illustration  from  a  principle  originally  ingrafted  in  that 
instrument,  though  no  longer  a  part  of  it.  The  Constitution,  as 
passed,  gave  the  courts  of  the  United  States  jurisdiction  in  suits 
brought  against  individual  States.  A  State,  then,  which  violated 
its  own  contract,  was  suable  in  the  courts  of  the  United  States  for 
that  violation.  Would  it  have  been  a  defense  in  such  a  suit  to 
say  that  the  State  had  passed  a  law  absolving  itself  from  the 
contract?  It  is  scarcely  to  be  conceived  that  such  a  defense 
would  be  set  up.  And  yet,  if  a  State  is  neither  restrained  by 
the  general  principles  of  our  political  institutions,  nor  by  the 
words  of  the  Constitution,  from  impairing  the  obligation  of  its 
own  contracts,  such  a  defense  would  be  a  valid  one.  This  feature 
is  no  longer  found  in  the  Constitution;  but  it  aids  in  the  con- 
struction of  those  clauses  with  which  it  was  originally  associated. 

It  is,  then,  the  unanimous  opinion  of  the  court,  that,  in  this 
case,  the  estate  having  passed  into  the  hands  of  a  purchaser  for  a 
valuable  consideration,  without  notice,  the  State  of  Georgia  was 
restrained,  either  by  general  principles  which  are  common  to  our 
free  institutions,  or  by  the  particular  provisions  of  the  Constitu- 
tion of  the  United  States,  from  passing  a  law  whereby  the  estate 
of  the  plaintiff  in  the  premises  so  purchased  could  be  constitution- 
ally and  legally  impaired  and  rendered  null  and  void. 

In  overruling  the  demurrer  to  the  third  plea,  therefore,  there 

is  no  error. 

*  *  «  •  • 

Judgment  affirmed  with  costs.* 

1  The  charter  granted  by  a  State  to  a  corporation  is  a  contract,  the  obliga- 
tion of  which  cannot  be  impaired  without  violating  the  Constitution  of  the 
United  States.  Trustees  of  Dartmouth  College  v.  Woodward,  4  Wheat.  518 
(1819).  But  the  reservation  by  the  State  of  a  right  to  alter,  amend,  or  repeal 
the  charter  is  effective.  Miller  v.  The  State,  15  Wall.  478  (1872),  See 
Stimson's  Am.  St.  Law,  §  8003. 

The  grant  of  an  exclusive  franchise  is  a  contract,  the  obligation  of  which 
cannot  be  impaired.  The  Binghamton  Bridge,  3  Wall.  51  (1865)  ;  New 
Orleans  Gas  Co.  v.  Louisiana  Light  Co.,  115  U.  S.  650  (1885). 

The  grant  of  an  exemption  from  taxation,  if  upon  a  sufficient  considera- 
tion, is  a  contract,  the  obligation  of  which  cannot  be  impaired.  State  of 
New  Jersey  v.  Wilson,  7  Cranch,  164  (1812)  ;  Given  v.  Wright,  117  U.  S. 
648  (1886).  Cf.  Providence  Bank  v.  Billings,  4  Pet.  514  (1830)  ;  Delaware 
Railroad  Tax,  18  Wall.  206  (1873). 


700  DISCHARGE  OF  CONTRACT.  [Pabt  V, 

LORD  et  al  v.  THOMAS. 

64  NEW  YORK,  107.  — 1876. 

Action  to  have  chap.  323,  Laws  of  1874,  declared  unconstitu- 
tional and  void  so  far  as  it  authorized  defendant,  as  super- 
intending builder  of  the  State  Reformatory  at  Elmira,  appointed 
under  said  act,  to  relet  a  contract  for  the  brick  and  stone  work  of 
said  building,  and  to  restrain  defendant  from  entering  into  any- 
such  new  contract.  Judgment  for  defendant,  affirmed  at  General 
Term.  Plaintiffs  appeal.  Plaintiffs  were  the  assignees  of  a 
contract,  authorized  by  a  previous  law,  for  the  construction  of 
such  brick  and  stone  work. 

Andrews,  J.     This  action  cannot  be  maintained. 

The  State  cannot  be  compelled  to  proceed  with  the  erection  of 
a  public  building,  or  the  prosecution  of  a  public  work  at  the 
instance  of  a  contractor  with  whom  the  State  has  entered  into  a 
contract  for  the  erection  of  a  building  or  the  performance  of  the 
work.  The  State  stands,  in  this  respect,  in  the  same  position  as 
an  individual,  and  may  at  any  time  abandon  an  enterprise  which 
it  has  undertaken,  and  refuse  to  allow  the  contractor  to  proceed, 
or  it  may  assume  the  control  and  do  the  work  embraced  in  the 
contract,  by  its  own  immediate  servants  and  agents,  or  enter  into 
a  new  contract  for  its  performance  by  other  persons,  without 
reference  to  the  contract  previously  made,  and  although  there  has 
been  no  default  on  the  part  of  the  contractor.  The  State  in  the 
case  supposed  would  violate  the  contract,  but  the  obligation  of 
the  contract  would  not  be  impaired  by  the  refusal  of  the  State  to 
perform  it.  The  original  party  would  have  a  just  claim  against 
the  State  for  any  damages  sustained  by  him  from  the  breach  of 
the  contract,  and  although  the  claim  could  not  be  enforced  through 
an  action  at  law,  the  remedy  by  appeal  to  the  legislature  is  open 
to  him,  which  can,  and  it  must  be  presumed  will,  do  whatever 
justice  may  require  in  the  premises.  This  remedy  is  the  only  one 
provided  in  such  a  case,  and  this  is  known  to  the  party  contract- 
ing with  the  State  and  the  courts  cannot  say  that  it  is  not  certain, 
reasonable,  and  adequate.     See  Coster  v.  Mayor  &c.,  43  N.  Y.  408. 

If  the  court  should  undertake  by  its  order  or  judgment  to 


Chap.  VI.  §  4.]  CONSTITUTIONAL  PROHIBITIONS.  701 

protect  the  conJ;ractor  in  the  possession  of  the  building  or  premises 
to  enable  him  to  proceed  with  the  work  under  his  contract,  he 
would  still  be  left  without .  remedy  to  obtain  payment  except 
through  an  appropriation  by  the  legislature.  A  law  of  the  State 
suspending  or  discontinuing  a  public  work,  or  providing  for  its 
performance  by  different  agencies  from  those  theretofore  employed 
is  not,  therefore,  subject  to  any  constitutional  objection  because 
the  change  would  involve  a  breach  of  contract  with  a  contractor 
with  whom  it  had  entered  into  a  contract  for  doing  it.  That  a 
person  who  has  employed  another  to  perform  labor  may  refuse  to 
allow  the  other  party  to  proceed,  and  that  the  latter  cannot  there- 
after insist  upon  specifically  performing  the  contract,  was  decided 
in  Clark  v.  Marsiglia,  1  Den.  317. 

«  *  *  «  « 

The  judgment  of  the  General  Term  should  be  affirmed.     All 
concur. 

Judgment  affirmed. 


SUPPLEMENTARY  CASES. 

(P.  14)  Offer  must  he  communicated.  (p.  20) 

BENTON    V.    SPRINGFIELD     YOUNG    MEN'S     CHRIS- 
TIAN ASSOCIATION. 

170  MASSACHUSETTS,  534. —1898. 

Action  in  contract  by  Benton  against  the  Springfield  Young 
Men's  Christian  Association  to  recover  damages  for  the  refusal 
of  the  Association  to  allow  him  to  perform  the  duties  of  archi- 
tect in  the  erection  of  a  building.  Plaintiff  made  an  offer  of 
proof  of  his  whole  case  in  writing,  upon  which  the  trial  court 
ruled  that,  as  matter  of  law,  it  was  not  sufficient  to  maintain 
the  action,  and  gave  judgment  for  defendant.  Plaintiff  alleged 
exceptions.     The  facts  appear  in  the  opinion. 

Allex,  J.  The  "  notice  to  architects  "  issued  by  the  committee 
of  the  defendant  invited  the  plaintiff  and  other  architects  "to 
participate  in  the  competition  for  plans,  on  the  conditions  "  therein 
stated.  One  of  these  conditions  was  that  "  the  committee  reserve 
the  right  to  reject  any  and  all  of  the  designs  submitted."  Ac- 
cording to  the  plaintift''s  offer  of  proof,  he  presented  to  the  com- 
mittee a  full  set  of  drawings  of  the  proposed  building.  Other 
architects  did  the  same.  The  committee  thereupon,  on  May 
19,  1893,  passed  a  vote  "  that  we  proceed  to  examine  drawings 
and  specifications  presented  to  us  on  basis  of  compliance  with 
each  and  every  requirement  in  our  letter  of  invitation;  and, 
after  considering  and  discussing  each  requirement  separately, 
a  vote  of  the  committee  be  taken  as  to  which  plan  best  meets 
the  letter  of  requirements  and  the  needs  of  the  Association,  and 
that,  on  completion  of  this  examination,  we  select  the  architect 
who  has  the  largest  number  of  votes."  The  offer  of  proof  also 
states  that  the  committee  "  agreed  that  the  person  who  should 
receive  the  greatest  number  of  votes   should  superintend  the 

703 


704  FORMATION  OF  CONTRACT. 

construction  of  the  same."  This  can  mean  only  that  they  so 
agreed  amongst  themselves.  The  next  day,  another  meeting  of 
the  committee  was  held,  and  the  plaintiff  was  found  to  have 
received  the  greatest  number  of  first  marks  in  the  competition. 
Afterwards  at  this  meeting  the  committee  voted  to  reject  all 
the  plans  submitted,  and  to  return  them  to  their  owners,  and 
all  the  plans  were  rejected.  Immediately  after  this  vote  had 
been  passed,  another  vote  was  passed  that  the  plaintiff  "be 
chosen  architect  in  accordance  with  the  vote  of  last  night " ; 
the  words  "vote  of  last  night"  having  reference  to  the  receipt 
of  the  greatest  number  of  first  marks.  This  vote  remained  upon 
the  books  of  the  defendant  for  forty  days  without  being  changed, 
at  the  end  of  which  time  it  was  rescinded.  The  committee  did 
not,  as  a  committee,  communicate  this  vote  to  the  plaintiff  or 
ask  him  to  act  under  it,  but  two  members  of  the  committee 
notified  him  that  he  had  been  appointed  as  architect  of  the 
building,  and  this  fact  was  known  to  the  secretary  of  the 
committee,  and  also  to  other  members  of  the  committee,  who 
made  no  objections  to  the  notification,  and  did  nothing  in 
regard  to  the  matter  until  the  time  of  passing  the  vote  of 
rescission.  On  July  3,  1893,  the  plaintiff  wrote  a  letter  to 
the  committee  claiming  to  act  as  architect,  and  saying  that  he 
had  just  heard  that  the  committee  had  lately  taken  action 
which  appeared  to  show  their  intention  to  deprive  him  of  the 
position.  The  committee  answered  that  no  contract  with  him 
had  been  made.  The  offer  of  proof  stated  that  this  letter  of 
the  plaintiff  was  written  within  the  forty  days;  but,  by  the 
dates  given,  the  time  is  forty-four  days.  No  explanation  of 
this  apparent  inconsistency  has  been  given  to  us,  but  in  the 
view  we  take  of  the  case  it  becomes  immaterial.  The  subse- 
quent statement  that  these  letters  were  not  written  until  after 
the  vote  appointing  the  plaintiff  had  been  upon  the  books  for 
about  forty  days,  and  the  members  of  the  committee  had  known 
that  the  plaintiff  had  been  notified  as  aforesaid,  must  be  con- 
strued to  refer  only  to  those  members  of  the  committee  previ- 
ously referred  to,  as  knowing  the  fact  of  the  notification  given 
to  the  plaintiff  by  two  members  of  the  committee. 

It  is  apparent,  in  the  first  place,  that  no  contract  arose  out  of 


OFFER  AND  ACCEPTANCE.  705 

the  "  notice  to  architects  "  and  the  presentation  of  plans  by  the 
plaintiff,  because  the  right  to  reject  any  and  all  of  the  designs 
submitted  was  expressly  reserved,  and  this  right  was  exercised 
by  a  formal  vote. 

The  plaintiff,  however,  contends  that  his  presentation  of  plans 
was  an  offer  of  his  services  as  architect  of  the  building,  and  that 
this  offer  was  accepted  by  the  vote  of  May  20th.  There  is  noth- 
ing in  the  offer  of  proof  to  support  this  position.  The  notice  to 
architects  called  simply  for  the  submission  of  plans,  with  a  descrip- 
tion and  explanation  of  them.  Rejected  designs  were  to  be  re- 
turned to  their  authors  without  any  compensation.  The  plaintiff 
submitted  drawings  "  in  the  manner  specified."  There  is  noth- 
ing to  show  that,  either  by  express  words  or  by  implication,  he 
offered  or  was  understood  to  offer  his  services  as  architect,  unless 
his  plans  should  be  accepted.  The  vote  rejecting  his  plans 
rejected  all  that  he  had  offered. 

The  new  vote,  that  he  be  chosen  architect,  was  not  an  offer  to 
him.  It  was  not  communicated  to  him  by  the  committee,  nor 
voted  to  be  so  communicated.  Those  members  who  gave  notice 
of  the  vote  to  the  plaintiff  did  not  act  for  or  by  authority  of  the 
committee.  Their  notification  was  not  official,  and  did  not  pur- 
port to  be  so.  The  vote  did  not  specify  any  terms  or  duties  in 
detail,  and  it  was  not  in  form  or  intention  a  contract  or  the  offer 
of  a  contract.  It  was  merely  an  initiatory  step,  signifying  the 
intention  or  purpose  of  the  committee,  and  was  not  an  act  by 
which  they  meant  to  be  bound  as  by  a  contract.  If  the  plaintiff 
had  notified  them  at  once  that  he  would  act  as  architect,  in  pur- 
suance of  their  vote,  they  might  have  answered  that  their  vote 
was  not  a  proposal  or  offer  to  him.  Shaio  v.  Stone,  1  Cush.  228, 
244 ;  Dunham  v.  City  of  Boston,  12  Allen,  375 ;  Sears  v.  Railway 
Co.,  152  Mass.  151 ;  Edge  Moor  Bridge  Works  v.  Bristol  County, 
170  Mass.  528. 

If  the  plaintiff's  letter  was  sent  after  the  formal  rescission  of 
the  vote,  the  plaintiff  would  fail  to  maintain  his  case  for  the 
additional  reason  that  his  acceptance  of  an  offer  after  it  had  been 
recalled  would  be  too  late.  But  the  decision  is  not  put  upon 
that  ground,  because,  upon  the  facts  stated,  the  vote  was  not  a 
proposal  or  offer  to  him,  and  he  could  not  convert  it  into  a  con- 


706  FOR]VLA.TIOX  OF  CONTRACT. 

tract  by  signifying  his  acceptance  of  it,  even  though  he  acted. 

promptly. 

Exceptions  overruled. 


(P.  21)  Acceptance  of  guaranty.  (p.  29) 

BISHOP  V.  EATON. 

161   MASSACHUSEITS,  496.— 1894. 

Contract,  on  a  guaranty.  Judgment  for  plaintiff.  Defendant 
alleged  exceptions. 

Defendant  wrote  plaintiff:  "If  Harry  [defendant's  brother} 
needs  more  money,  let  him  have  it  or  assist  him  to  get  it,  and  I 
will  see  that  it  is  paid."  Plaintiff  signed  the  brother's  note  as 
surety,  relying  on  defendant's  letter.  Shortly  afterwards  plaintiff 
wrote  defendant  stating  that  he  had  signed  the  note.  He  de- 
posited the  letter,  postage  prepaid,  in  the  post  office  at  Sycamore, 
Illinois,  addressed  to  defendant  at  the  latter's  home  in  Nova 
Scotia.  The  letter  was  never  received  by  defendant.  When  the 
note  was  due  it  was  extended  for  a  year,  but  whether  with 
defendant's  knowledge  or  consent  was  in  dispute.  After  it  was 
again  due  defendant  said  to  plaintiff :  "  Try  to  get  Harry  to  pay 
it.  If  he  don't,  I  will.  It  shall  not  cost  you  anything."  Plain- 
tiff afterward  paid  the  note. 

The  principal  question  in  the  case  was  whether  the  plaintiff 
was  bound  to  notify  defendant  of  the  acceptance  of  the  offer, 
and,  if  so,  whether  the  due  mailing,  within  a  reasonable  time, 
of  a  letter  accepting  the  offer  of  guaranty  was  sufficient,  or 
whether  such  letter  of  notification  or  acceptance  must  actually 
be  received.  A  secondary  question  was  whether  the  extension 
of  time  of  payment,  without  defendant's  knowledge  or  consent, 
released  him  from  the  guaranty,  and,  if  so,  whether  there  was 
a  subsequent  waiver  or  notification. 

Knowxton,  J.  The  first  question  in  this  case  is  whether  the 
contract  proved  by  the  plaintiff  is  an  original  and  independent 
contract  or  a  guaranty.  The  judge  found  that  the  plaintiff  signed 
the  note  relying  upon  the  letter,  "and  looked  to  the  defendant 
solely  for  reimbursement  if  called  upon  to  pay  the  note."     The 


OFFER  AND  ACCEPTANCE.  707 

promise  contained  in  the  letter  was  in  these  words :  "  If  Harry 
needs  more  money,  let  him  have  it,  or  assist  him  to  get  it,  and  I 
will  see  that  it  is  paid."  On  a  reasonable  interpretation  of  this 
promise,  the  plaintiff  was  authorized  to  adopt  the  first  alternative, 
and  let  Harry  have  the  money  in  such  a  way  that  a  liability  of 
Harry  to  him  would  be  created,  and  to  look  to  the  defendant  for 
payment  if  Harry  failed  to  pay  the  debt  at  maturity ;  or  he 
might  adopt  the  second  alternative  and  assist  him  to  get  money 
from  some  one  else  in  such  a  way  as  to  create  a  debt  from  Harry 
to  the  person  furnishing  the  money,  and,  if  Harry  failed  to  pay, 
might  look  to  the  defendant  to  relieve  him  from  the  liability. 
The  tvords  fairly  imply  that  Harry  was  to  be  primarily  liable 
for  the  debt,  either  to  the  plaintiff  or  to  such  other  person  as 
should  furnish  the  money,  and  that  the  defendant  was  to  guar- 
antee the  payment  of  it.  We  are  therefore  of  opinion,  that,  if 
the  plaintiff  relied  solely  upon  the  defendant,  he  was  authorized 
by  the  letter  to  rely  upon  him  only  as  a  guarantor. 

The  defendant  requested  many  rulings  in  regard  to  the  law 
applicable  to  contracts  of  guaranty,  most  of  which  it  becomes 
necessary  to  consider.  The  language  relied  on  was  an  offer  to 
guarantee,  which  the  plaintiff  might  or  might  not  accept.  With- 
out acceptance  of  it  there  was  no  contract,  because  the  offer  was 
conditional  and  there  was  no  consideration  for  the  promise.  But 
this  was  not  a  proposition  which  was  to  become  a  contract  only 
upon  the  giving  of  a  promise  for  the  promise,  and  it  was  not  nec- 
essary that  the  plaintiff  should  accept  it  in  words,  or  promise  to 
do  anything  before  acting  upon  it.  It  was  an  offer  which  was  to 
-become  effective  as  a  contract  upon  the  doing  of  the  act  referred 
to.  It  was  an  offer  to  be  bound  in  consideration  of  an  act  to  be 
done,  and  in  such  a  case  the  doing  of  the  act  constitutes  the 
acceptance  of  the  offer  and  furnishes  the  consideration.  Ordi- 
narily there  is  no  occasion  to  notify  the  offerer  of  the  acceptance 
.  of  such  an  offer,  for  the  doing  of  the  act  is  a  sufficient  accept- 
ance, and  the  promisor  knows  that  he  is  bound  when  he  sees  that 
action  has  been  taken  on  the  faith  of  his  offer.  But  if  the  act  is 
of  such  a  kind  that  knowledge  of  it  will  not  quickly  come  to  the 
promisor,  the  promisee  is  bound  to  give  him  notice  of  his  accept- 
ance within  a  reasonable  time  after  doing  that  which  constitutes 


708  FORMATION  OF  CONTRACT. 

tlie  acceptance.  In  such  a  case  it  is  implied  in  the  offer  that,  to 
complete  the  contract,  notice  shall  be  given  with  due  diligence,  so 
that  the  promisor  may  know  that  a  contract  has  been  made.  But 
where  the  promise  is  in  consideration  of  an  act  to  be  done,  it 
becomes  binding  upon  the  doing  of  the  act  so  far  that  the  promisee 
cannot  be  affected  by  a  subsequent  withdrawal  of  it,  if  within  a 
reasonable  time  afterward  he  notifies  the  promisor.  In  accord- 
ance with  these  principles,  it  has  been  held  in  cases  like  the  pres- 
ent, where  the  guarantor  would  not  know  of  himself,  from  the 
nature  of  the  transaction,  whether  the  offer  has  been  accepted  or 
not,  that  he  is  not  bound  without  notice  of  the  acceptance,  sea- 
sonably given  after  the  performance  which  constitutes  the  con- 
sideration. Babcock  v.  Bryant,  12  Pick.  133;  Whiting  v.  Stacy, 
15  Gray,  270 ;  Schlessinger  v.  Dickinson,  5  Allen,  47. 

In  the  present  case  the  plaintiff  seasonably  mailed  a  letter  to 
the  defendant,  informing  him  of  what  he  had  done  in  compliance 
with  the  defendant's  request,  but  the  defendant  testified  that  he 
never  received  it,  and  there  is  no  finding  that  it  ever  reached  him. 
The  judge  ruled,  as  matter  of  law,  that  upon  the  facts  found,  the 
plaintiff  was  entitled  to  recover,  and  the  question  is  thus  pre- 
sented whether  the  defendant  was  bound  by  the  acceptance  when 
the  letter  was  properly  mailed,  although  he  never  received  it. 

When  an  offer  of  guaranty  of  this  kind  is  made,  the  implica- 
tion is  that  notice  of  the  act  which  constitutes  an  acceptance 
of  it  shall  be  given  in  a  reasonable  way.  What  kind  of  a  notice 
is  required  depends  upon  the  nature  of  the  transaction,  the 
situation  of  the  parties,  and  the  inferences  fairly  to  be  drawn 
from  their  previous  dealings,  if  any,  in  regard  to  the  matter. 
If  they  are  so  situated  that  communication  by  letter  is  naturally 
to  be  expected,  then  the  deposit  of  a  letter  in  the  mail  is  all 
that  is  necessary.  If  that  is  done  which  is  fairly  to  be  contem- 
plated from  their  relations  to  the  subject-matter  and  from  their 
course  of  dealing,  the  rights  of  the  parties  are  fixed,  and  a 
failure  actually  to  receive  the  notice  will  not  affect  the  obliga- 
tion of  the  guarantor. 

The  plaintiff  in  the  case  now  before  us  resided  in  Illinois 
and  the  defendant  in  Nova  Scotia.  The  offer  was  made  by 
letter,  and  the  defendant  must  have  contemplated  that  informa- 


OFFER  AND  ACCEPTANCE.  709 

tion  in  regard  to  the  plaintiff's  acceptance  or  rejection  of  it 
would  be  by  letter.  It  would  be  a  harsh  rule  which  would 
subject  the  plaintiff  to  the  risk  of  the  defendant's  failure  to 
receive  the  letter  giving  notice  of  his  action  on  the  faith  of  the 
offer.  We  are  of  opinion  that  the  plaintiff,  after  assisting 
Harry  to  get  the  money,  did  all  that  he  was  required  to  do 
when  he  seasonably  sent  the  defendant  the  letter  by  mail  inform- 
ing him  of  what  had  beeii  done. 

How  far  such  considerations  are  applicable  to  the  case  of 
an  ordinary  contract  made  by  letter,  about  which  some  of  the 
early  decisions  are  conflicting,  we  need  not  now  consider.^ 

The  plaintiff  was  not  called  upon  under  his  contract  to  attempt 
to  collect  the  money  from  the  maker  of  the  note,  and  it  is  no 
defense  that  he  did  not  promptly  notify  the  defendant  of  the 
maker's  default,  at  least  in  the  absence  of  evidence  that  the 
defendant  was  injured  by  the  delay.  This  rule  in  cases  like 
the  present  was  established  in  Massachusetts  in  Vinal  v.  Hich- 
ardson  (13  Allen,  521),  after  much  consideration,  and  it  is  well 
founded  in  principle  and  strongly  supported  by  authority. 

We  find  one  error  in  the  rulings  which  requires  us  to  grant 

a  new  trial.     It  appears  from  the  bill  of  exceptions  that  when 

the  note  became  due  the  time  for  the  payment  of  it  was  extended 

without  the  consent  of  the  defendant.     The  defendant  is  thereby 

discharged  from  his  liability,  unless   he   subsequently  assented 

to  the  extension  and  ratified  it.     CJiace  v.  Brooks,  5  Cush.  43 ; 

Garkin  v.  Savory,  14  Gray,  528.      The  court  should  therefore 

have   ruled    substantially   in    accordance   with    the    defendant's 

eighth  request,  instead  of  finding  for  the  plaintiff,   as   matter 

of  law,  on  the  facts  reported.     Whether  the  judge  would  have 

found   a   ratification  on  the  evidence  if  he  had   considered  it, 

we  have  no  means  of  knowing. 

Exceptions  sustained. 

1  See  Brauer  v.  Shaw,  168  Mass.  198,  post,  p.  715. 


710  FORMATION  OF  CONTRACT. 

(P.  29)  Contract  by  letter.  (p,  35) 

SANDERS  V.   POTTLITZER  BROS.  FRUIT  CO. 

144  NEW  YORK,  209.  —  1894. 

Action  by  Archie  D.  Sanders  and  others  against  Pottlitzer 
Bros.  Fruit  Company  for  damages  for  breach  of  a  contract  of 
sale.  From  a  judgment  of  the  general  term  affirming  a  judg- 
ment in  favor  of  defendant,  plaintiffs  appeal. 

O'Brien,  J.  The  plaintiffs  in  this  action  sought  to  recover 
damages  for  the  breach  of  a  contract  for  the  sale  and  delivery 
of  a  quantity  of  apples.  The  complaint  was  dismissed  by  the 
referee,  and  his  judgment  was  affirmed  upon  appeal.  The  only 
question  to  be  considered  is  whether  the  contract  stated  in  the 
complaint,  as  the  basis  for  damages,  was  ever  in  fact  made,  so  as 
to  become  binding  upon  the  parties.  On  the  28th  of  October, 
1891,  the  plaintiffs  submitted  to  the  defendant  the  following 
proposition  in  writing : 

«  Buffalo,  N.  Y.,  Oct.  28,  1891. 
"  Messrs.  Pottlitzer  Bros.  Fruit  Co.,  Lafayette,  Ind.  — 

"  Gentlemen  :  We  offer  you  ten  car  loads  of  apples,  to  be  from  175  to 
200  barrels  per  car,  put  up  in  good  order,  from  stock  inspected  by  your 
Mr.  Leo  Pottlitzer  at  Xunda  and  Silver  Springs.  The  apples  not  to 
exceed  one-half  green  fruit,  balance  red  fruit,  to  be  shipped  as  follows  : 
First  car  between  1st  and  15th  December,  1891 ;  second  car  between 
15th  and  30th  December,  1891 ;  and  one  car  each  ten  days  after  Janu- 
ary 1,  1892,  until  all  are  shipped.  Dates  above  specified  to  be  consid- 
ered as  approximate  a  few  days  either  way,  at  the  price  of  $2.00  per 
barrel,  free  on  board  cars  at  Silver  Springs  and  Xunda,  in  refrigerator 
cars ;  this  proposition  to  be  accepted  not  later  than  the  31st  inst.,  and 
you  to  pay  us  $500  upon  acceptance  of  the  proposition,  to  be  deducted 
from  the  purchase  price  of  apples  at  the  rate  of  §100  per  car  on  the  last 
five  cars. 

"Yours  respectfully, 

"J.  Sanders  &  Sox." 

To  this  proposition  the  defendant  replied  by  telegraph  on 
October  31st  as  follows : 

"  Lafayette,  Ind.,  Slst  October. 
"  J.  Sanders  &  Son  : 

"  We  accept  your  proposition  on  apples,  pro-vided  you  will  change  it 


OFFER  AND  ACCEPTANCE.  711 

to  read  car  every  eight  days  from  January  first,  none  in  December ;  wire 
acceptance. 

"  POTTLITZER   BrOS.    FrUIT    Co." 

On  the  same  day  the  plaintiffs  replied  to  this  dispatch,  to  the 
effect  that  they  could  not  accept  the  modification  proposed,  but 
must  insist  upon  the  original  offer.  On  the  same  day  the  defend- 
ant answered  the  plaintiffs'  telegram  as  follows : 

"  Can  only  accept  condition  as  stated  in  last  message.  Only  way  we 
■can  accept.  Answer  if  accepted.  Mail  contract,  and  we  will  then  for- 
ward draft. 

"POTTLITZER   BrOS.    FrUIT   Co." 

The  matter  thus  rested  till  November  4th,  when  the  plaintiffs 
received  the  following  letter  from  the  defendant : 

"Lafayette,  Ind.,  November  2,  1891. 
"J.  Sanders  &  Son,  Stafford,  N.  Y.— 

"  Gents :  We  are  in  receipt  of  your  telegrams,  also  your  favor  of  the 
31st  ult.  While  we  no  doubt  think  we  have  offered  you  a  fair  contract 
on  apples,  still  the  dictator  of  this  has  learned  on  his  return  home  that 
there  are  so  many  near-by  apples  coming  into  market  that  it  will  affect  the 
sale  of  apples  in  December,  and  therefore  we  do  not  think  it  advisable  to 
take  the  contract  unless  you  made  it  read  for  shipment  from  the  1st  of 
January.  We  are  very  sorry  you  cannot  do  this,  but  perhaps  we  will  be 
able  to  take  some  fruit  from  you,  as  we  will  need  it  in  the  spring.  If 
you  can  change  the  contract  so  as  to  read  as  we  wired  you  we  will  accept 
it  and  forward  you  draft  in  payment  on  same. 

"POTTLITZER    BrOS.    FrUIT   Co." 

On  receipt  of  this  letter  the  plaintiffs  sent  the  following  mes- 
sage to  the  defendant  by  telegraph  : 

"  November  ^th. 
"  Pottlitzer  Brothers  Fruit  Company,  Lafayette,  Ind.  — 

"  Letter  received.  WUl  accept  conditions.  If  satisfactory,  answer, 
and  will  forward  contract. 

"J.  Sanders  &  Sox." 

The  defendant  replied  to  this  message  by  telegraph  saying : 

"  AU  right.    Send  contract  as  stated  in  our  message." 

The  plaintiffs  did  prepare  and  send  on  the  contract  precisely 
in  the  terms  embraced  in  the  foregoing  correspondence,  which 
was  the  original  proposition  made  by  the  plaintiffs,  as  modified 


712  FORMATION  OF  CONTRACT. 

by  defendant's  telegram  above  set  forth,  and  which  was  acceded 
to  by  the  plaintiffs.  This  was  not  satisfactory  to  the  defendant^ 
and  it  returned  it  to  the  plaintiffs  with  certain  modifications, 
which  were  not  referred  to  in  the  correspondence.  These  modi- 
fications were :  (1)  That  the  fruit  should  be  well  protected  from 
frost  and  well  hayed ;  (2)  that  if,  in  the  judgment  of  the  plain- 
tiffs, it  was  necessary  or  prudent  that  the  cars  should  be  fired 
through,  the  plaintiffs  should  furnish  the  stoves  for  the  purpose, 
and  the  defendant  pay  the  expense  of  the  man  to  be  employed 
in  looking  after  the  fires  to  be  kept  in  the  cars;  (3)  that  the 
plaintiffs  should  line  the  cars  in  which  the  fruit  was  shipped. 
These  conditions  were  more  burdensome,  and  rendered  the  con- 
tract less  profitable  to  the  plaintiffs.  They  were  not  expressed 
in  the  correspondence  and  I  think  cannot  be  implied.  They 
were  not  assented  to  by  the  plaintiffs,  and  on  their  declining  to 
incorporate  them  in  the  paper  the  defendant  treated  the  nego- 
tiations as  at  an  end  and  notified  the  plaintiffs  that  it  had  placed 
its  order  with  other  parties.  There  was  some  further  correspon- 
dence but  it  is  not  material  to  the  question  presented  by  the 
appeal. 

The  writings  and  telegrams  that  passed  between  the  parties 
contain  all  the  elements  of  a  complete  contract.  Nothing  was 
wanting  in  the  plaintiffs'  original  proposition  but  the  defend- 
ant's assent  to  it  in  order  to  constitute  a  contract  binding 
upon  both  parties  according  to  its  terms.  This  assent  was 
given  upon  condition  that  a  certain  specified  modification  was 
accepted.  The  plaintiffs  finally  assented  to  the  modification,  and 
called  upon  the  defendant  to  signify  its  assent  again  to  the 
whole  arrangement  as  thus  modified,  and  it  replied  that  it  was 
"all  right,"  which  must  be  taken  as  conclusive  evidence  that 
the  minds  of  the  parties  had  met  and  agreed  upon  certain 
specified  and  distinct  obligations  which  were  to  be  observed  by 
both. 

It  is  true,  as  found  by  the  learned  referee,  that  the  parties 
intended  that  the  agreement  should  be  formally  expressed  in 
a  single  paper,  which,  when  signed,  should  be  the  evidence  of 
what  had  already  been  agreed  upon.  But  neither  party  was 
entitled  to  insert  in  the  paper  any  material  condition  not  referred 


OFFER  AND  ACCEPTANCE.  713 

to  in  the  correspondence,  and  if  it  was  inserted  without  the 
consent  of  the  other  party  it  was  unauthorized.  Hence  the 
defendant,  by  insisting  upon  further  material  conditions,  not 
expressed  or  implied  in  the  correspondence,  defeated  the  inten- 
tion to  reduce  the  agreement  to  the  form  of  a  single  paper 
signed  by  both  parties.  The  plaintiffs  then  had  the  right  to 
fall  back  upon  their  written  proposition,  as  originally  made, 
and  the  subsequent  letters  and  telegrams;  and,  if  they  consti- 
tuted a  contract  of  themselves,  the  absence  of  the  formal  agree- 
ment contemplated  was  not,  under  the  circumstances,  material. 

When  the  parties  intend  that  a  mere  verbal  agreement  shall 
be  finally  reduced  to  writing,  as  the  evidence  of  the  terms  of 
the  contract,  it  may  be  true  that  nothing  is  binding  upon  either 
party  until  the  writing  is  executed.  But  here  the  contract  was 
already  in  writing,  and  it  was  none  the  less  obligatory  upon 
both  parties  because  they  intended  that  it  should  be  put  into 
another  form,  especially  when  their  intention  is  made  impos- 
sible by  the  act  of  one  or  the  other  of  the  parties  by  insisting 
upon  the  insertion  of  conditions  and  provisions  not  contemplated 
or  embraced  in  the  correspondence.  Vassar  v.  Camp,  11  N.  Y. 
441 ;  Brown  v.  Norton,  50  Hun,  248 ;  Pratt  v.  Railroad  Co., 
21  !N".  Y.  308.  The  principle  that  governs  in  such  cases 
was  clearly  stated  by  Judge  Selden  in  the  case  last  cited; 
in  these  words:  "A  contract  to  make  and  execute  a  certain 
written  agreement,  the  terms  of  which  are  mutually  under- 
stood and  agreed  upon,  is,  in  all  respects,  as  valid  and  obliga- 
tory, where  no  statutory  objection  interposes,  as  the  written 
contract  itself  would  be,  if  executed.  If,  therefore,  it  shovdd 
appear  that  the  minds  of  the  parties  had  met;  that  a  propo- 
sition for  a  contract  had  been  made  by  one  party  and  ac- 
cepted by  the  other;  that  the  terms  of  this  contract  were  in 
all  respects  definitely  understood  and  agreed  upon,  and  that  a 
part  of  the  mutual  understanding  was  that  a  written  contract 
embodying  these  terms  should  be  drawn  and  executed  by  the 
respective  parties,  —  this  is  an  obligatory  contract,  which  neither 
party  is  at  liberty  to  refuse  to  perform." 

In  this  case  it  is  apparent  that  the  minds  of  the  parties  met, 
through  the  correspondence,  upon  all  the  terms,  as  well  as  the 


714  FORMATION  OF  CONTRACT. 

subject-matter,  of  the  contract,  and  that  the  subsequent  failure 
to  reduce  this  contract  to  the  precise  form  intended,  for  the 
reason  stated,  did  not  affect  the  obligations  of  either  party, 
which  had  already  attached,  and  they  may  now  resort  to  the 
primary  evidence  of  their  mutual  stipulations.  Any  other  rule 
would  always  permit  a  party  who  has  entered  into  a  contract 
like  this,  through  letters  and  telegraphic  messages,  to  violate 
it  whenever  the  understanding  was  that  it  should  be  reduced 
to  another  written  form,  by  simply  suggesting  other  and  addi- 
tional terms  and  conditions.  If  this  were  the  rule  the  contract 
would  never  be  completed  in  cases  where,  by  changes  in  the 
market,  or  other  events  occurring  subsequent  to  the  written 
negotiations,  it  became  the  interest  of  either  party  to  adopt 
that  course  in  order  to  escape  or  evade  obligations  incurred  in 
the  ordinary  course  of  commercial  business.  A  stipulation 
to  reduce  a  valid  written  contract  to  some  other  form  cannot 
be  used  for  the  purpose  of  imposing  upon  either  party  additional 
burdens  or  obligations,  or  of  evading  the  performance  of  those 
things  which  the  parties  have  mutually  agreed  upon  by  such 
means  as  made  the  promise  or  assent  binding  in  law.  There 
was  no  proof  of  any  custom  existing  between  the  shippers  and 
consignees  of  such  property  in  regard  to  the  payment  of  the 
expense  of  firing,  lining,  and  haying  the  cars.  If  it  be  said 
that  such  precautions  are  necessary  in  order  to  protect  the 
property  while  in  transit,  that  does  not  help  the  defendant. 
The  question  still  remains,  who  was  to  bear  the  expense  ?  The 
plaintiffs  had  not  agreed  to  pay  it,  any  more  than  they  had 
agreed  to  pay  the  freight  or  incur  the  other  expenses  of  trans- 
portation. The  plaintiffs  sent  a  plain  proposition  which  the 
defendant  accepted  without  any  such  conditions  as  it  subse- 
quently sought  to  attach  to  it.  That  the  parties  intended  to 
make  and  sign  a  final  paper  does  not  warrant  the  inference 
that  they  also  intended  to  make  another  and  different  agree- 
ment. The  defendant  is  in  no  better  position  than  it  would  be 
in  case  it  had  refused  to  sign  the  final  writing  without  alleg- 
ing any  reasons  whatever. 

The  principle,   therefore,   which   is   involved   in  the  case,  is 
this:   Can  parties  who   have   exchanged  letters   and   telegrams 


OFFER  AND  ACCEPTANCE.  715 

with  a  view  to  an  agreement,  and  have  arrived  at  a  point 
where  a  clear  and  definite  proposition  is  made  on  the  one  side 
and  accepted  on  the  other,  with  an  understanding  that  the 
agreement  shall  be  expressed  in  a  formal  writing,  ever  be 
bound  until  that  writing  is  signed  ?  If  they  are  at  liberty  to 
repudiate  the  proposition  or  acceptance,  as  the  case  may  be, 
at  any  time  before  the  paper  is  signed,  and  as  the  market  may 
go  up  or  down,  then  this  case  is  well  decided.  But  if,  at  the 
close  of  the  correspondence,  the  plaintiffs  became  bound  by 
their  offer,  and  the  defendant  by  its  acceptance  of  that  offer, 
whether  the  final  writing  was  signed  or  not,  as  I  think  they  did, 
under  such  circumstances  as  the  record  discloses,  then  the  con- 
clusion of  the  learned  referee  was  erroneous.  To  allow  either 
party  to  repudiate  the  obligations  clearly  expressed  in  the 
correspondence,  unless  the  other  will  assent  to  material  con- 
ditions, not  before  referred  to,  or  to  be  implied  from  the  trans- 
action, would  be  introducing  an  element  of  confusion  and 
uncertainty  into  the  law  of  contract.  If  the  parties  did  not 
become  bound  in  this  case,  they  cannot  be  bound  in  any  case  until 
the  Avriting  is  executed. 

The  judgment  should  be  reversed,  and  a  new  trial  granted, 
costs  to  abide  the  event. 

All  concur,  except  Earl,  Gray,  and  Bartlett,  JJ.,  dissenting. 

Judgment  reversed. 


(Pp.  29  and  57)      Acceptarice  and  revocation  by  mail  and  telegraph. 

(pp.  35  and  62) 
BRAUER  V.   SHAW.^ 

168  MASSACHUSETTS,  198.  — 1897. 

Two  actions  by  William  W.  Brauer  and  others  against  Frank 
Shaw  and  others  for  breach  of  contracts.  The  cases  were  tried 
together,  and  a  verdict  ordered  for  defendants.     Plaintiffs  except. 

Holmes,  J.  These  are  two  actions  of  contract  on  alleged 
contracts  letting  all  the  cattle-carrying  space  on  the  Warren 

1  Approved  in  Commonwealth,  etc.,  Ins.  Co.  v.  Knahe  Co.,  171  Mass. 
266,  270. 


716  FORMATION  OF  CONTRACT. 

Line  of  steamships  for  the  May  sailings  from  Boston  to  Liver- 
pool, the  first  contract  at  the  rate  of  fifty  shillings  a  head,  the 
second  and  alternative  one  at  fifty-two  shillings  and  six  pence. 
As  we  are  all  of  opinion  that,  for  one  reason  or  another,  the 
right  to  recover  upon  the  first  contract  is  not  made  out,  it 
may  be  stated  shortly.  On  April  15,  1892,  after  earlier  corre- 
spondence, the  defendants  wrote,  stating  terms,  saying  that  they 
had  telegraphed  that  they  "would  probably  accept  50s.,  if  reply 
promptly,"  referring  to  an  answer  asking  to  have  the  space  kept 
until  noon  the  next  day,  and  to  their  reply  that  they  would  "  try 
to  keep  space  for  you,"  and  adding  that  there  were  several  cus- 
tomers, and  that  they  should  feel  "duty  bound  to  let  it  to  the 
first  man  making  the  best  bid."  The  plaintiffs'  agents  tele- 
graphed at  fifty-three  minutes  past  eight  the  next  morning,  mak- 
ing a  modified  offer.  Whether  they  had  received  the  above  letter 
does  not  appear.  The  defendants  answered,  "  Eef erring  our  letter 
yesterday,  first  offer  for  number  named  has  preference,  three 
parties  considering.  Wire  quick  if  you  want  it."  This  was- 
received  in  the  New  York  telegraph  office  at  fifteen  minutes 
past  ten.  At  twenty  minutes  past  ten  the  plaintiffs'  agents 
telegraphed,  "Have  closed  all  your  May  spaces  as  per  letter, "^ 
etc.  This  is  relied  on  as  making  the  contract.  It  does  not 
appear  whether  the  telegram  which  arrived  only  five  minutes 
before  had  been  received.  If  not,  and,  if  the  last  telegram  was 
in  answer  to  the  letter  only,  the  plaintiffs  would  encounter  the 
question  whether  the  letter  contained  an  absolute  offer  or  only 
invited  one,  and,  if  the  former,  whether  the  offer  had  not  been 
rejected  by  the  modified  offer  in  the  first  telegram  mentioned. 
However  this  may  be,  the  parties  did  not  stop  at  the  point  which 
we  have  reached,  but  went  on  telegraphing  as  we  shall  state ;  so 
that,  if  there  was  any  moment  when  a  contract  had  been  made, 
the  parties  assumed  the  contrary,  and  continued  their  bargaining. 
Either  no  contract  had  been  made  thus  far,  or  it  was  discharged 
by  the  conduct  of  the  parties.  It  was  treated  as  discharged  in 
a  letter  of  the  plaintiffs'  agents  written  later  on  the  same  day. 

We  come,  then,  to  the  later  telegrams  of  the  same  day,  which 
are  relied  on  as  making  the  second  contract.  At  half  past  eleven 
the  defendants  telegraphed,  "  Subject  prompt  reply,  will  let  you 


OFFER  AND  ACCEPTANCE.  717 

May  space,  fifty-two  six."  This  was  received  in  New  York  at 
sixteen  minutes  past  twelve,  and  at  twenty-eight  minutes  past 
twelve  a  reply  was  sent  accepting  the  offer.  For  some  reason 
this  was  not  received  by  the  defendants  until  twenty  minutes 
past  one.  At  one  the  defendants  telegraphed,  revoking  their 
offer,  the  message  being  received  in  New  York  at  forty-three 
minutes  past  one.  The  plaintiffs  held  the  defendants  to  their 
bargain,  and  both  parties  stand  upon  their  rights. 

There  is  no  doubt  that  the  reply  was  handed  to  the  telegraph 
company  promptly,  and,  at  least,  it  would  have  been  open  to  a 
jury  to  find  that  the  plaintiffs  had  done  all  that  was  necessary 
on  their  part  to  complete  the  contract.  If,  then,  the  offer  was 
outstanding  when  it  was  accepted,  the  contract  was  made.  But 
the  offer  was  outstanding.  At  the  time  when  the  acceptance  was 
received,  even  the  revocation  of  the  offer  had  not  been  received. 
It  seems  to  us  a  reasonable  requirement  that,  to  disable  the  plain- 
tiffs from  accepting  their  offer,  the  defendants  should  bring  home 
to  them  actual  notice  that  it  had  been  revoked.  By  their  choice 
and  act,  they  brought  about  a  relation  between  themselves  and 
the  plaintiffs,  which  the  plaintiffs  could  turn  into  a  contract  by 
an  act  on  their  part,  and  authorized  the  plaintiffs  to  understand 
and  to  assume  that  that  relation  existed.  When  the  plaintiffs 
acted  in  good  faith  on  the  assumption,  the  defendants  could  not 
complain.  Knowingly  to  lead  a  person  reasonably  to  suppose 
that  you  offer,  and  to  offer,  are  the  same  thing.  O'Donnell  v. 
Clinton,  145  Mass.  461,  463 ;  Cornish  v.  Ahington,  4  Hurl.  «&.  N. 
549.  The  offer  must  be  made  before  the  acceptance,  and  it  does 
not  matter  whether  it  is  made  a  longer  or  a  shorter  time  before, 
if,  by  its  express  or  implied  terms,  it  is  outstanding  at  the 
time  of  the  acceptance.  Whether  much  or  little  time  has  inter- 
vened, it  reaches  forward  to  the  moment  of  the  acceptance,  and 
speaks  then.  It  would  be  monstrous  to  allow  an  inconsistent  act 
of  the  offerer,  not  known  o:*  brought  to  the  notice  of  the  offeree, 
to  affect  the  making  of  the  contract;  for  instance,  a  sale  by  an 
agent  elsewhere  one  minute  after  the  principal  personally  has 
offered  goods  which  are  accepted  within  five  minutes  by  the  per- 
son to  whom  he  is  speaking.  The  principle  is  the  same  when  the 
time  is  longer,  and  the  act  relied  on  a  step  looking  to,  but  not  yet 


718  FORMATION  OF  CONTRACT. 

giving  notice.    The  contrary  suggestion  by  Wilde,  J.,  in  McOulloch 

V.  Insurance  Co.  (1  Pick.  278,  279),  is  not  adopted  as  a  ground  of 

decision,  and  the  view  which  we  take  is  that  taken  by  the  supreme 

court  of  the  United  States,  and  is  now  the  settled  law  of  England. 

Tayloe  v.  Insurance  Co.,  9  How.  390,  400;  Patrick  v.  Bowmany 

149  U.  S.  411,  424 ;  Byrne  v.  Van  Tienhoven,  5  C.  P.  Div.  344 ; 

Stevenson  v.  McLean,  5  Q.   B.  Div.  346;    Henthorne  v.  Fi-aser, 

[1892]  2  Ch.  27;  Thomson  v.  James,   18  Ct.  of  Sess.  Cas.  (2d 

Series)  1 ;  Langdell  Cont.  §  180 ;  Drew  v.  Nunn,  4  Q.  B.  Div,  661, 

667 ;    Wheat  v.  Cross,  31  Md.  99,  103 ;  Kempner  v.  Cohn,  47  Ark. 

519,  527. 

It  is  unnecessary  to  consider  other  reasons  which  were  urged 

for  our  decision. 

Exceptions  sustained. 

(P.  62)  Acceptance  of  offer  of  reward.  (p.  67) 

VITTY  V.   ELEY. 

51  N.    Y.   APPELLATE   DIVISION,  44.  — 1900. 

Appeal  by  the  plaintiff,  John  Vitty,  from  a  judgment  of  the 
County  Court  of  Niagara  county  in  favor  of  the  defendant,  entered 
in  the  office  of  the  clerk  of  the  county  of  Niagara  on  the  9th  day 
of  December,  1899,  affirming  the  judgment  of  a  justice  of  the 
peace. 

Spring,  J.  The  defendant  is  trustee  of  a  school  district  in  the 
town  of  Lockport.  In  January,  1899,  the  schoolhouse  in  this  dis- 
trict was  broken  into  by  one  Joe  White  and  a  quantity  of  prop- 
erty stolen  therefrom  or  destroyed.  The  trustee,  probably  by 
authority  of  the  citizens  of  the  district,  although  his  authority  is 
not  in  question,  offered  a  reward  of  twenty -five  dollars  "  for  the 
arrest  and  conviction  of  the  party  or  parties  "  who  perpetrated 
the  crime.  The  evidence  shows  that  White  and  the  plaintiff 
lived  together  and  were  cronies.  White,  after  breaking  into  the 
schoolhouse  in  the  night,  returned  to  the  plaintiff's  house  bring- 
ing with  him  chalk,  flags,  window-catches  and  other  stuff  which 
he  had  taken  from  the  schoolhouse.  He  also  had  two  chickens, 
evidently  stolen,  which  were  eaten  in  the  household.     The  plain- 


OFFER  AND  ACCEPTANCE.  719 

tiff  saw  White  burn  two  of  these  flags  and  secrete  the  other  stuff 
under  a  board  of  the  floor.  White  told  the  plaintiff  not  to  "  say 
anything  about  this."  The  testimony,  therefore,  shows  that  the 
plaintiff  knew  that  White  had  stolen  this  stuff.  Later  on,  after 
the  reward  and  with  notice  of  it,  he  testified  that  he  told  the  bar- 
tender in  the  saloon  of  Mahar  &  Byrnes  that  Joe  White  broke 
into  the  schoolhouse ;  that  Peter  Hayes,  who  was  working  up  the 
case,'  was  called  in  from  the  back  room,  and  the  plaintiff'  then 
voluntarily  told  him  what  he  had  seen,  incriminating  White. 
Hayes  contradicted  the  plaintiff  and  said  he  was  called  from  the 
back  room  and  the  following  occurred :  "  I  said,  '  I  want  you  to 
come  up  to  the  sheriff's  office  and  make  a  statement  as  to  what 
you  know  about  breaking  into  this  schoolhouse.'  He  says,  '  I 
don't  know  anything  about  it ;  I  was  home  in  bed  the  night  the 
schoolhouse  was  broken  into.'  I  said,  '  From  what  I  hear,  either 
you  or  Joe  or  both  of  you  went  into  that  schoolhouse.'  He  said, 
'  I  didn't  go  in  there.'  I  said,  '  If  you  don't  come  up  to  the 
sheriff's  office  and  tell  what  you  know  about  it,  I  will  swear  out 
a  warrant  against  you.'  He  said  that  if  he  told  what  he  knew 
about  it,  he  would  have  no  place  to  stay.  I  said,  '  I  will  find  you 
a  place  to  stay,  come  with  me,'  and  we  went  to  the  courthouse 
and  called  the  sheriff  out.  I  said,  '  This  man  will  make  a  state- 
ment.' We  went  into  a  side  room.  He  said  about  what  he  testi- 
fied this  forenoon."  If  his  version  of  the  transaction  is  correct, 
the  plaintiff  did  not  voluntarily  give  up  the  information  with  the 
expectation  of  obtaining  the  reward,  but  it  was  extorted  from  him 
through  fear  that  he  might  be  arrested  himself  for  complicity 
with  White. 

There  is  considerable  contrariety  in  the  decisions  as  to  the  real 
basis  of  the  right  to  a  reward.  It,  however,  seems  to  be  settled 
in  this  State  that  it  is  in  the  nature  of  a  contract  inuring  to  the 
benefit  of  the  person  who  gives  the  information.  A  few  princi- 
ples out  of  the  conflicting  cases  I  think  may  be  stated,  although 
there  is  no  uniformity  among  them. 

1.  The  information  must  be  given  with  knowledge  of  the 
reward.  Fitch  v.  Sneddker,  38  N.  Y.  248 ;  Howland  v.  Lounds, 
51  Id.  604. 

I  think  the  evidence  warrants  the  conclusion  that  plaintiff 


720  FORMATION  OF  CONTRACT. 

knew  of  the  reward,  altliough  that  is  a  little  shadowy,  for  appar- 
ently he  could  not  read. 

/  2.  As  I  have  suggested,  it  is  a  contract  obligation.  This  being 
so,  it  must  be  the  voluntary  giving  up  of  the  information  by  the 
person.  If  corkscrewed  out  of  him  by  threats  inducing  fear  of 
prosecution,  I  take  it  no  recovery  could  be  had.  That  would 
destroy  the  contract  element.  In  the  early  English  case  of  Wil- 
liams V.  Carwardine  (4  Barn.  &  Aid.  621)  the  question  of  the 
motive  was  held  to  be  unimportant,  but  the  text  writers  and 
American  authorities  do  not  seem  to  have  followed  this  doctrine 
strictly,  although  I  find  no  case  in  this  State  distinctly  overruling 
it.  That  case  cannot  be  good  law  if  the  liability  is  contractual, 
as  assent  and  a  voluntary  surrender  of  the  information  would  be 
essential. 

3.  The  authorities  hold  that  the  information  must  be  imparted 
with  a  view  to  obtaining  the  reward.  18  Ency.  of  PI.  &  Pr. 
1155;  Hewitt  v.  Anderson^  56  Cal.  476.  And  in  Howland  v. 
Loiinds  (supra)  the  court  says  at  page  609  :  "  That  a  party  claim- 
ing a  reward  of  this  character  must  give  some  information  or  do 
something  having  some  reference  to  the  reward  offered,  is  very 
obvious.  The  action  is,  in  fact,  upon  contract.  Where  a  con- 
tract is  proposed  to  all  the  world,  in  the  form  of  a  proposition, 
any  party  may  assent  to  it  and  it  is  binding,  but  he  cannot  assent 
without  knowledge  of  the  proposition." 

In  the  present  case  the  plaintiff  does  not  claim  that  there 
was  any  talk  between  him  and  Hayes  to  the  effect  that  he 
expected  the   reward.     The  information   given  by  the   plaintiff 

1  In  Hewitt  v.  Anderson  (56  Cal.  476)  the  court  says  :  "  The  plaintiff,  on 
the  trial,  testified  that  he  did  do  the  acts  upon  which  he  bases  his  claim  to 
the  reward  with  a  view  to  obtaining  it.  On  the  other  hand,  there  was  evi- 
dence introduced  by  the  defendants  which  tended  to  prove  that  the  plaintiff 
had  stated,  under  oath,  that  he  had  not  expected  any  reward.  In  view  of 
that  conflict,  we  would  not  disturb  a  finding  either  way.  And  we  are  satis- 
fied that  under  that  finding  the  plaintiff  cannot  recover  in  this  action.  If  he 
did  not  do  the  acts  upon  which  he  now  bases  his  i"ight  to  recover,  with  the 
intention  of  claiming  the  reward  in  the  event  of  his  accomplishing  what  would 
entitle  him  to  it,  he  cannot  recover  it.  If  he  had  not  known  that  a  reward 
had  been  offered,  he  might,  upon  the  authority  of  some  cases,  recover.  But 
we  are  not  aware  of  any  case  in  which  it  has  been  held  that  a  party,  after 
disclaiming  any  intention  to  claim  a  reward,  could  recover  it." 


FORM:  STATUTE  OF  FRAUDS.  721 

was  undoubtedly  valuable,  and  even  essential  to  secure  the  con- 
viction of  White.  The  justice,  however,  on  conflicting  evidence, 
or  upon  inferences  properly  deducible  from  the  evidence,  has 
decided  adversely  to  the  plaintiff.  This  decision  implies  that 
he  reached  the  conclusion  that  the  information  was  imparted 
through  fear  of  arrest,  or  without  any  expectation  of  receiving 
the  reward.  The  conclusion  is  supported  by  the  proofs,  and 
we  are  not  inclined  to  interfere  with  the  disposition  of  the  case 
made  by  the  justice. 

The  judgment  is  affirmed,  with  costs  to  the  respondent.     All 

concurred. 

Judgment  affirmed,  with  costs. 


(P.  120)      Agreements  not  to  be  performed  within  a  year. 

WARNER  V.   TEXAS  &  PACIFIC  RY.   CO. 
164  UNITED  STATES,  418.  — 1896. 

In  Error  to  the  United  States  Circuit  Court  of  Appeals  for 
the  Fifth  Circuit. 

This  was  an  action  brought  May  9,  1892,  by  Warner  against 
the  Texas  &  Pacific  Railway  Company,  a  corporation  created 
by  the  laws  of  the  United  States,  upon  a  contract  made  in 
1874,  by  which  it  was  agreed  between  the  parties  that,  if  the 
plaintiff  would  grade  the  ground  for  a  switch,  and  put  on  the 
ties,  at  a  certain  point  on  the  defendant's  railroad,  the  defend- 
ant would  put  down  the  rails,  and  maintain  the  switch  for 
the  plaintiff's  benefit  for  shipping  purposes  as  long  as  he 
needed  it.  The  defendant  pleaded  that  the  contract  was  oral 
and  within  the  statute  of  frauds,  because  it  was  "not  to  be 
performed  within  one  year  from  the  making  thereof,"  and 
because  it  was  "  a  grant  or  conveyance  by  this  defendant  of  an 
estate  of  inheritance,  and  for  a  term  of  more  than  one  year,  in 
lands." 

At  the  trial,  the  plaintiff,  being  called  as  a  witness  in  his  own 
behalf,  testified  that  in  1874  the  defendant's  agent  made  an  oral 
contract  with  him,  by  which  it  was  agreed  that,  if  he  would  fur- 


722  FORMATION  OF  CONTRACT. 

nish  tlie  ties  and  grade  the  ground  for  the  switch,  the  defendant 
would  put  down  the  iron  rails  and  maintain  the  switch  for  the 
plaintiff's  benefit  for  shipping  purposes,  as  long  as  he  needed 
it;  that  the  plaintiff  immediately  graded  the  ground  for  the 
switch,  and  got  out  "and  put  down  the  ties,  and  the  defendant 
put  down  the  iron  rails,  and  established  the  switch ;  and  that 
the  plaintiff,  on  the  faith  of  the  continuance  of  transportation 
facilities  at  the  switch,  put  up  a  large  sawmill,  bought  many- 
thousand  acres  of  land  and  timber  rights  and  the  water  privi- 
leges of  Big  Sandy  creek,  made  a  tram  road  three  miles  long 
from  the  switch  to  the  creek,  and  otherwise  expended  large 
sums  of  money,  and  sawed  and  shipped  large  quantities  of 
lumber,  until  the  defendant,  on  May  19,  1887,  while  its  road  was 
operated  by  receivers,  tore  up  the  switch  and  ties,  and  destroyed 
his  transportation  facilities,  leaving  his  lands  and  other  property 
without  any  connection  with  the  railroad.  His  testimony  also 
tended  to  prove  that  he  had  thereby  been  injured  to  the  amount 
of  more  than  $50,000,  for  which  the  defendant  was  liable,  if  the 
contract  sued  on  was  not  within  the  statute  of  frauds. 

On  cross-examination,  the  plaintiff  testified  that  when  he 
made  the  contract  he  expected  to  engage  in  the  manufacture  of 
lumber  at  this  place  for  more  than  one  year,  and  to  stay  there, 
and  to  have  a  site  for  lumber  there,  as  long  as  he  lived;  and 
that  he  told  the  defendant's  agent,  in  the  conversation  between 
them  at  the  time  of  making  the  contract,  that  there  was  lumber 
enough  in  sight  on  the  railroad  to  run  a  mill  for  ten  years, 
and  by  moving  back  to  the  creek  there  would  be  enough  to  run 
a  mill  for  twenty  years  longer. 

!N"o  other  testimony  being  offered  by  either  party  bearing 
upon  the  question  whether  the  contract  sued  on  was  within 
the  statute  of  frauds,  the  Circuit  Court,  against  the  plaintiff's 
objection  and  exception,  ruled  that  the  contract  was  within  the 
statute,  instructed  the  jury  to  find  a  verdict  for  the  defendant, 
and  rendered  judgment  thereon,  which  was  affirmed  by  the 
Circuit  Court  of  Appeals,  upon  the  ground  that  the  contract  was 
within  the  statute  of  frauds,  as  one  not  to  be  performed  within 
a  year.  (13  U.  S.  App.  236,  54  Fed.  922.)  The  plaintiff  sued 
out  this  writ  of  error. 


FORM  :  STATUTE  OF  FRAUDS.  723 

Mr.  Justice  Gray,  after  stating  the  case,  delivered  the  opin- 
ion of  the  court. 

The  statute  of  frauds  of  the  State  of  Texas,  re-enacting,  in  this 
particular,  the  English  statute  of  29  Car.  II.  c.  3,  §  4  (1677),  pro- 
vides that  no  action  shall  be  brought  "  upon  any  agreement  which 
is  not  to  be  performed  within  the  space  of  one  year  from  the  mak- 
ing thereof,"  unless  the  "  agreement  upon  which  such  action  shall 
be  brought,  or  some  memorandum  or  note  thereof,  shall  be  in 
writing,  and  signed  by  the  party  to  be  charged  therewith,  or  by 
some  person  by  him  thereunto  lawfully  authorized."  Tex.  St. 
January  18, 1840 ;  1  Pasch.  Dig.  (4th  ed.)  art.  3875 ;  Eev.  St.  1879, 
art.  2464 ;  Bason  v.  Ilayhart,  2  Tex.  476,  480. 

This  case  has  been  so  fully  and  ably  argued,  and  the  con- 
struction of  this  clause  of  the  statute  of  frauds  has  so  seldom 
come  before  this  court,  that  it  will  be  useful,  before  considering 
the  particular  contract  now  in  question,  to  refer  to  some  of  the 
principal  decisions  upon  the  subject  in  the  courts  of  England^ 
and  of  the  several  States. 

In  the  earliest  reported  case  in  England  upon  this  clause  of 
the  statute  regard  seems  to  have  been  had  to  the  time  of  actual 
performance  in  deciding  that  an  oral  agreement  that,  if  the 
plaintiff  would  procure  a  marriage  between  the  defendant  and 
a  certain  lady,  the  defendant  would  pay  him  fifty  guineas, 
was  not  within  the  statute ;  Lord  Holt  saying  :  "  Though  the 
promise  depends  upon  a  contingent,  the  which  may  not  hap- 
pen in  a  long  time,  yet,  if  the  contingent  happen  within  a  year, 
the  action  shall  be  maintainable,  and  is  not  within  the  statute." 
Fmncam  v.  Foster,  (1692)  Skin.  326 ;  S.  C,  Holt,  25. 

A  year  later,  another  case  before  Lord  Holt  presented  the 
question  whether  the  words,  "  agreement  not  to  be  performed 
within  one  year,"  should  be  construed  as  meaning  every  agree- 
ment which  need  not  be  performed  within  the  year,  or  as  mean- 
ing only  an  agreement  which  could  not  be  performed  within 
the  year,  and  thus,  according  as  the  one  or  the  other  construc- 
tion should  be  adopted,  including  or  excluding  an  agreement 
which  might  or  might  not  be  performed  within  the  year,  with- 
out regard  to  the  time  of  actual  performance.  The  latter  was 
decided  to  be  the  true  construction. 


72-4  FORMATION  OF  CONTRACT. 

< 

That  was  an  action  upon  an  oral  agreement,  by  which  the 
defendant  promised,  for  one  guinea  paid,  to  pay  the  plaintifE 
so  many  at  the  day  of  his  marriage ;  and  the  marriage  did  not 
happen  within  the  year.  The  case  was  considered  by  all  the 
judges.  Lord  Holt  "  was  of  opinion  that  it  ought  to  have  been 
in  writing,  because  the  design  of  the  statute  was,  not  to  trust 
to  the  memory  of  witnesses  for  a  longer  time  than  one  year." 
But  the  great  majority  of  the  judges  were  of  opinion  that  the 
statute  included  those  agreements  only  that  were  impossible  to 
be  performed  within  the  year,  and  that  the  case  was  not  within 
the  statute,  because  the  marriage  might  have  happened  within 
a  year  after  the  agreement;  and  laid  down  this  rule:  "Where 
the  agreement  is  to  be  performed  upon  a  contingent,  and  it 
does  not  appear  within  the  agreement  that  it  is  to  be  per- 
formed after  the  year,  then  a  note  in  writing  is  not  necessary, 
for  the  contingent  might  happen  within  the  year ;  but  where 
it  appears  by  the  whole  tenor  of  the  agreement  that  it  is  to  be 
performed  after  the  year,  there  a  note  is  necessary."  Peter 
V.  Compton,  (1693)  Skin.  353 ;  S.  C,  Holt,  326,  cited  by  Lord 
Holt  in  Smith  v.  Westall,  1  Ld.  Raym.  316,  317;  Anon., 
Comyn,  49,  50;   Comb.   463. 

Accordingly,  about  the  same  time,  all  the  judges  held  that  a 
promise  to  pay  so  much  money  upon  the  return  of  a  certain 
ship,  which  ship  happened  not  to  return  within  two  years  after 
the  promise  made,  was  not  within  the  statute,  "for  that  by 
possibility  the  ship  might  have  returned  within  a  year;  and 
although  by  accident  it  happened  not  to  return  so  soon,  yet, 
they  said,  that  clause  of  the  statute  extends  only  to  such 
promises  where,  by  the  express  appointment  of  the  party,  the 
thing  is  not  to  be  performed  within  a  year."     Anon.,  1  Salk.  280. 

Again,  in  a  case  in  the  king's  bench  in  1762,  an  agreement 
to  leave  money  by  will  was  held  not  to  be  within  the  statute, 
although  uncertain  as  to  the  time  of  performance.  Lord  Mans- 
field said  that  the  law  was  settled  by  the  earlier  cases.  Mr. 
Justice  Denison  said :  "  The  statute  of  frauds  plainly  means  an 
agreement  not  to  be  performed  within  the  space  of  a  year,  and 
expressly  and  specifically  so  agreed.  A  contingency  is  not  within 
it;   nor  any  case  that  depends  upon  contingency.     It  does  not 


FORM :  STATUTE  OF  FRAUDS.  725 

extend  to  cases  where  the  thing  only  may  be  performed  within 
the  year ;  and  the  act  cannot  be  extended  further  than  the  words 
of  it."  And  Mr.  Justice  Wilmot  said  that  the  rule  laid  down  in 
1  Salk.  280,  above  quoted,  was  the  true  rule.  Fenton  v.  Emblers, 
3  Burrows,  1278 ;  S.  C,  1  W.  Bl.  353. 

It  thus  appears  to  have  been  the  settled  construction  of  this 
clause  of  the  statute  in  England,  before  the  Declaration  of  Inde- 
pendence, that  an  oral  agreement  which,  according  to  the  inten- 
tion of  the  parties,  as  shown  by  the  terms  of  the  contract,  might 
be  fully  performed  within  a  year  from  the  time  it  was  made,  was 
not  within  the  statute,  although  the  time  of  its  performance  was 
uncertain,  and  might  probably  extend,  and  be  expected  by  the 
parties  to  extend,  and  did  in  fact  extend,  beyond  the  year. 

The  several  states  of  the  Union,  in  re-enacting  this  provision 
of  the  statute  of  frauds  in  its  original  words,  must  be  taken  to 
have  adopted  the  known  and  settled  construction  which  it  had 
received  by  judicial  decisions  in  England,  Tucker  v.  Oxley, 
5  Cranch,  34,  42 ;  Pennock  v.  Dialogue,  2  Pet.  1,  18 ;  McDonald 
V.  Hovey,  110  U.  S.  619,  628.  And  the  rule  established  in  Eng- 
land by  those  decisions  has  ever  since  been  generally  recognized 
in  England  and  America,  although  it  may,  in  a  few  instances, 
have  been  warped  or  misapplied. 

The  decision  in  Boydell  v.  Drummond  (1809)  11  East,  142, 
which  has  been  sometimes  supposed  to  have  modified  the  rule, 
was  really  in  exact  accordance  with  it.  In  that  case  the  dec- 
laration alleged  that  the  Boydells  had  proposed  to  publish  by 
subscription  a  series  of  large  prints  from  some  of  the  scenes  of 
Shakespeare's  plays,  in  eighteen  numbers  containing  four  plates 
each,  at  the  price  of  three  guineas  a  number,  payable  as  each  was 
issued,  and  one  number,  at  least,  to  be  annually  published  after 
the  delivery  of  the  first;  and  that  the  defendant  became  a 
subscriber  for  one  set  of  prints,  and  accepted  and  paid  for  two 
numbers,  but  refused  to  accept  or  pay  for  the  rest.  The  first 
prospectus  issued  by  the  publishers  stated  certain  conditions, 
in  substance  as  set  out  in  the  declaration,  and  others  showing 
the  magnitude  of  the  undertaking,  and  that  its  completion  would 
unavoidably  take  a  considerable  time.  A  second  prospectus 
stated  that  one  number,  at  least,  should  be  published  annually, 


726  FORMATION  OF  CONTRACT. 

and  the  proprietors  were  confident  that  they  should  be  enabled 
to  produce  two  numbers  within  the  course  of  every  year.  The 
book  in  which  the  defendant  subscribed  his  name  had  only,  for 
its  title,  "  Shakespeare  Subscribers.  Their  signatures,"  without 
any  reference  to  either  prospectus.  The  contract  was  held  to 
be  within  the  statute  of  frauds,  as  one  not  to  be  performed  within 
a  year,  because,  as  was  demonstrated  in  concurring  opinions  of 
Lord  Ellenborough  and  Justices  Grose,  LeBlanc,  and  Bayley,  the 
contract,  according  to  the  understanding  and  contemplation  of  the 
parties,  as  manifested  by  the  terms  of  the  contract,  was  not  to  be 
fully  performed  (by  the  completion  of  the  whole  work)  within  the 
year ;  and  consequently,  a  full  completion  within  the  year,  even 
if  physically  possible,  would  not  have  been  according  to  the 
terms  or  the  intent  of  the  contract,  and  could  not  have  entitled 
the  publishers  to  demand  immediate  payment  of  the  Avhole  sub- 
scription. 

In  Wells  V.  Horton,  (1826)  4  Bing.  40 ;  S.  C,  12  Moore,  C.  P. 
177,  it  was  held  to  be  settled  by  the  earlier  authorities  that  an 
agreement  by  which  a  debtor,  in  consideration  of  his  creditor's 
agreeing  to  forbear  to  sue  him  during  his  lifetime,  promised  that 
his  executor  should  pay  the  amount  of  the  debt,  was  not  within 
the  statute ;  and  Chief  Justice  Best  said :  "  The  present  case  is 
clearly  distinguishable  from  Boydell  v.  Di'ummond,  where,  upon 
the  face  of  the  agreement,  it  appeared  that  the  contract  was  not 
to  be  executed  within  a  year." 

In  Souch  V.  Strawbndge,  (1846)  2  C.  B.  808,  a  contract  to  sup- 
port a  child,  for  a  guinea  a  month,  as  long  as  the  child's  father 
should  think  proper,  was  held  not  to  be  Avithin  the  statute,  which, 
as  Chief  Justice  Tindal  said,,  ''speaks  of  'any  agreement  that  is 
not  to  be  performed  within  the  space  of  one  year  from  the  making 
thereof ; '  pointing  to  contracts  the  complete  performance  of  which 
is  of  necessity  extended  beyond  the  space  of  a  year.  That  appears 
clearly  from  the  case  of  Boydell  v.  Drummond,  the  rule  to  be 
extracted  from  which  is  that,  when  the  agreement  distinctly 
shows,  upon  the  face  of  it,  that  the  parties  contemplated  its 
performance  to  extend  over  a  greater  space  of  time  than  one 
year,  the  case  is  within  the  statute ;  but  that,  where  the  contract 
is  such  that  the  whole  may  be  performed  within  a  year,  and 


FORM  :  STATUTE  OF  FRAUDS.  727 

there  is  no  express  stipulation  to  the  contrary,  the  statute  does 
not  apply." 

In  Murphy  v.  O'SulUvan,  (1866)  11  Ir.  Jur.  (N.  S.)  Ill,  the 
court  of  exchequer  chamber  in  Ireland,  in  a  series  of  careful 
opinions  by  Mr.  Justice  O'Hagan  (afterwards  Lord  Chancellor 
of  Ireland),  Baron  Fitzgerald,  Chief  Baron  Pigot,  and  Chief 
Justice  Monahan,  reviewing  the  English  cases,  held  that  under 
the  Irish  statute  of  frauds  of  7  Wm.  III.  c.  12  (which  followed 
in  this  respect  the  words  of  the  English  statute),  an  agreement 
to  maintain  and  clothe  a  man  during  his  life  was  not  required 
to  be  in  writing. 

In  the  recent  case  of  McGregor  v.  McGregor,  (1888)  21  Q.  B. 
Div.  424,  the  English  court  of  appeal  held  that  a  lawful  agree- 
ment made  between  husband  and  wife,  in  compromise  of  legal 
proceedings,  by  which  they  agreed  to  live  apart,  the  husband 
agreeing  to  allow  the  wife  a  weekly  sura  for  maintenance,  and 
she  agreeing  to  maintain  herself  and  her  children,  and  to  indem- 
nify him  against  any  debts  contracted  by  her,  was  not  within  the 
statute.  Lord  Esher,  M.  E..,  thought  the  true  doctrine  on  the 
subject  was  that  laid  down  by  Chief  Justice  Tindal  in  the  pas- 
sage above  quoted  from  Souch  v.  Strawbridge.  Lord  Justice  Lind- 
ley  said :  "  The  provisions  of  the  statute  have  been  construed  in 
a  series  of  decisions  from  which  we  cannot  depart.  The  effect  of 
these  decisions  is  that,  if  the  contract  can  by  possibility  be  per- 
formed within  the  year,  the  statute  does  not  apply."  Lord  Jus- 
tice Bowen  said :  "  There  has  been  a  decision  which  for  200  years 
has  been  accepted  as  the  leading  case  on  the  subject.  In  Peter  v. 
Compton  it  was  held  that  *  an  agreement  that  is  not  to  be  per- 
formed within  the  space  of  a  year  from  the  making  thereof 
means,  in  the  statute  of  frauds,  an  agreement  which  appears 
from  its  terms  to  be  incapable  of  performance  within  the  year." 
And  each  of  the  three  judges  took  occasion  to  express  approval 
of  the  decision  in  Murphy  v.  G' Sullivan,  above  cited,  and  to  disap- 
prove the  opposing  decision  of  Hawkins,  J.,  in  Davey  v.  Shannon, 
4  Exch.  Div.  81. 

The  cases  on  this  subject  in  the  courts  of  the  several  states 
are  generally  in  accord  with  the  English  cases  above  cited. 
They  are   so  numerous,   and  have  been  so  fully  collected  in 


728  FORMATION  OF  CONTRACT. 

Browne  on  the  Statute  of  Frauds  (Stli  ed.  c.  13),  that  we  shall 
refer  to  but  few  of  them,  beyond  those  cited  by  counsel  in  the 
case  at  bar. 

[The  court  then  states  Peters  v.  WestborougJi,  ante,  p.  120.] 

In  many  other  States,  agreements  to  support  a  person  for 
life  have  been  held  not  to  be  within  the  statute.  Browne,  St. 
Frauds,  c.  13,  §  276.  The  decision  of  the  Supreme  Court  of 
Tennessee  in  Deaton  v.  Coal  Go.  (12  Heisk.  650),  cited  by  the 
defendant  in  error,  is  opposed  to  the  weight  of  authority. 

[The  court  then  discusses  Roberts  v.  Bockbottom  Co.,  7  Met. 
(Mass.)  46;  Blanding  v.  Sargent,  33  N.  H.  239;  Hinckley  v. 
Southgate,  11  Vt.  428 ;  Linscott  v.  Mclntire,  15  Me.  201 ;  Herrin 
y.  Butters,  20  Me.  119 ;  Broadwell  v.  Getman,  2  Denio  (N.  Y.) 
87 ;  Pitkin  v.  Long  Island  Railroad  Co.,  2  Barb.  Ch.  (N.  Y.)  221 ; 
Kent  V.  Kent,  62  N.  Y.  560;  Saunders  v.  Kastenbine,  6  B.  Mon. 
(Ky.)  17 ;  Railway  Go.  v.  Whitley,  54  Ark.  199 ;  Sweet  v.  Lumber 
Co.,  56  Ark.  629.] 

The  construction  and  application  of  this  clause  of  the  statute 
of  frauds  first  came  before  this  court  at  December  term,  1866, 
in  Packet  Go.  v.  Sickles  (5  Wall.  580),  which  arose  in  the  Dis- 
trict of  Columbia  under  the  statute  of  29  Car.  II.  c.  3,  §  4,  in 
force  in  the  state  of  Maryland  and  in  the  District  of  Columbia. 
Alex.  Br.  St.  Md.  509;  Mlicott  v.  Peterson,  13  Md.  476,  487; 
Comp.  St.  D.  C.  c.  23,  §  7. 

That  was  an  action  upon  an  oral  contract,  by  which  a  steam- 
boat company  agreed  to  attach  a  patented  contrivance,  known 
as  the  "  Sickles  Cut-Oif,"  to  one  of  its  steamboats,  and,  if  it 
should  effect  a  saving  in  the  consumption  of  fuel,  to  use  it  on 
that  boat  during  the  continuance  of  the  patent,  if  the  boat 
should  last  so  long;  and  to  pay  the  plaintiffs  weekly,  for  the 
use  of  the  cut-off,  three-fourths  of  the  value  of  the  fuel  saved, 
to  be  ascertained  in  a  specified  manner.  At  the  date  of  the 
contract  the  patent  had  twelve  years  to  run.  The  court,  in  an 
opinion  delivered  by  Mr.  Justice  Nelson,  held  the  contract  to 
be  within  the  statute,  and  said :  "  The  substance  of  the  contract 
is  that  the  defendants  are  to  pay  in  money  a  certain  proportion 
of  the  ascertained  value  of  the  fuel  saved  at  stated  intervals 
throughout  the  period  of  twelve  years,  if  the  boat  to  which 


FORM  :  STATUTE  OF  FRAUDS.  72^ 

the  cut-off  is  attached  should  last  so  long."  "  It  is  a  contract 
not  to  be  performed  within  the  year,  subject  to  a  defeasance 
by  the  happening  of  a  certain  event,  which  might  or  might 
not  occur  within  that  time."  (5  Wall.  594-596.)  And  refer- 
ence was  made  to  Birch  v.  Liverpool  (9  Barn.  &  C.  392)  and 
Dohson  V.  Collis  (1  Hurl.  &  N.  81),  in  each  of  which  the  agree- 
ment was  for  the  hire  of  a  thing,  or  of  a  person,  for  a  term 
specified  of  more  than  a  year,  determinable  by  notice  within 
the  year,  and  therefore  within  the  statute,  because  it  was  not 
to  be  performed  within  a  year,  although  it  was  defeasible  within 
that  period. 

In  Packet  Co.  v.  Sickles  it  appears  to  have  been  assumed, 
almost  without  discussion,  that  the  contract,  according  to  its 
true  construction,  was  not  to  be  performed  in  less  than  twelve 
years,  but  defeasible  by  an  event  which  might  or  might  not 
happen  within  that  time.  It  may  well  be  doubted  whether  that 
view  can  be  reconciled  with  the  terms  of  the  contract  itself,  or 
with  the  general  current  of  the  authorities.  The  contract,  as 
stated  in  the  forepart  of  the  opinion,  was  to  use  and  pay  for 
the  cut-off  upon  the  boat  "during  the  continuance  of  the  said 
patent,  if  the  said  boat  should  last  so  long."  (5  Wall.  581, 
594.)  The  terms  "  during  the  continuance  of "  and  "  last  so 
long "  would  seem  to  be  precisely  equivalent,  and  the  full  per- 
formance of  the  contract  to  be  limited  alike  by  the  life  of  the 
patent  and  by  the  life  of  the  boat.  It  is  difficult  to  understand 
how  the  duration  of  the  patent  and  the  duration  of  the  boat 
differed  from  one  another  in  their  relation  to  the  performance 
or  the  determination  of  the  contract ;  or  how  a  contract  to  use 
an  aid  to  navigation  upon  a  boat  so  long  as  she  shall  last  can 
be  distinguished  in  principle  from  a  contract  to  support  a  man 
so  long  as  he  shall  live,  which  has  been  often  decided,  and  is 
generally  admitted,  not  to  be  within  the  statute  of  frauds. 

At  October  term,  1877,  this  court,  speaking  by  Mr.  Justice 
Miller,  said:  "The  statute  of  frauds  applies  only  to  contracts 
which,  by  their  terms,  are  not  to  be  performed  within  a  year, 
and  does  not  apply  because  they  may  not  be  performed  within 
that  time.  In  other  words,  to  make  a  parol  contract  void,  it 
must  be  apparent  that  it  was  the  understanding  of  the  parties. 


730  FORIVIATION  OF  CONTRACT. 

that  it  was  not  to  be  performed  within  a  year  from  the  time  it 
was  made."  And  it  was  therefore  held,  in  one  case,  that  a 
contract  by  the  owner  of  a  valuable  estate,  employing  lawyers 
to  avoid  a  lease  thereof,  and  to  recover  the  property,  and  prom- 
ising to  pay  them  a  certain  sum  out  of  the  proceeds  of  the 
land  when  recovered  and  sold,  was  not  within  the  statute, 
because  all  this  might  have  been  done  within  a  year ;  and,  in 
another  case,  that  a  contract,  made  early  in  November,  1869, 
to  furnish  all  the  stone  required  to  build  and  complete  a  lock 
-and  dam  which  the  contractor  with  the  State  had  agreed  to 
complete  by  September  1,  1871,  was  not  within  the  statute, 
because  the  contractor,  by  pushing  the  work,  might  have  fully 
completed  it  before  November,  1870.  McPherson  v.  Cox,  96  U.  S. 
404,  416,  417 ;  Walker  v.  Johnson,  Id.  424,  427. 

In  Texas,  where  the  contract  now  in  question  was  made,  and 
this  action  upon  it  was  tried,  the  decisions  of  the  Supreme  Court 
of  the  State  are  in  accord  with  the  current  of  decisions  else- 
where. 

[The  court  then  discusses  Tliouvenin  v.  Lea,  26  Tex.  612 ; 
TJioma^  V.  Hammond,  47  Tex.  42 ;  Weatherford,  &c.  Railway 
<Jo.  V.  Wood,  88  Tex.  191.] 

In  the  case  at  bar,  the  contract  between  the  railroad  com- 
pany and  the  plaintiff,  as  testified  to  by  the  plaintiff  himself, 
who  was  the  only  witness  upon  the  point,  was  that,  if  he  would 
furnish  the  ties  and  grade  the  ground  for  the  switch  at  the 
place  where  he  proposed  to  erect  a  sawmill,  the  railroad  com- 
pany would  "  put  down  the  iron  rails  and  maintain  the  switch 
for  the  •  plaintiff's  benefit  for  shipping  purposes  as  long  as  he 
needed  it." 

The  parties  may  Avell  have  expected  that  the  contract  would 
continue  in  force  for  more  than  one  year.  It  may  have  been  very 
improbable  that  it  would  not  do  so ;  and  it  did  in  fact  continue 
in  force  for  a  much  longer  time.  But  they  made  no  stipulation 
which,  in  terms,  or  by  reasonable  inference,  required  that  result. 
The  question  is  not  what  the  probable,  or  expected,  or  actual  per- 
formance of  the  contract  was,  but  whether  the  contract,  accord- 
ing to  the  reasonable  interpretation  of  its  terms,  required  that  it 
should  not  be  performed  within  the  year.     No  definite  term  of 


FORM  :  STATUTE  OF  FRAUDS.  731 

time  for  the  performance  of  the  contract  appears  to  have  been 
mentioned  or  contemplated  by  the  parties,  nor  was  there  any 
agreement  as  to  the  amount  of  lumber  to  be  sawed  or  shipped  by 
the  plaintiff,  or  as  to  the  time  during  which  he  should  keep  np 
his  mill. 

The  contract  of  the  railroad  company  was  with,  and  for  the 
benefit  of,  the  plaintiff  personally.  The  plaintiff's  own  testimony 
shows  (although  that  is  not  essential)  that  he  understood  that  the 
performance  of  the  contract  would  end  with  his  own  life.  The 
obligation  of  the  railroad  company  to  maintain  the  switch  was  in 
teTms  limited  and  restricted  by  the  qualification  "  for  the  plain- 
tiff's benefit  for  shipping  purposes  as  long  as  he  needed  it,"  and 
no  contingency  which  should  put  an  end  to  the  performance  of 
the  contract,  other  than  his  not  needing  the  switch  for  the  pur- 
pose of  his  business,  appears  to  have  been  in  the  mouth  or  in  the 
mind  of  either  party.  If,  within  a  year  after  the  making  of  the 
contract,  the  plaintiff  had  died,  or  had  abandoned  his  whole  busi- 
ness at  this  place,  or  for  any  other  reason  had  ceased  to  need  the 
switch  for  the  shipping  of  lumber,  the  railroad  company  would 
have  been  no  longer  under  any  obligation  to  maintain  the  switch, 
and  the  contract  would  have  been  brought  to  an  end  by  having 
been  fully  performed. 

The  complete  performance  of  the  contract  depending  upon  a 
contingency  which  might  happen  within  the  year,  the  contract  is 
not  within  the  statute  of  frauds  as  an  "  agreement  which  is  not 
to  be  performed  within  the  space  of  one  year  from  the  making 
thereof." 

Nor  is  it  within  the  other  clause  of  the  statute  of  frauds,  relied 
on  in  the  answer,  which  requires  certain  conveyances  of  real 
estate  to  be  in  writing.  The  suggestion  made  in  the  argument 
for  the  defendant  in  error,  that  the  contract  was,  in  substance,  a 
grant  of  an  easement  in  real  estate,  and  as  such  within  the  stat- 
ute, overlooks  the  difference  between  the  English  and  the  Texan 
statutes  in  this  particular.  The  existing  statutes  of  Texas, 
while  they  substantially  follow  the  English  statute  of  frauds,  so 
far  as  to  require  a  conveyance  of  any  "  estate  of  inheritance  or 
freehold,  or  for  a  term  of  more  than  one  year,  in  lands  and  tene- 
ments," as  well  as  "  any  contract  for  the  sale  of  real  estate,  or 


732  FORMATION  OF  CONTRACT. 

the  lease  thereof  for  a  longer  term  than  one  year,"  to  be  in  writ- 
ing, omit  to  re-enact  the  additional  words  of  the  English  statute, 
in  the  clause  concerning  conveyances,  "  or  any  uncertain  interest 
of,  in,  to,  or  out  of  "  lands  or  tenements,  and,  in  the  other  clause, 
"or  any  interest  in  or  concerning  them."  St.  29  Car.  II.  c.  3, 
§§  1,  4;  Eev.  St.  Tex.  1879,  arts.  548,  2464;  Pasch.  Dig.  arts.  997, 
3875 ;  James  v.  Fulcrod,  5  Tex.  512,  516 ;  Stuart  v.  Baker,  17  Tex. 
417,  420 ;  Anderson  v.  Powers,  59  Tex.  213. 

Judgment  reversed,  and  case  remanded  to  the  Circuit  Court, 
with  directions  to  set  aside  the  verdict,  and  to  order  a  new  trial.^ 


(P.  138)  Adequacy  of  consideration.  (p.  150) 

RICKETTS  V.   SCOTHORN. 

57   NEBRASKA,   51. —1898. 

Sullivan,  J.  In  the  District  Court  of  Lancaster  County  the 
plaintiff  Katie  Scothorn  recovered  judgment  against  the  defend- 
ant Andrew  D.  Ricketts,  as  executor  of  the  last  will  and  testa- 
ment of  John  C.  Ricketts,  deceased.  The  action  was  based  upon 
a  promissory  note,  of  which  the  following  is  a  copy : 

"  May  the  first,  1891.  I  promise  to  pay  to  Katie  Scothorn  on  demand, 
$2000  to  be  at  6  per  cent  per  annum. 

"J.  C.  Ricketts." 

In  the  petition  the  plaintiff  alleges  that  the  consideration  for 
the  execution  of  the  note  was  that  she  should  surrender  her 
employment  as  bookkeeper  for  Mayer  Bros,  and  cease  to  work 
for  a  living.  She  also  alleges  that  the  note  was  given  to  induce 
her  to  abandon  her  occupation,  and  that,  relying  on  it,  and  on 
the  annual  interest,  as  a  means  of  support,  she  gave  up  the  em- 
ployment in  which  she  was  then  engaged.  These  allegations  of 
the  petition  are  denied  by  the  executor.     The  material  facts  are 

1  A  contract  to  marry  is  not  within  this  clause  of  the  statute  of  frauds. 
Lewis  V.  Tapman  (Md.),  45  Atl.  459  ;  citing  Derby  v.  Phelps,  2  N.  H.  515  ; 
Nichols  V.  Weaver,  7  Kans.  373  ;  Ullman  v.  Meyer,  10  Fed.  Rep.  241 ;  Con- 
tra, Brick  V.  Gannar,  36  Huu  (N.  Y.),  52  ;  Blackburn  v.  Mann,  85  111.  222. 


CONSIDERATION.  733 

undisputed.  They  are  as  follows :  John  C.  Ricketts,  the  maker 
of  the  note,  was  the  grandfather  of  the  plaintiff.  Early  in  May, 
—  presumably  on  the  day  the  note  bears  date,  —  he  called  on  her 
at  the  store  where  she  was  working.  What  transpired  between 
them  is  thus  described  by  Mr.  Flodene,  one  of  the  plaintiff's 
witnesses : 

A.  Well  the  old  gentleman  came  in  there  one  morning  about 
9  o'clock,  —  probably  a  little  before  or  a  little  after,  but  early  in 
the  morning,  —  and  he  unbuttoned  his  vest  and  took  out  a  piece 
of  paper  in  the  shape  of  a  note ;  that  is  the  way  it  looked  to  me ; 
and  he  says  to  Miss  Scothorn,  "  I  have  fixed  out  something  that 
you  have  not  got  to  work  any  more."  He  says,  "  None  of  my 
grandchildren  work  and  you  don't  have  to." 

Q.   Where  was  she  ? 

A.  She  took  the  piece  of  paper  and  kissed  him  ;  and  kissed  the 
old  gentleman  and  commenced  to  cry. 

It  seems  Miss  Scothorn  immediately  notified  her  employer  of 
her  intention  to  quit  work,  and  that  she  did  soon  after  abandon 
her  occupation.  The  mother  of  the  plaintiff  was  a  witness  and 
testified  that  she  had  a  conversation  with  her  father,  Mr.  Ricketts, 
shortly  after  the  note  was  executed,  in  which  he  informed  her 
that  he  had  given  the  note  to  the  plaintiff  to  enable  her  to  quit 
work;  that  none  of  his  grandchildren  worked  and  he  did  not 
think  she  ought  to.  For  something  more  than  a  year  the  plain- 
tiff was  without  an  occupation ;  but  in  September,  1892,  with  the 
consent  of  her  grandfather,  and  by  his  assistance,  she  secured  a 
position  as  bookkeeper  with  Messrs.  Funke  &  Ogden.  On  June 
8,  1894,  Mr.  Ricketts  died.  He  had  paid  one  year's  interest  on 
the  note,  and  a  short  time  before  his  death  expressed  regret  that 
he  had  not  been  able  to  pay  the  balance.  In  the  summer  or  fall 
of  1892,  he  stated  to  his  daughter,  Mrs.  Scothorn,  that  if  he  could 
sell  his  farm  in  Ohio  he  would  pay  the  note  out  of  the  proceeds. 
He  at  no  time  repudiated  the  obligation. 

We  quite  agree  with  counsel  for  the  defendant  that  upon 
this  evidence  there  was  nothing  to  submit  to  the  jury,  and  that  a 
verdict  should  have  been  directed  peremptorily  for  one  of  the 
parties. 

The  testimony  of  Flodene  and  Mrs.  Scothorn,  taken  together, 


734  FORMATION  OF  CONTRACT. 

conclusively  establishes  the  fact  that  the  note  was  not  given  in 
consideration  of  the  plaintiff  pursuing,  or  agreeing  to  pursue,  any- 
particular  line  of  conduct.  There  was  no  promise  on  the  part  of 
the  plaintiff  to  do  or  refrain  from  doing  anything.  Her  right  to 
the  money  promised  in  the  note  was  not  made  to  depend  upon  an 
abandonment  of  her  employment  with  Mayer  Bros,  and  future 
abstention  from  like  service.  Mr.  Ricketts  made  no  condition, 
requirement,  or  request.  He  exacted  no  quid  pro  quo.  He  gave 
the  note  as  a  gratuity  and  looked  for  nothing  in  return.  So  far 
as  the  evidence  discloses,  it  was  his  purpose  to  place  the  plaintiff 
in  a  position  of  independence,  where  she  could  work  or  remain 
idle  as  she  might  choose.  The  abandonment  by  Miss  Scothorn 
of  her  position  as  bookkeeper  was  altogether  voluntary.  It  was 
not  an  act  done  in  fulfillment  of  any  contract  obligation  assumed 
when  she  accepted  the  note.  The  instrument  in  suit  being  given 
without  any  valuable  consideration,  was  nothing  more  than  a 
promise  to  make  a  gift  in  the  future  of  the  sum  of  money  therein 
named. 

Ordinarily,  such  promises  are  not  enforceable  even  when  put 
in  the  form  of  a  promissory  note.  Kirkpatrick  v.  Taylor,  43  111. 
207 ;  Pheljjs  v.  Phelps,  28  Barb.  N.  Y.  121 ;  Johnston  v.  Griest, 
85  Ind.  503 ;  Fink  v.  Cox,  18  Johns.  N.  Y.  145.  But  it  has 
often  been  held  that  an  action  on  a  note  given  to  a  church, 
college,  or  other  like  institution,  upon  the  faith  of  which  money 
has  been  expended  or  obligations  incurred,  could  not  be  success- 
fully defended  on  the  ground  of  a  want  of  consideration.^  Barnes 
v.  Ferine,  12  N.  Y.  18 ;  Fhilomath  College  v.  Hai'tless,  6  Ore.  158 ; 
Tliompson  v.  Mercer  County,  40  111.  379 ;  Irwin  v.  Lombard  Uni- 
versity, 56  0.  St.  9.  In  this  class  of  cases  the  note  in  suit  is 
nearly  always  spoken  of  as  a  gift  or  donation,  but  the  decision 
is  generally  put  on  the  ground  that  the  expenditure  of  money  or 
assumption  of  liability  by  the  donee,  on  the  faith  of  the  promise, 
constitutes  a  valuable  and  sufficient  consideration.  It  seems  to 
us  that  the  true  reason  is  the  preclusion  of  the  defendant,  under 
the  doctrine  of  estoppel,  to  deny  the  consideration.  Such  seems 
to  be  the  view  of  the  matter  taken  by  the  supreme  court  of 

*  See  Presbyterian  Church  v.  Cooper,  112  N.  Y.  517,  post,  p.  756. 


CONSIDERATION.  735 

Iowa  in  the  case  of  Simpson  Centenary  College  v.  Tuttle  (71  la. 
596),  where  Kothrock,  J.,  speaking  for  the  court,  said :  "  Where 
a  note,  however,  is  based  on  a  promise  to  give  for  the  support 
of  the  objects  referred  to,  it  may  still  be  open  to  this  defense 
[want  of  consideration],  unless  it  shall  appear  that  the  donee 
has,  prior  to  any  revocation,  entered  into  engagements  or  made 
expenditures  based  on  such  promise,  so  that  he  must  suffer  loss 
or  injury  if  the  note  is  not  paid.  This  is  based  on  the  equitable 
principle  that,  after  allowing  the  donee  to  incur  obligations  on  the 
faith  that  the  note  would  be  paid,  the  doner  would  be  estopped 
from  pleading  want  of  consideration."  And  in  the  case  of 
Reimensnyder  v.  Gans  (110  Pa.  St.  17),  which  was  an  action 
on  a  note  given  as  a  donation  to  a  charitable  object,  the  court 
said :  "  The  fact  is  that,  as  we  may  see  from  the  case  of  Ryerss 
V.  Trustees  (33  Pa.  St.  114),  a  contract  of  the  kind  here  involved 
is  enforceable  rather  by  way  of  estoppel  than  on  the  ground 
of  consideration  in  the  original  undertaking."  It  has  been 
held  that  a  note  given  in  expectation  of  the  payee  performing 
certain  services,  but  without  any  contract  binding  him  to  serve, 
will  not  support  an  action.  Hulse  v.  Hulse,  84  Eng.  Com.  Law, 
709.  But  when  the  payee  changes  his  position  to  his  disad- 
vantage, in  reliance  on  the  promise,  a  right  of  action  does  arise. 
McClure  v.  Wilson,  43  111.  356 ;   Trustees  v.  Gai-vey,  53  111.  401. 

Under  the  circumstances  of  this  case  is  there  an  equitable 
estoppel  which  ought  to  preclude  the  defendant  from  alleging 
that  the  note  in  controversy  is  lacking  in  one  of  the  essential 
elements  of  a  valid  contract  ?  We  think  there  is.  An  estoppel 
in  pais  is  defined  to  be  "  a  right  arising  from  acts,  admissions, 
or  conduct  which  have  induced  a  change  of  position  in  accord- 
ance with  the  real  or  apparent  intention  of  the  party  against 
whom  they  are  alleged."  Mr.  Pomeroy  has  formulated  the 
following  definition:  "Equitable  estoppel  is  the  effect  of  the 
voluntary  conduct  of  a  party  whereby  he  is  absolutely  pre- 
cluded, both  at  law  and  in  equity,  from  asserting  rights  which 
might  perhaps  have  otherwise  existed,  either  of  property,  or 
contract,  or  of  remedy,  as  against  another  person  who  in  good 
faith  relied  upon  such  conduct,  and  has  been  led  thereby  to 
change  his  position  for  the  worse,  and  who  on  his  part  acquires 


736  FORMATION  OF  CONTRACT. 

some  corresponding  right  either  of  property,  of  contract,  or  of 
remedy."     2  Pomeroy,  Equity  Jurisprudence,  804. 

According  to  the  undisputed  proof,  as  shown  by  the  record 
hefore  us,  the  plaintiff  was  a  working  girl,  holding  a  position  in 
which  she  earned  a  salary  of  $10  per  week.  Her  grandfather,  de- 
siring to  put  her  in  a  position  of  independence,  gave  her  the  note, 
accompanying  it  with  the  remark  that  his  other  grandchildren 
did  not  work,  and  that  she  would  not  be  obliged  to  work 
any  longer.  In  effect  he  suggested  that  she  might  abandon 
her  employment  and  rely  in  the  future  upon  the  bounty  which 
he  promised.  He,  doubtless,  desired  that  she  should  give 
up  her  occupation,  but  whether  he  did  or  not,  it  is  entirely 
certain  that  he  contemplated  such  action  on  her  part  as  a 
reasonable  and  probable  consequence  of  his  gift.  Having  inten- 
tionally influenced  the  plaintiff  to  alter  her  position  for  the  worse 
on  the  faith  of  the  note  being  paid  when  due,  it  would  be  grossly 
Inequitable  to  permit  the  maker,  or  his  executor,  to  resist  pay- 
ment on  the  ground  that  the  promise  was  given  without  con- 
sideration. The  petition  charges  the  elements  of  an  equitable 
estoppel,  and  the  evic^ence  conclusively  establishes  them.  If 
errors  intervened  at  the  trial  they  could  not  have  been  prejudi- 
cial.    A  verdict  for  the  defendant  would  be  unwarranted.     The 

judgment  is  right  and  is 

AflSrmed.^ 


(P.  157)  Uncertainty.  (p.  162) 

HART  V.   GEORGIA  RAILROAD  COMPANY. 

101  GEORGIA,  188.— 1897. 

Action  by  Eva  F.  Hart  against  the  Georgia  Railroad  Company. 
A  general  demurrer  to  the  complaint  was  sustained,  and  plaintiff 
brings  error, 

Cobb,   J.     Mrs.   Hart  sued  the   Georgia  Railroad  Company, 

1  In  Hoshor  v.  Kautz,  19  Wash.  258,  the  defendant  promised  plaintiff 
$360  a  year  for  four  years  if  he  would  attend  a  specified  university  as  a 
student.  Plaintiff  attended  the  university  and  this  was  held  a  sufficient 
consideration. 


CONSIDERATION.  737 

alleging  in  her  petition  that  the  defendant  was  engaged  as  a 
common  carrier  in  the  carrying  of  passengers,  and  that  an  eating 
station  for  the  comfort  and  convenience  of  passengers  on  the 
road  was  practically  a  necessity,  and  the  establishment  of  such 
a  station  would  be  a  great  advantage  to  the  road  in  increasing 
its  popularity  and  patronage ;  that  the  company,  through  its 
duly-authorized  agent  and  officer,  covenanted  and  agreed  with 
her  that,  if  she  would  erect  at  the  station  of  Union  Point  a 
permanent  and  first-class  eating  house  for  the  accommodation  of 
the  traveling  public,  and  maintain  the  same  in  a  first-class  man- 
ner, the  company,  by  the  patronage  of  its  road,  would  maintain 
and  support  the  same.  In  consideration  of  such  representations 
and  promises,  and  of  the  profits  anticipated  from  the  patron- 
age, she  agreed  to  erect  such  a  house,  and  maintain  or  cause 
it  to  be  maintained  in  first-class  style,  promising  further 
to  accommodate  the  employes  of  said  company  thereat  for  a 
reduced  price,  to  wit,  25  cents  for  meals,  being  one-half  the 
regular  price.  It  was  further  alleged  that  in  accordance  with 
the  terms  of  the  agreement  a  first-class  hotel  was  erected  and 
maintained,  and  that  the  contract  was  fully  performed  on  her 
part.  It  was  also  alleged  that  said  company  discontinued 
stopping  its  trains  for  meals  at  Union  Point  until  only  one 
train  was  stopped  for  that  purpose,  the  patronage  of  which  was 
not  sufficient  to  make  the  business  of  maintaining  an  eating 
house  profitable;  that  the  business  was  wholly  (dependent  for 
support  upon  the  patronage  of  the  trains  of  the  company,  and 
could  not  be  otherwise  sustained;  and  since  the  stopping  of 
the  trains  she  is  unable  to  conduct  the  business  at  all,  and 
has  lost  the  entire  profits  which  could  have  been  derived  there- 
from, to  the  net  annual  value  of  $4000.  To  the  declaration  the 
defendant  filed  a  general  demurrer,  which  was  sustained,  and 
the  plaintiff  excepted. 

The  contract  as  declared  on  contained  an  obligation  on  the 
part  of  the  plaintiff  to  erect  "a  permanent  and  first-class  hotel 
for  the  accommodation  of  the  traveling  public,  and  maintain 
the  same  in  a  first-class  manner,"  and  the  obligation  on  the 
part  of  the  road  that  it,  "by  the  patronage  of  it's  road,  would 
maintain  and  support  the  same."    The  whole  of  the   alleged 


738  FORMATION  OF  CONTRACT. 

parol  contract  is  contained  in  tlie  words  quoted.  What  is  a 
first-class  hotel  ?  How  is  a  hotel  maintained  in  a  first-class, 
manner  ?  What  is  the  patronage  of  a  road  running  trains  day 
and  night  at  a  given  point  ?  Is  the  stopping  of  every  train 
necessary  to  maintain  and  support  an  eating  house  at  such 
point  ?  If  not,  how  many  trains,  and  what  trains  ?  Suppose 
the  plaintiff  had  failed  to  erect  an  hotel,  what  character  of 
building  could  she  have  been  compelled  to  erect  under  this 
contract  ?  That  she  did  erect  an  hotel  which,  in  her  opinion^ 
was  a  first-class  hotel,  and  that  she  did  maintain  the  same  in 
what  she  understood  to  be  a  first-class  manner,  cannot  make 
certain  and  definite  stipulations  in  the  contract  declared  on, 
which  are  otherwise  vague  and  indefinite.  Construing  the 
declaration  as  a  whole,  it  is  impossible  to  determine  with  cer~ 
tainty  what  was  the  contract  between  the  parties,  and  there- 
fore it  is  impossible  to  determine  what  would  be  the  damages 
arising  from  a  failure  to  carry  out  the  alleged  contract.  As  the 
language  alleged  does  not  make  a  contract  between  the  parties 
which  is  capable  of  enforcement,  there  was  no  error  in  dismissing 
the  declaration  on  demurrer. 

Judgment  affirmed.* 


(p.  177)  Promise  to  jyerform  existing  contract.  (p.  185) 

KING  V.   DULUTH,  M.   &  N.   RY.   CO. 

61  MINNESOTA,  482.  —  1895. 

Start,  C.  J.  This  is  an  action  brought  by  the  plaintiff,  as 
surviving  partner  of  the   firm   of  Wolf  &  King,  to  recover  a 

1  A  contract  to  sell  oil  to  plaintiff  on  such  reasonable  terms  as  to  enable 
him  to  compete  with  other  dealers  in  the  same  territory,  is  too  indefinite. 
Marble  v.  Standard  Oil  Co.,  169  Mass.  553.  A  contract  with  a  clause  by 
which  defendant  agrees  to  renew  provided  plaintiff  does  such  a  business  as 
defendant  might  "reasonably  expect,"  is  not  too  indefinite.  Worthington 
V.  Beeman,  91  Fed.  R.  232.  A  contract  to  pay  a  divorced  wife  a  fixed  sum 
each  month  "so  long  as  she  shall  conduct  herself  with  sobriety,  and  in  a 
respectable,  orderly,  and  virtuous  manner,"  is  not  too  indefinite,  and  the 
wife's  compliance  with  the  condition  is  a  sufficient  consideration  to  support 
the  promise.     Dunton  v.  Dunton,  18  Vict.  Law  Rep.  114. 


CONSIDERATION.  739 

balance  claimed  to  be  due  for  the  construction  of  a  portion  of 
the  defendant's  line  of  railway.  The  complaint  alleges  two 
supposed  causes  of  action,  to  each  of  which  the  defendant 
demurred  on  the  ground  that  neither  states  facts  constituting 
a  cause  of  action.  From  an  order  overruling  the  demurrer 
the  defendant  appealed. 

1.  The  complaint  for  a  first  cause  of  action  alleges,  among 
other  things,  substantially,  that  in  January,  1893,  the  firm  of 
Wolf  &  King  entered  into  three  written  contracts  with  the 
president  and  representative  of  the  defendant  for  the  grading, 
clearing,  grubbing,  and  construction  of  the  roadbed  of  its  rail- 
way for  a  certain  stipulated  price  for  each  of  the  general  items 
of  work  and  labor  to  be  performed ;  that  the  firm  entered  upon 
the  performance  of  such  contracts,  but  in  the  latter  part  of 
February,  1893,  in  the  course  of  such  performance,  unforeseen 
difficulties  of  construction,  involving  unexpected  expenses,  and 
such  as  were  not  anticipated  by  the  parties  to  the  contracts, 
were  encountered.  That  the  firm  of  Wolf  &  King  found  that 
by  reason  of  such  difficulties  it  would  be  impossible  to  complete 
the  contracts  within  the  time  agreed  upon  without  employing; 
an  additional  and  an  unusual  force  of  men  and  means,  and  at 
a  loss  of  not  less  than  $40,000  to  them,  and  consequently  they 
notified  the  representative  of  the  defendant  that  they  would 
be  unable  to  go  forward  with  the  contracts,  and  unable  to  com- 
plete or  prosecute  the  work.  Thereupon  such  representative 
entered  into  an  agreement  with  them  modifying  the  written 
contracts,  whereby  he  agreed  that  if  they  would  "go  forward 
and  prosecute  the  said  work  of  construction,  and  complete  said 
contract,"  he  would  pay  or  cause  to  be  paid  to  them  an  addi- 
tional consideration  therefor,  up  to  the  full  extent  of  the  cost 
of  the  work,  so  that  they  should  not  be  compelled  to  do  the 
work  at  a  loss  to  themselves;  that  in  consideration  of  such 
promise  they  agreed  to  forward  the  work  rapidly,  and  force 
the  same  to  completion,  in  the  manner  provided  in  the  specifi- 
cations for  such  work,  and  referred  to  in  such  contracts.  That 
in  reliance  upon  the  agreement  modifying  the  former  contracts, 
and  in  reliance  upon  such  former  contracts,  they  did  prosecute 
and  complete  the  work  in  accordance  with  the  contracts  as  so 


•740  FORMATION  OF  CONTRACT. 

modified  by  the  oral  agreement,  to  the  satisfaction  of  all  parties 
in  interest.  That  such  contracts  and  the  oral  contract  modi- 
fying them  were  duly  ratified  by  the  defendant,  and  that  the 
actual  cost  of  sach  construction  was  not  less  than  $30,000  in 
excess  of  the  stipulated  amount  provided  for  in  the  original 
written  contracts. 

It  is  claimed  by  appellant  that  the  complaint  shows  no  con- 
sideration for  the  alleged  promise  to  pay  extra  compensation 
for  the  work ;  that  it  is  at  best  simply  a  promise  to  pay  the 
contractors  an  additional  compensation  if  they  would  do  that 
which  they  were  already  legally  bound  to  do.  The  general  rule 
is  that  a  promise  of  a  party  to  a  contract  to  do,  or  the  doing 
of,  that  which  he  is  already  under  a  legal  obligation  to  do  by 
the  terms  of  the  contract  is  not  a  valid  consideration  to  support 
the  promise  of  the  other  party  to  pay  an  additional  compensation 
for  such  performance.  1  Chit.  Cont.  60 ;  Pol.  Cont.  176  (161) ; 
Leake,  Cont.  621.  In  other  words,  a  promise  by  one  party  to 
a  subsisting  contract  to  the  opposite  party  to  prevent  a  breach 
of  the  contract  on  his  part  is  without  consideration.  The 
following  cases  sustain  and  illustrate  the  practical  application 
of  the  rule.  Ay7-es  v.  Railroad  Co.,  52  Iowa,  478,  3  N.  W.  522 ; 
JUcCarty  v.  Association,  61  Iowa,  287,  16  N.  W.  114;  Lingen- 
Jelder  v.  Brewing  Co.,  103  Mo.  578,  15  S.  W.  844 ;  Vanderhilt 
■v.  Schreyer,  91  K  Y.  392;  Reynolds  v.  Nugent,  25  Ind.  328; 
Robinson  v.  Jewett,  116  N.  Y.  40,  22  J^^.  E.  224 ;  Winner  v.  Worth 
Tp.,  104  Pa.  St.  317. 

If  the  allegations  of  the  complaint,  when  taken  together, 
are  in  legal  effect  simply  that  the  contractors,  finding  by  the 
test  of  experience  in  the  prosecution  of  the  work  that  they  had 
agreed  to  do  that  which  involved  a  greater  expenditure  of  money 
than  they  calculated  upon,  that  they  had  made  a  losing  con- 
tract, and  thereupon  notified  the  opposite  party  that  they  were 
unable  to  proceed  with  the  work,  and  he  promised  them  extra 
compensation  if  they  would  perform  their  contract,  the  case  is 
within  the  rule  stated,  and  the  demurrer  ought  to  have  been 
sustained  as  to  the  first  cause  of  action. 

It  is  claimed,  however,  by  the  respondent,  that  such  is  not 
the  proper  construction  of  the  complaint,  and  that  its  allegations 


CONSroERATION.  741 

bring  the  case  within  the  rule  adopted  in  several  states,  and 
at  least  approved  in  our  own,  to  the  effect  that  if  one  party  to 
a  contract  refuses  to  perforin  his  part  of  it  unless  promised 
some  further  pay  or  benefit  than  the  contract  provides,  and 
such  promise  is  made  by  the  other  party,  it  is  supported  by  a 
valid  consideration,  .for  the  making  of  the  new  promise  shows 
a  rescission  of  the  original  contract  and  the  substitution  of 
another.  In  other  words,  that  the  party,  by  refusing  to  perform 
his  contract,  thereby  subjects  himself  to  an  action  for  damages, 
and  the  opposite  party  has  his  election  to  bring  an  action  for 
the  recovery  of  such  damages  or  to  accede  to  the  demands  of 
his  adversary  and  make  the  promise  ;  and  if  he  does  so  it  is 
a  relinquishment  of  the  original  contract  and  the  substitution 
of  a  new  one.  Monroe  v.  Perkins,  9  Pick.  305 ;  Bryant  v.  Lord, 
19  Minn.  396  (Gil.  342)  ;  Moor  v.  Locomotive  Works,  14  Mich. 
266 ;  Goehel  v.  Linn,  47  Mich.  489,  11  N.  W.  284 ;  Rogers  v. 
Rogers,  139  Mass.  440,  1  N.  E.'  122. 

The  doctrine  of  these  cases  as  it  is  frequently  applied  does 
not  commend  itself  either  to  our  judgment  or  our  sense  of 
justice,  for  where  the  refusal  to  perform  and  the  promise  to 
pay  extra  compensation  for  performance  of  the  contract  are 
one  transaction,  and  there  are  no  exceptional  circumstances 
making  it  equitable  that  an  increased  compensation  should  be 
demanded  and  paid,  no  amount  of  astute  reasoning  can  change 
the  plain  fact  that  the  party  who  refuses  to  perform,  and  thereby 
coerces  a  promise  from  the  other  party  to  the  contract  to  pay 
him  an  increased  compensation  for  doing  that  which  he  is  legally 
bound  to  do,  takes  an  unjustifiable  advantage  of  the  necessities 
of  the  other  party.  To  hold,  under  such  circumstances,  that 
the  party  making  the  promise  for  extra  compensation  is  pre- 
sumed to  have  voluntarily  elected  to  relinquish  and  abandon 
all  of  his  rights  under  the  original  contract,  and  to  substitute 
therefor  the  new  or  modified  agreement,  is  to  wholly  disregard 
the  natural  inference  to  be  drawn  from  the  transaction,  and 
invite  parties  to  repudiate  their  contract  obligations  whenever 
they  can  gain  thereby. 

There  can  be  no  legal  presumption  that  such  a  transaction 
is  a  voluntary  rescission  or  modification  of  the  original  contract, 


742  FORMATION  OF  CONTRACT. 

for  the  natural  inference  to  be  drawn  from  it  is  otherwise 
in  the  absence  of  any  equitable  considerations  justifying  the 
demand  for  extra  pay.  In  such  a  case  the  obvious  yiference 
is  that  the  party  so  refusing  to  perform  his  contract  is  seeking 
to  take  advantage  of  the  necessities  of  the  other  party  to  force 
from  him  a  promise  to  pay  a  further  sum  for  that  which  he 
is  already  legally  entitled  to  receive.  Surely  it  would  be  a 
travesty  on  justice  to  hold  that  the  party  so  making  the  prom- 
ise for  extra  pay  was  estopped  from  asserting  that  the  promise 
was  without  consideration.  A  party  cannot  lay  the  founda- 
tion of  an  estoppel  by  his  own  Avrong.  If  it  be  conceded  that 
by  the  new  promise  the  party  obtains  that  which  he  could  not 
compel,  viz.  a  specific  performance  of  the  contract  by  the  other 
party,  still  the  fact  remains  that  the  one  party  has  obtained 
thereby  only  that  which  he  was  legally  entitled  to  receive,  and 
the  other  party  has  done  only  that  which  he  was  legally  bound 
to  do.  How,  then,  can  it  be  said  that  the  legal  rights  or 
obligations  of  the  party  are  changed  by  the  new  promise? 
It  is  entirely  competent  for  the  parties  to  a  contract  to  modify 
or  to  waive  their  rights  under  it,  and  ingraft  new  terms  upon 
it,  and  in  such  a  case  the  promise  of  one  party  is  the  considera- 
tion for  that  of  the  other;  but  where  the  promise  to  the  one 
is  simply  a  repetition  of  a  subsisting  legal  promise  there'  can 
be  no  consideration  for  the  promise  of  the  other  party,  and 
there  is  no  warrant  for  inferring  that  the  parties  have  volun- 
tarily rescinded  or  modified  their  contract. 

But  where  the  party  refusing  to  complete  his  contract  does  so 
fby  reason  of  some  unforeseen  and  substantial  difficulties  in  the 
performance  of  the  contract,  which  were  not  known  or  anticipated 
by  the  parties  when  the  contract  was  entered  into,  and  which  cast 
upon  him  an  additional  burden  not  contemplated  by  the  parties, 
and  the  opposite  party  promises  him  extra  pay  or  benefits  if  he 
will  complete  his  contract,  and  he  so  promises,  the  promise  to 
pay  is  supported  by  a  valid  consideration.  In  such  a  case  the 
natural  inference  arising  from  the  transaction,  if  unmodified  by 
any  equitable  considerations,  is  rebutted,  and  the  presumption 
arises  that  by  the  voluntary  and  mutual  promises  of  the  parties 
their  respective  rights  and  obligations  under  the  original  con- 


CONSIDERATION.  743 

tract  are  waived,  and  those  of  the  new  or  modified  eontracc 
substituted  for  them.  Cases  of  this  character  form  an  excep- 
tion to  the  general  rule  that  a  promise  to  do  that  which  a- 
party  is  already  legally  bound  to  do  is  not  a  sufficient  considera- 
tion to  support  a  promise  by  the  other  party  to  the  contract  toj 
give  the  former  an  additional  compensation  or  benefit.  1  Whart 
Cont.  §  500. 

On  the  other  hand,  where  no  unforeseen  additional  burdens 
have  been  cast  upon  a  party  refusing  to  perform  his  contract, 
which  make  his  refusal  to  perform,  unless  promised  further 
pay,  equitable,  and  such  refusal  and  promise  of  extra  pay  are 
all  one  transaction,  the  promise  of  further  compensation  is  with- 
out consideration,  and  the  case  falls  within  the  general  rule,  and 
the  promise  cannot  be  legally  enforced,  although  the  other  party 
has  completed  his  contract  in  reliance  upon  it.  This  proposition, 
in  our  opinion,  is  correct  on  principle  and  supported  by  the 
weight  of  authority.  What  unforeseen  difficulties  and  burdens 
will  make  a  party's  refusal  to  go  forward  with  his  contract  equi- 
table, so  as  to  take  the  case  out  of  the  general  rule  and  bring  it 
within  the  exception,  must  depend  upon  the  facts  of  each  particu- 
lar case.  They  must  be  substantial,  unforeseen,  and  not  within 
the  contemplation  of  the  parties  when  the  contract  was  made. 
They  need  not  be  such  as  woiild  legally  justify  the  party  in  his 
refusal  to  perform  his  contract,  unless  promised  extra  pay,  or  to 
justify  a  court  of  equity  in  relieving  him  from  the  contract ;  for 
they  are  sufficient  if  they  are  of  such  a  character  as  to  render  the 
party's  demand  for  extra  pay  manifestly  fair,  so  as  to  rebut  all 
inference  that  he  is  seeking  to  be  relieved  from  an  unsatisfactory 
contract, 'or  to  take  advantage  of  the  necessities  of  the  opposite 
party  to  coerce  from  him  a  promise  for  further  compensation. 
Inadequacy  of  the  contract  price  which  is  the  result  of  an  error 
of  judgment,  and  not  of  some  excusable  mistake  of  fact,  is  not 
sufficient. 

The  cases  of  Meech  v.  City  of  Buffalo  (29  N.  Y.  198),  where 
the  unforeseen  difficulty  in  the  execution  of  the  contract  was 
quicksand,  in  place  of  expected  ordinary  earth  excavation,  and 
Michaud  v.  MacOregor  (61  Minn.  198),  where  the  unforeseen 
obstacles  were  rocks  below  the  surface  of  the  lots  to  be  exca- 


744  FORMATION  OF  CONTRACT. 

vated,  whicli  did  not  naturally  belong  there,  but  were  placed 
there  by  a  third  party,  and  of  the  existence  of  which  both  parties 
to  the  contract  were  ignorant  when  the  contract  was  made,  are 
illustrations  of  what  unforeseen  difficulties  will  take  a  case  out 
of  the  general  rule. 

Do  the  allegations  of  fact  contained  in  plaintiff's  first  alleged 
cause  of  action  bring  his  case  within  the  exception  ?  Clearly 
not;  for  eliminating  all  conclusions,  and  considering  only  the 
facts  alleged,  there  is  nothing  to  make  the  case  exceptional, 
other  than  the  general  statement  that  the  season  was  so  extraor- 
dinary that  in  order  to  do  the  stipulated  work  it  would  require 
great  and  unusual  expense,  involving  a  large  use  of  powder  and 
extra  time  and  labor  for  the  purpose  of  blasting  out  the  frozen 
earth  and  other  material  which  was  encountered.  What  the 
character  of  this  material  was  we  are  not  told,  or  what  the  other 
extraordinary  conditions  of  the  ground  were.  The  court  will 
take  judicial  knowledge  of  the  fact  that  frozen  ground  on  the 
Missabe  Range,  where  the  work  was  to  be  performed,  in  the 
month  of  February,  is  not  unusual  or  extraordinary.  It  was  a 
matter  which  must  have  been  anticipated  by  the  parties,  and 
taken  into  consideration  by  them  when  this  contract  was  made. 
The  most  that  can  be  claimed  from  the  allegations  of  the  com- 
plaint is  that  the  contractors  had  made  a  losing  bargain,  and 
refused  to  complete  their  contract,  and  the  defendant,  by  its 
representative,  promised  them  that  if  they  would  go  forward 
and  complete  their  contract,  it  would  pay  them  an  additional 
compensation,  so  that  the  total  compensation  should  be  equal 
to  the  actual  cost  of  the  work. 

2.  The  second  cause  of  action  is  supported  by  a  different  and  a 
valid  consideration.  It  fairly  appears  from  the  allegations  of  the 
complaint  as  to  this  cause  of  action  that  the  defendant,  by  chang- 
ing its  line  and  by  its  defaults,  had  so  far  delayed  the  work  of 
construction  as  to  legally  excuse  the  contractors  from  their  obliga^ 
tion  to  complete  the  work  within  the  time  originally  agreed  upon, 
and  that  to  execute  the  work  within  such  time  would  involve  an 
additional  expense.  Thereupon,  in  consideration  of  their  waiving 
the  defaults  and  the  delays  occasioned  by  the  defendant,  and 
promising  to  complete  the  work  in  time,  so  that  it  could  secure 


CONSIDERATION.  745 

the  bonds,  it  promised  to  pay  or  give  to  them  the  extra  compensa- 
tion. This  was  a  legal  consideration  for  such  promise,  and  the 
allegations  of  the  second  general  subdivision  of  the  complaint 
state  a  cause  of  action. 

So  much  of  the  order  appealed  from  as  overruled  the 
defendant's  demurrer  to  the  supposed  first  cause  of  action  in 
the  plaintiff's  complaint  must  be  reversed,  and  as  to  so  much 
of  it  as  overruled  the  demurrer  to  the  second  cause  of  action 
it  must  be  affirmed,  and  the  case  remanded  to  the  district  court 
of  the  county  of  St.  Louis  with  the  direction  to  modify  the  order 
appealed  from  so  as  to  sustain  the  demurrer  as  to  the  first  cause 
of  action,  with  or  without  leave  to  the  plaintiff  to  amend,  as  such 

court  may  deem  to  be  just. 

So  ordered.* 


(p.  177)  Promise  to  perform  existing  contract.  (p.  187} 

ABBOTT  V.   DOANE. 

163  MASSACHUSETTS,   433.  — 1896. 

Contract,  upon  a  promissory  note  for  $500.  Defendant  set  up 
want  of  consideration.  Verdict  for  plaintiff.  Defendant  alleged 
exceptions. 

Allen,  J.  The  plaintiff  had  given  his  accommodation  note  to 
a  corporation,  which  had  had  it  discounted  at  a  bank,  and  left 
it  unpaid  at  its  maturity.  The  defendant  being  a  stockholder, 
director,  and  creditor  of  the  corporation,  wishing  to  have  th& 
note  paid  at  once  for  his  own  advantage,  entered  into  an  agree- 
ment with  the  plaintiff,  whereby  he  was  to  give  to  the  plaintiff 
his  own  note  for  the  amount,  and  the  plaintiff  was  to  furnish 
money  to  enable  the  defendant  to  take  up  the  note  at  the  bank. 
This  agreement  was  carried  out,  and  the  defendant  now  contends 
that  his  note  to  the  plaintiff  was  without  consideration,  because 
the  plaintiff  was  already  bound  in  law  to  take  up  the  note  at  the 
bank.  ' 

It  is  possible  that,  for  one  reason  or  another,  both  the  bank 
and  the  plaintiff  may  have  been  willing  to  wait  awhile,  but  that 

1  See  also  Sargent  v.  Bobertson,  17  Ind.  App.  411,  46  N.  E.  925. 


T46  FORMATION  OF  CONTRACT, 

the  defendant's  interests  were  imperiled  by  a  delay,  and  indeed 
required  that  the  note  should  be  paid  at  once,  and  that  the  cor- 
poration whose  duty  it  was  primarily  to  pay  it  was  without  pres- 
ent means  to  do  so.  Since  the  defendant  was  sane,  sui  juris,  was 
not  imposed  upon,  nor  under  duress,  knew  what  he  was  about, 
and  probably  acted  for  his  own  advantage,  it  would  certainly  be 
unfortunate  if  the  rules  of  law  required  us  to  hold  his  note  invalid 
for  want  of  a  sufficient  consideration,  when  he  has  had  all  the 
benefit  that  he  expected  to  get  from  it. 

In  this  commonwealth,  it  was  long  ago  decided  that  even 
between  the  original  parties  to  a  building  contract,  if,  after 
having  done  a  part  of  the  work,  the  builder  refused  to  pro- 
ceed, but  afterwards,  on  being  promised  more  pay  by  the  owner, 
went  on  and  finished  the  building,  he  might  recover  the  whole 
sum  so  promised.  Munroe  v.  Perkins,  9  Pick.  298.  See,  also, 
Holmes  v.  Doane,  9  Cush.  135 ;  Peck  v.  Bequa,  13  Gray,  407 ; 
Rogers  v.  Rogers,  139  Mass.  440 ;  Hastings  v.  Lovejoy,  140  Mass. 
-261,  265;  Tliomas  v.  Barnes,  156  Mass.  581.  In  other  States 
there  is  a  difference  of  judicial  opinion,  but  the  following  cases 
sanction  a  similar  doctrine :  Lattimore  v.  Harsen,  14  Johns.  330 ; 
JSteicaH  V.  Keteltas,  36  N.  Y.  388 ;  Lawrence  v.  Davey,  28  Vt.  264 ; 
Osborne  v.  O'Reilly,  42  N.  J.  Eq.  467 ;  Goehel  v.  Linn,  47  Mich. 
489;  Cooke  v.  Murphy,  70  111.  96.  In  England  and  in  others  of 
the  United  States  a  different  rule  prevails. 

But  when  one,  who  is  unwilling  or  hesitating  to  go  on  and  per- 
form a  contract  which  proves  a  hard  one  for  him,  is  requested  to 
do  so  by  a  third  person,  who  is  interested  in  such  performance, 
though  having  no  legal  way  of  compelling  it  or  of  recovering 
damages  for  a  breach,  and  who  accordingly  makes  an  indepen- 
dent promise  to  pay  a  sum  of  money  for  such  performance,  the 
reasons  for  holding  him  bound  to  such  payment  are  stronger  than 
where  an  additional  sum  is  promised  by  the  party  to  the  original 
■contract. 

Take  an  illustration.  A  enters  into  a  contract  with  B  to  do 
something.  It  may  be  to  pay  money,  to  render  service,  or  to  sell 
land  or  goods  for  a  price.  The  contract  may  be  not  especially  for 
the  benefit  of  B,  but  rather  for  the  benefit  of  others,  as,  e.g.  to 
€rect  a  monument,  an  archway,  a  memorial  of  some  kind,  or  to 


CONSroERATION.  747 

paint  a  picture  to  be  placed  where  it  can  be  seen  by  the  public. 
The  consideration  moving  from  B  may  be  executed  or  executory. 
It  may  be  money  or  anything  else  in  law  deemed  valuable.  It 
may  be  of  slight  value,  as  compared  with  what  A  has  contracted 
to  do.  Now  A  is  legally  bound  only  to  B,  and,  if  he  breaks  his 
contract,  nobody  but  B  can  recover  damages,  and  those  damages 
may  be  slight.  They  may  even  be  already  liquidated  at  a  small 
sum  by  the  terms  of  the  contract  itself.  Though  A  is  legally 
bound,  the  motive  to  perform  the  contract  may  be  slight.  If 
after  A  has  refused  to  go  on  with  his  undertaking,  or  while  he  is 
hesitating  whether  to  perform  it  or  submit  to  such  damages  as  B 
may  be  entitled  to  recover,  other  persons  interested  in  having  the 
contract  performed  intervene,  and  enter  into  a  new  agi-eement 
with  A,  by  which  A  agrees  to  do  that  which  he  was  already 
bound  by  his  contract  with  B  to  do,  and  they  agree  jointly  or 
severally  to  pay  him  a  certain  sum  of  money,  and  give  their  note 
or  notes  therefor,  and  A  accordingly  does  what  he  had  before 
agreed  to  do,  but  what  perhaps  he  might  not  otherwise  have 
done,  no  good  reason  is  perceived  why  they  should  not  be  held 
to  fulfill  their  promise.  They  have  got  what  they  bargained  for, 
and  A  has  done  what  otherwise  he  might  not  have  done,  and 
what  they  could  not  have  compelled  him  to  do. 

This  has  been  so  held  in  England,  and  the  view  is  supported  by 
English  text  writers,  though  not  always  for  precisely  the  same 
reasons.  Scotson  v.  Pegg,  6  Hurl.  &  N.  295 ;  Shadicell  v.  Shad- 
well,  30  Law  J.  C.  P.  145;  Pol.  Cont.  (6th  ed.)  175,  177;  Anson, 
Cont.  (4th  ed.)  87,  88 ;  Leake,  Cont.  (3d  ed.)  540.  In  this  coun- 
try the  courts  of  several  States  have  taken  the  opposite  view, 
though  in  some  instances  the  cases  referred  to  as  so  holding, 
when  examined,  do  not  necessarily  lead  to  that  result.  These 
cases  are  collected  in  the  defendant's  brief  and  in  Williston's 
discussion  of  the  subject  in  8  Harv.  Law  Rev.  27. 

1  The  American  cases  cited  by  the  defendant  are  Bichardson  v.  Williams, 
49  Me.  558 ;  Putnam  v.  Woodbury,  08  Me.  58 ;  Ellison  v.  Jackson  Water 
Co.,  12  Cal.  542;  Ritenotir  v.  Mathews,  42  Ind.  7;  Gordon  v.  Gordon,  66 
N.  H.  170  ;  Havana  Press  Drill  Co.  v.  Ashurst,  148  111.  116 ;  In  re  God- 
dard's  Estate,  29  Atl.  Rep.  634  ;  Baker  v.  Wahrmund,  6  Tex.  Civ.  App.  268  ; 
Ford  V.  Garner,  15  Ind.  298 ;  Beynolds  v.  Nugent,  25  Ind.  328  ;  Brotonlee 
V.  Lowe,  117  Ind.  420  j  Netoton  v.  Chicago  &c.  By.,  GO  Iowa,  422  ;    V.mdcr- 


748  FORMATION  OF  CONTRACT. 

Without  dwelling  further  on  the  reasons  for  the  doctrine,  it 
seems  to  us  better  to  hold,  as  a  general  rule,  that  if  A  has 
refused  or  hesitated  to  perform  an  agreement  with  B,  and  is 
requested  to  do  so  by  C,  who  will  derive  a  benefit  from  such 
performance,  and  who  promises  to  pay  him  a  certain  sum  there- 
for, and  A  thereupon  undertakes  to  do  it,  the  performance  by  A 
of  his  agreement,  in  consequence  of  such  request  and  promise  by 
C,  is  a  good  consideration  to  support  C's  promise. 

Exceptions  overruled.* 


(P.  177)  Promise  to  perform  existing  contract.  (p.  187) 

MANETTI  V.  DOEGE. 

48  N.  Y.  APPELLATE  DIVISION,  567.  — 1900. 

Appeal  by  the  defendant,  Paul  Doege,  from  a  judgment  of  the 
Municipal  Court  of  the  city  of  New  York  for  the  borough  of  The 
Bronx  in  favor  of  the  plaintiff,  entered  in  the  office  of  the  clerk 
of  said  court  on  the  3d  day  of  November,  1899. 


hilt  v.  Schreyer,  91  N.  Y.  392  ;  Seybolt  v.  New  York  <fcc.  i?.,  95  N.  Y.  562 ; 
Jtobinson  v.  Jewett,  116  N.  Y.  40;  Sherwin  v.  Brigham,  39  Oh.  St.  137; 
Wimer  v.  Worth  Township,  104  Penn.  St.  317  ;  Johnson  v.  Sellers,  33  Ala. 
265 ;  Schuler  v.  Myton,  48  Kans.  282 ;  L'Amoreux  v.  Gould,  7  N.  Y.  349 ; 
Merrick  v.  biddings,  1  Mackey,  394 ;  Davenport  v.  First  Cong.  Soc,  33 
Wis.  387. 

1  In  Arend  v.  Smith,  151  N.  Y.  502,  the  defendant  owed  a  corporation 
^1000  and  the  plaintiff  (president  of  the  corporation)  told  him  that  if  he 
would  give  his  note  for  the  amount  he  (plaintiff)  would  indorse  it  and  would 
renew  it  when  it  fell  due.  The  note  was  given  to  plaintiff,  who  discounted 
it  and  turned  the  proceeds  over  to  the  corporation.  When  it  fell  due  plain- 
tiff could  not  reuew  it,  but  took  it  up  and  brought  action  against  defendant 
upon  it.  Defendant  sets  up  the  breach  of  the  promise  to  renew.  Held,  that 
the  promise  was  without  consideration  since  plaintiff  was  under  a  legal  obli- 
gation to  pay  the  corporation.  "Although  the  promise  in  this  case  was  made 
to  induce  performance,  as  the  act  performed  was  less  than  the  legal  duty 
already  resting  upon  the  defendant,  it  was  incapable  of  sustaining  an  action 
or  maintaining  a  defense. " 

The  court  seems  not  to  have  considered  whether  the  act  performed  was 
not  different  from  the  legal  duty  already  resting  upon  defendant.  He  was 
under  an  obligation  to  pay  the  corporation,  but  he  was  under  no  obligation 
to  give  a  negotiable  promissory  note  to  plaintiff,  or  to  the  corporation. 


CONSIDERATION.  7^9 

HiRSCHBERG,  J.  The  defendant  contracted  with  one  Manger 
to  build  him  a  house.  Manger  sublet  the  contract  to  one  Putts. 
Putts  sub-contracted  part  of  the  work,  including  the  cellar  and 
foundation,  to  one  Scully ;  and  Scully  employed  the  plaintiff 
to  build  the  foundation  for  the  sum  of  $60.  While  the  work 
was  in  progress  defendant  visited  the  job,  whereupon  plaintiff 
stopped  work  and  entered  into  a  conversation  with  the  defend- 
ant. He  told  the  defendant  in  substance  that  he  was  afraid  he 
would  not  be  paid  by  Scully  and  that  he,  therefore,  intended  to 
abandon  the  work.  The  defendant  thereupon  said  to  him,  "  Go 
ahead  and  finish  the  work,  and  I  will  pay  you.  Never  mind 
about  Scully."  The  plaintiff  completed  the  work  on  the  faith  of 
this  promise,  and,  in  default  of  payment,  has  sued  and  recovered 
as  on  an  original  undertaking. 

The  general  rule  undoubtedly  is  that  an  agreement  to  do  what 
one  is  under  contract  to  do  will  not  furnish  a  sufficient  considera- 
tion to  support  a  promise.  In  the  cases  cited  by  the  appellant  the 
existing  engagement  or  contract  was  made  with  the  promisor, 
and  not,  as  in  this  instance,  with  a  third  person.  The  plaintiff 
here  was  under  no  engagement  or  contract  with  the  defendant. 
The  defendant  could  not  compel  the  plaintiff  to  continue  the 
work  inasmuch  as  the  latter  had  not  contracted  with  him  to  do  it. 
Nor  would  an  agreement  to  do  what  one  is  under  contract  to  do, 
be  sufficient  consideration  to  support  a  promise  made  by  a  third 
person  unless  some  new  consideration  exists  at  the  time  of  the 
promise  as  between  the  promisor  and  promisee.  And  that  is  the  , 
situation  here.  The  defendant  had  an  interest  in  the  prompt 
prosecution  of  the  work.  The  plaintiff,  apprehensive  of  losing 
his  pay,  had  concluded  to  throw  up  the  job  and  take  the  chances 
of  any  claim  by  Scully  for  damages.  The  defendant,  thereupon, 
in  consideration  of  the  benefit  resulting  to  him  from  uninterrupted 
work  upon  the  house,  made  a  new  and  independent  contract  with 
the  plaintiff,  by  the  terms  of  which  the  latter  consented  to  and 
did  proceed  with  the  work  instead  of  abandoning  it,  and  in  con- 
sideration of  which  the  defendant  promised  to  pay  the  entire 
$60.  This  was  a  valid  and  enforceable  contract  under  the  au- 
thorities. King  v.  Despard,  5  Wend.  277 ;  Lattimore  v.  Harsen, 
14  Johns.  330 ;  Alley  v.  Turck,  8  App.  Div.  60 ;  Stewart  v.  Keteltas, 


4 


^^^ 


/ 


750  FORMATION  OF  CONTRACT. 

36  N. Y.  388 ;  Pond  v.  Starkweather,  99  Id.  411 ;  Scotson  v.  Peg^, 
6  H.  &  N.  295 ;  Monroe  v.  Perkins,  9  Pick.  298. 

The  contract  was  not  Avithin  the  statute  of  frauds,  Snell  v. 
Rogers,  70  Hun,  462 ;  Wliite  v.  Bintoul,  108  N.  Y.  222 ;  Baabe  v. 
Sqider,  148  Id.  81 ;  Clark  v.  Howard,  150  Id.  232. 

The  judgment  should  be  affirmed,  with  costs.     All  concurred. 

Judgment  afBxmed,  with  costs. 


(p.  187)    Payment  of  smaller  sum  in  satisfaction  of  larger,    (p.  195) 

WOODS,  C.  J.,  IN  CLAYTON  v.  CLARK. 

74  MISSISSIPPI,  499. —1896. 

[In  this  case  a  note  for  $2789  was  by  agreement  surrendered 
upon  the  payment  of  $1000.  The  payee  subsequently  brought 
suit  for  the  balance.] 

It  has  been  held  in  England,  though  not  unbrokenly,  nor  with- 
out now  and  then  hostile  criticism  from  bench  and  bar,  that  an 
agreement  by  a  creditor  with  his  debtor  to  accept  a  smaller  sum 
of  money  in  satisfaction  of  an  ascertained  debt  of  a  greater  sum, 
is  without  consideration,  and  is  not  binding  upon  the  creditor, 
even  though  he  has  received  the  smaller  sum  agreed  upon  in  the 
new  contract.  And  in  the  United  States,  blindly  following  what 
was  supposed  to  be  settled  law  in  England  for  nearly  three  hun- 
dred years,  our  courts  have  uniformly  announced  adherence  to 
this  rule,  though  in  most  of  the  cases  examined  by  us  no  such 
announcement  was  necessary  to  their  determination. 

The  rule  is,  in  nearly  all  the  cases,  declared  to  have  been  first 
announced  in  PinneVs  case  (5  Coke's  Rep.  117),^  whereas  an  exami- 

1  Pinnel  brought  an  action  of  debt  on  a  bond  against  Cole  of  16Z.  for  pay- 
ment of  8Z.  10s.  the  11th  day  of  November,  1600.  The  defendant  pleaded, 
that  he  at  the  instance  of  the  plaintiff,  before  the  said  day,  scil.  1  Octob. 
anno  44,  apud  W.  solvit  querenti  51.  2s.  2d.  quas  quidem  bl.  2s.  2d.  the  plain- 
tiff accepted  in  full  satisfaction  of  the  8^  10s.  And  it  was  resolved  by  the 
whole  court,  that  payment  of  a  lesser  sum  on  the  day  in  satisfaction  of  a 
greater,  cannot  be  any  satisfaction  for  the  whole,  because  it  appears  to  the 
judges  that  by  no  possibility  a  lesser  sum  can  be  a  satisfaction  to  the  plain- 
tiff for  a  greater  sum;  but  the  gift  of  a  horse,  hawk,  or  robe,  etc.,  in  satis- 


CONSIDERATION.  751 

nation  of  that  mischievous  and  misleading  reported  case  will 
make  it  appear  at  once  that  the  question  before  us  was  not  in  any- 
way involved.  Piunel's^  plea  was,  that  before  the  maturity  of 
his  bond  for  the  larger  sum,  plaintiff  had  accepted  a  lesser  sum 
agreed  upon  between  the  parties,  in  full  satisfaction  of  the  origi- 
nal debt.  Now,  all  the  authorities,  American  and  English,  in- 
cluding Coke  himself,  agree  that  this  was  a  good  defense,  and 
that  the  plaintiff  was  bound  by  it,  if  defendant  should  properly 
plead  it  to  a  suit  for  the  entire  original  debt.  But  the  hapless 
Pinnel,^  in  that  remote  period  when  courts  were  almost  as  jealous 
for  the  observance  of  technical  rules  of  special  pleading  as  for 
the  execution  of  justice  according  to  right,  was  adjudged  to  pay 
the  whole  debt,  the  plaintiff  having  judgment  against  him,  be- 
cause of  his  "  insufficient  pleading,  for,"  says  Coke,  "  he  did  not 

faction  is  good.  For  it  shall  be  intended  that  a  horse,  hawk,  or  robe,  etc. , 
might  be  more  beneficial  to  the  plaintiff  than  the  money,  in  respect  of  some 
circumstance,  or  otherwise  the  plaintiff  would  not  have  accepted  of  it  in. 
satisfaction.  But  when  the  whole  sum  is  due,  by  no  intendment  the  accept- 
ance of  parcel  can  be  a  satisfaction  to  the  plaintiff.  But  in  the  case  at  bar  it 
was  resolved  that  the  payment  and  acceptance  of  parcel  before  the  day,  in 
satisfaction  of  the  whole,  would  be  a  good  satisfaction  in  regard  of  circum- 
stance of  time ;  for  peradventure  parcel  of  it  before  the  day  would  be  more 
beneficial  to  him  than  the  whole  at  the  day,  and  the  value  of  the  satisfaction 
is  not  material.  So,  if  I  am  bound  in  201.  to  pay  you  lOZ.  at  Westminster, 
and  you  request  me  to  pay  you  51.  at  the  day  at  York,  and  you  will  accept  it 
in  full  satisfaction  of  the  whole  lOZ. ,  it  is  a  good  satisfaction  for  the  whole ; 
for  the  expenses  to  pay  it  at  York  is  sufficient  satisfaction. 

But  in  this  case  the  plaintiff  had  judgment  for  the  insufficient  pleading ; 
for  he  [defendant]  did  not  plead  that  he  had  paid  the  5Z.  2s.  2d.  in  full 
satisfaction  (as  by  law  he  ought),  but  pleaded  the  payment  of  part  generally, 
and  that  the  plaintiff  accepted  it  in  full  satisfaction.  And  always  the  man- 
ner of  the  tender  and  of  the  payment  shall  be  directed  by  him  who  made  the 
tender  or  payment,  and  not  by  him  who  accepts  it.  And  for  this  cause 
judgment  was  given  for  the  plaintiff. 

See  reader  26  H.  6  Barre,  37,  in  debt  on  a  bond  for  lOZ.,  the  defendant 
pleaded  that  one  F  was  bound  by  the  said  deed  with  him,  and  each  in  the 
whole,  and  that  the  plaintiff  had  made  an  acquittance  to  F  bearing  date 
before  the  obligation,  and  delivered  after,  by  which  acquittance  he  did 
acknowledge  himself  to  be  paid  20s.  in  full  satisfaction  of  the  lOl.  And  it 
was  adjudged  a  good  bar ;  for  if  a  man  acknowledges  himself  to  be  satisfied 
by  deed,  it  is  a  good  bar,  without  anything  being  received.  Vide  12  R. 
2,  Barre,  243 ;  26  H.  6  Barre,  37  and  10  H.  7,  etc.  —  PinneVs  case,  6  Coke's 
Kep.  117  (1602). 

1 A  slip  for  defendant,  Cole.  —  Eds. 


752  FORMATION  OF  CONTRACT. 

plead  tliat  lie  tad  paid  the  £5,  2s.  2d.  in  full  satisfaction  (as  by 
law  he  ought),  but  pleaded  the  payment  of  part  generally,  and 
that  the  plaintiff  accepted  it  in  full  satisfaction."  .  .  . 

The  rule  is  found  in  PinneVs  case,  but  it  is  bald  dictum,  and, 
as  stated  by  Lord  Blackburn,  in  Fodkes  v.  Beer,  before  the  House 
of  Lords  (9  App.  Cas.  605),  for  the  long  period  of  one  hundred 
and  fifteen  years  after  PinneVs  case  was  decided  no  case  is  to  be 
found  "in  which  the  question  was  raised  whether  payment  of  a 
lesser  sum  would  be  satisfaction  of  a  liquidated  demand."  ^  .  .  . 

Turning  now  to  the  holdings  of  the  American  courts  on 
this  question,  we  are  profoundly  and  painfully  impressed  with 
the  slavish  adherence  of  the  legal  and  judicial  mind  to  precedent, 
or,  in  many  cases,  to  what  seems  to  be  precedent  only.  [The 
learned  judge  then  discusses  some  of  the  American  cases.] 

The  absurdity  and  unreasonableness  of  the  rule  seem  to  be 
generally  conceded,  but  there  also  seems  to  remain  a  wavering, 
shadowy  belief  in  the  fact,  falsely  so  called,  that  the  agreement 
to  accept,  and  the  actual  acceptance  of,  a  lesser  sum  in  the  full 
satisfaction  of  a  larger  sum,  is  without  any  consideration  to  sup- 
port it — that  is,  that  the  new  agreement  confers  no  benefit  upon 
the  creditor.  However  it  may  have  seemed  three  hundred  years 
ago  in  England,  when  trade  and  commerce  had  not  yet  burst  their 
swaddling  bands,  at  this  day  and  in  this  country,  where  almost 
every  man  is  in  some  way  or  other  engaged  in  trade  or  commerce, 
it  is  as  ridiculous  as  it  is  untrue  to  say  that  the  payment  of  a  lesser 
part  of  an  originally  greater  debt,  cash  in  hand,  without  vexation, 
cost,  and  delay,  or  the  hazard  of  litigation  in  an  effort  to  collect 

1  In  that  case  Lord  Blackburn  says  :  "  What  principally  weighs  with  me 
in  thinking  that  Lord  Coke  made  a  mistake  of  fact  is  my  conviction  that  all 
men  of  business,  whether  merchants  or  tradesmen,  do  every  day  recognize 
and  act  on  the  ground  that  prompt  payment  of  a  part  of  their  demand  may 
be  more  beneficial  to  them  than  it  would  be  to  insist  on  their  rights  and  en- 
force payment  of  the  whole.  Even  where  the  debtor  is  perfectly  solvent, 
and  sure  to  pay  at  last,  this  often  is  so.  Where  the  credit  of  the  debtor  is 
doubtful  it  must  be  more  so.  I  had  persuaded  myself  that  there  was  no  such 
long-continued  action  on  this  dictum  as  to  render  it  improper  in  this  House 
to  reconsider  the  question.  I  had  written  my  reasons  for  so  thinking ;  but 
as  they  were  not  satisfactory  to  the  other  noble  and  learned  Lords  who  heard 
the  case,  I  do  not  now  repeat  them  nor  persist  iu  them."  (9  App.  Cas.  605, 
022-623.) 


CONSroERATION.  753 

all,  is  not  often  —  nay,  generally  —  greatly  to  the  benefit  of  the 
creditor.  Why  shall  not  money  —  the  thing  sought  to  be  secured 
by  new  notes  of  third  parties,  notes  where  payment  in  money  is 
designed  to  be  secured  by  mortgage,  and  even  negotiable  notes  of 
the  debtor  himself — why  shall  not  the  actual  payment  of  money, 
cash  in  hand,  be  held  to  be  as  good  consideration  for  a  new  agree- 
ment, as  beneficial  to  the  creditor,  as  any  mere  promises  to  pay  the 
same  amount,  by  whomsoever  made  and  however  secured  ?  And 
why  may  not  men  make  and  substitute  a  new  contract  and  agree- 
ment for  an  old  one,  even  if  the  old  contract  calls  for  a  money 
payment  ?  And  why  may  one  accept  a  horse  worth  $100  in  full 
satisfaction  of  a  promissory  note  for  $1000,  and  be  bound  thereby, 
and  yet  not  be  legally  bound  by  his  agreement  to  accept  $999, 
and  his  actual  acceptance  of  it,  in  full  satisfaction  of  the  $1000 
note  ?  No  reason  can  be  assigned  except  that  just  adverted  to, 
and  this  rests  upon  a  mistake  in  fact.  And  a  rule  of  law  which 
declares  that  under  no  circumstances,  however  favorable  and  bene- 
ficial to  the  creditor,  or  however  hard  and  full  of  sacrifice  to  the 
debtor,  can  the  payment  of  a  less  sum  of  money  at  the  time  and 
place  stipulated  in  the  original  obligation,  or  afterwards,  for  a 
greater  sum,  though  accepted  by  the  creditor  in  full  satisfaction 
of  the  whole  debt,  ever  amount  in  law  to  satisfaction  of  the 
original  debt,  is  absurd,  irrational,  unsupported  by  reason,  and 
not  founded  in  authority,  as  has  been  declared  by  courts  of  the 
highest  respectability,  and  of  last  resort,  even  when  yielding  reluc- 
tant assent  to  it.  We  decline  to  adopt  or  to  follow  it,  and  if  there  is 
anything  in  the  cases  of  Jones  v.  Perkins  (29  Miss.  139)  or  Pulliam 
V.  Taylor  (50  Miss.  251)  which  may  be  regarded  as  sanctioning 
the  rule  that  the  payment  of  a  less  sum  of  money,  though  agreed 
to  be  received  in  full  satisfaction  of  a  debt  greater  in  amount 
than  such  agreed  payment,  shall  not  be  so  considered  in  legal 
contemplation,  then,  to  that  extent  those  cases  are  hereby  over- 
ruled ;  and  the  case  of  Burrus  v.  Gordon  {bl  Miss.  93),  in  so  far 
as  it  sanctions  the  rule  we  are  combating,  is  hereby  over- 
ruled.^ 

1  See  Nassoiy  v.  Tomlinson,  148  N.  Y.  Z2Q,post,  p.  864 ;  Flynn  v.  Hurlock, 
194  Pa.  St.  462,  post,  p.  869,  on  accord  and  satisfaction  by  payment  of  smaller 
sum  for  larger  sum  claimed, 
ccc 


754  FORMATION  OF  CONTRACT. 

[Whitfield,  J.,  specially  concurred  in  the  decision  on  the 
ground  that  the  delivery  up  of  a  note  by  the  holder  to  the  maker 
is  a  complete  discharge.] 


(P.  199)  Mutual  promises. 

STOVALL  V.  McCUTCHEK 
54  SOUTHWESTERN  REP.   (Kt.),  969.  —1900. 

Action  by  McCutchen  &  Co.  and  others  against  T.  L.  Stovall 
to  enjoin  defendant  from  violating  a  contract.  Judgment  for 
plaintiffs,  and  defendant  appeals. 

White,  J,  In  May,  1895,  appellant  and  appellees,  all  mer- 
chants of  Russellville,  signed  an  agreement  as  follows :  "  We,  the 
undersigned,  merchants  of  Eussellville,  do  hereby  agree  and 
obligate  ourselves  to  close  our  place  of  business  at  6.30  o'clock^ 
"  beginning  May  15, 1895,  and  lasting  until  the  first  of  September." 
The  pleadings  and  proof  all  agree  that  the  intention  of  this 
writing  was  that  the  stores  were  to  be  closed  at  6.30  p.m.  of  each 
day  during  the  time  specified,  except  on  Saturdays.  After  com- 
pliance for  a  few  evenings  after  the  15th  of  May,  appellant 
notified  appellees  that  he  declined  to  further  comply  with  the 
agreement,  but  would  disregard  it.  This  he  did.  Appellees  in- 
stituted this  action  to  obtain  an  injunction  against  appellant  to 
prevent  a  violation  of  the  agreement,  or,  rather,  to  compel  him 
to  specifically  perform  the  agreement.  A  temporary  injunction 
was  granted.  Appellant  made  defense  of  the  action,  pleading 
that  he  signed  the  agreement  conditionally.  He  alleges  that  one 
of  the  conditions  was  that  others,  who  never  did  sign,  were  also 
to  sign  the  agreement.  Another  condition  was  that  he,  at  the 
end  of  a  few  days'  trial,  could  withdraw  from  the  agreement  if 
he  so  desired,  —  and  that  these  conditions  were  left  out  by  mis- 
take, as  were  the  provisions  that  the  closing  was  to  be  daily  at 
6.30  P.M.,  and  not  to  apply  to  Saturday.  On  these  issues,  pre- 
sented by  the  answer,  proof  was  taken,  and  on  final  hearing  the 
temporary  injunction  was  made  perpetual,  and  from  that  judg- 
ment this  appeal  is  prosecuted. 


CONSIDERATION.  765 

It  is  insisted  by  counsel  for  appellant  that  there  is  no  consid- 
eration for  the  agreement;  that  it  is  against  public  policy  and 
void;  that,  because  of  its  uncertainty,  it  cannot  be  specifically 
enforced ;  and  that  the  trial  court  erred  in  adjudging,  on  the' 
proof,  that  there  were  no  conditions  omitted  from  the  writing. 

We  are  of  opinion  that  the  proof  fails  to  establish  that  appel- 
lant signed  the  writing  with  the  understanding  that  any  others 
were  to  sign  than  those  whose  names  appear  thereto.  We  are 
also  of  opinion  that  the  proof  fails  to  establish  appellant's  con- 
tention that  he  had  the  privilege  of  withdrawal  after  trial. 

We  think  there  is  sufficient  consideration  to  uphold  the  contract. 
"Valuable  considerations,"  says  Bouvier  (title,  "Consideration"),  , 
"  are  either  some  benefit  conferred  upon  the  party  by  whom  the  ' 
promise  is  made,  or  upon  a  third  party  at  his  instance  or  request, 
or  some  detriment  sustained,  at  the  instance  of  the  party  promis- 
ing, by  the  party  in  whose  favor  the  promise  is  made  ; "  citing  i 
Overstreet  v.  Philips,  1  Litt.  123 ;  Lem aster  v.  Burckhart,  2  Bibb, 
30;   Wooldridge  v.   Cates,  2  J.  J.  Marsh,  222.     Again  the  same 
author  (Bouvier)  says,  "  Mutual  promises  made  at  the  same  time  \ 
are  concurrent  considerations,  and  will   support   each   other,  if  \ 
both  be  legal  and  binding."     This  court,  in  the  case  of  Tdlhott  v. 
Stemmons'  Ex'r  (89  Ky.  222),  held  a  promise  to  abstain  from  the' 
use  of  tobacco  to  be  a  sufficient  consideration  for  an  agreement  to 
pay  $500.     The  Court  of  Appeals  of  New  York,  in  Hamer  v. 
Sidivay  (124  N.  Y.  538),  held  the  same  thing.     We  are  of  the 
opinion  that  the  mutual  promises  to  refrain  from   engaging  in 
business  after  6.30  p.m.  of  each  day  are  sufficient  loss  or  detri- 
ment in  the  way  of  financial  transaction,  or  are  sufficient  gain  or 
advantages  from  a  social  or  healthful  standpoint,  to  support  a 
contract.     The  loss  or  gain  is  to  be  supposed  to  be  alike  to  all 
parties.     There  is  complete  mutuality. 

While  it  is  true  that  contracts  in  restraint  of  trade  are  to  be 
carefully  scrutinized,  and  looked  upon  with  disfavor,  all  contracts 
in  restraint  of  trade  are  not  illegal.  The  restraint  here  put  is 
but  partial,  —  very  inconsiderable.  It  is  but  a  few  hours,  at  most, 
each  day,  and  for  three  and  one-half  months,  during  the  extremely 
hot  weather.  It  has  come  within  the  observation  of  the  members  of 
this  court  that  during  this  season  (May  15th  to  September)  many 


756  FORMATION  OF  CONTRACT. 

merchants  close  about  6.30  or  7  p.m.  This  cannot  be  held  to  be 
an  illegal  restraint  of  trade. 

As  to  the  question  of  uncertainty  of  the  contract,  appellant's 
position  might  be  tenable,  if  it  were  not  shown  by  the  pleadings 
in  the  case  precisely  what  the  contract  was  intended  to  mean. 
The  courts  rarely  ever  reform  and  then  specifically  enforce  a  con- 
tract. The  reason  of  this  is  that  the  dispute  comes  as  to  what 
contract  was  intended  to  be  entered  into.  This  is  not  so  here. 
All  parties  agree  that  this  writing  was  intended  to  say  and  mean 
that  the  places  of  business  should  be  closed  at  6.30  p.m.  each  day, 
excepting  Saturdays,  between  May  15th  and  September  1st. 

We  think  that  in  this  case  injunction  is  a  proper  remedy.    The 

recurring  breach  each  day  of  the  contract  would  require  numerous 

actions  at  law,  and  by  different  plaintiffs,  as  well;  or,  if  not, 

there  would  at  least  be  a  continuing  damage  by  the  breaches  and 

violation  of  the  contract  up  to  September  1st.     It  has  repeatedly, 

if  not  universally,  been  held  that  injunction  is  proper  in  either 

of  these  classes  of  cases,  to  prevent  a  multiplicity  of  actions,  or 

to  prevent  a  repeated  and  recurring  cause  of  action.     Sutton  v. 

Mead,  86  Ky.  156. 

Judgment  affirmed. 


((P.  199)  Mutual  subscriptions. 

» 

THE  PRESBYTEEIAN  CHURCH  OF  ALBANY  v.  COOPER. 
112  NEW  YORK,  517.  — 1889. 

Appeal  from  order  of  the  General  Term  of  the  Supreme  Court 
in  the  third  judicial  department,  which  reversed  a  judgment  in 
favor  of  plaintiff,  entered  upon  the  report  of  a  referee,  and  or- 
dered a  new  trial.     (Reported  below,  45  Hun,  453.) 

This  was  a  reference  under  the  statute  of  a  disputed  claim 
against  the  estate  of  Thomas  P.  Crook,  defendant's  intestate. 
The  claim  arose  under  a  subscription  paper,  of  which  the  follow- 
ing is  a  copy : 

"  We,  the  undersigned,  hereby  severally  promise  and  agree  to  and 
with  the  trustees  of  the  Presbyterian  Church  iu  this  city  of  Albany,  in 
consideration  of  one  dollar  to  each  of  us  iu  hand  paid  and  the  agree- 


%AA^i^>^itL>,cJi  ^p^^ 


CONSIDERATION.  757 

ments  of  each  other  in  this  contract  contained,  to  pay  on  or  before  three 
years  from  the  date  hereof  to  said  trustees  the  sum  set  opposite  to  our 
respective  names,  but  upon  the  express  condition,  and  not  otherwise,  that 
the  sum  of  ^45,000  in  the  aggregate  shall  be  subscribed  and  paid  in  for 
the  purpose  hereinafter  stated;  and  if  within  one  year  from  this  date 
said  sum  shall  not  be  subscribed  or  paid  in  for  such  purpose,  then  this 
agreement  to  be  null  and  of  no  effect.  The  purpose  of  this  subscription 
is  to  pay  oif  the  mortgage  debt  of  .^45,000,  now  a  lien  upon  the  church 
edifice  of  said  church,  and  the  subscription  or  contribution  for  that 
purpose  must  equal  that  sum  in  the  aggregate  to  make  this  agreement 
binding.' 

"DatedMay  18,  1884." 

The  defendants'  intestate  made  two  subscriptions  to  this  paper, 
one  of  $5,000  and  the  other  of  $500.  He  paid  upon  the  sub- 
scription $2,000.     The  claim  was  for  the  balance. 

Andrews,  J.  It  is,  we  think,  an  insuperable  objection  to  the 
maintenance  of  this  action,  that  there  was  no  valid  consideration 
to  uphold  the  subscription  of  the  defendants'  intestate.  It, 
is,  of  course,  unquestionable  that  no  action  can  be  maintained  to 
enforce  a  gratuitous  promise,  however  worthy  the  object  intended 
to  be  promoted.  The  performance  of  such  a  promise  rests  wholly 
on  the  will  of  the  person  making  it.  He  can  refuse  to  perform, 
and  his  legal  right  to  do  so  cannot  be  disputed,  although  his 
refusal  may  disappoint  reasonable  expectations,  or  may  not  be 
justified  in  the  forum  of  conscience.  By  the  terms  of  the  sub- 
scription paper  the  subscribers  promise  and  agree  to  and  with  the 
trustees  of  the  First  Presbyterian  Church  of  Albany,  to  pay  to 
said  trustees,  within  three  years  from  its  date,  the  sums  severally 
subscribed  by  them,  for  the  purpose  of  paying  off  "the  mortgage- 
debt  of  $45,000,  on  the  church  edifice,"  upon  the  condition  that 
the  whole  sum  shall  be  subscribed  or  paid  in  within  one  year.  It 
recites  a  consideration,  viz.,  "in  consideration  of  one  dollar  to 
each  of  us  (subscribers)  in  hand  paid  and  the  agreements  of  each 
other  in  this  contract  contained."  It  was  shown  that  the  one 
dollar  recited  to  have  been  paid  was  not  in  fact  paid,  and  the  fact 
that  the  promise  of  each  subscriber  was  made  by  reason  of  and 
in  reliance  upon  similar  promises  by  the  others  constitutes  no  1 
consideration  as  between  the  corporation  for  whose  benefit  the  1 
promise  was  made  and  the  promisors.     The  recital  of  a  considera-   \ 


758  FORMATION  OF  CONTRACT. 

tion  paid  does  not  preclude  the  promisor  from  disputing  the 
fact  in  a  case  like  this,  nor  does  the  statement  of  a  particular 
\  consideration  which,  on  its  face,  is  insufficient  to  support  a 
I  promise,  give  it  any  validity,  although  the  fact  recited  may  be  true. 
It  has  sometimes  been  supposed  that  when  several  persons 
promise  to  contribute  to  a  common  object,  desired  by  all,  the 
promise  of  each  may  be  a  good  consideration  for  the  promise  of 
others,  and  this  although  the  object  in  view  is  one  in  which  the 
promisors  have  no  pecuniary  or  legal  interest,  and  the  perform- 
ance of  the  promise  by  one  of  the  promisors  would  not  in  a  legal 
sense  be  beneficial  to  the  others.  This  seems  to  have  been  the 
view  of  the  chancellor  as  expressed  in  Hamilton  College  v.  Steivart 
when  it  was  before  the  Court  of  Errors  (2  Den.  417),  and  dicta  of 
judges  will  be  found  to  the  same  effect  in  other  cases.  Trustees, 
&c.  V.  Stetson,  5  Pick.  508;  Watkins  v.  Eames,  9  Cush.  537. 
But  the  doctrine  of  the  chancellor,  as  we  understand,  was  over- 
ruled when  the  Hamilton  College  case  came  before  this  court 
(1  N.  Y.  581),  as  have  been  also  the  dicta  in  the  Massachusetts 
cases,  by  the  court  in  that  State,  in  the  recent  case  of  Cottage 
Street  Metliodist  Episcopal  Church  v.  Kendall,  121  Mass.  528.  The 
doctrine  seems  to  us  unsound  in  principle.  It  proceeds  on  the 
assumption  that  a  stranger  both  to  the  consideration  and  the 
promise,  and  whose  only  relation  to  the  transaction  is  that  of 
donee  of  an  executory  gift,  may  sue  to  enforce  the  payment 
of  the  gratuity  for  the  reason  that  there  has  been  a  breach  of 
contract  between  the  several  promisors  and  a  failure  to  carry  out 
as  between  themselves  their  mutual  engagement.  It  is  in  no 
proper  sense  a  case  of  mutual  promises,  as  between  the  plaintiff 
and  defendant. 

In  the  disposition  of  this  case  we  must,  therefore,  reject  the 
consideration  recited  in  the  subscription  paper  as  ground  for 
supporting  the  promise  of  the  defendants'  intestate,  the  money 
consideration,  because  it  had  no  basis  in  fact,  and  the  mutual 
'promise  between  the  subscribers,  because  there  is  no  privity  of 
I  contract  between  the  plaintiff  and  the  promisors.  Some  consider- 
ation must,  therefore,  be  found  other  than  that  expressly  stated 
in  the  subscription  paper,  in  order  to  sustain  the  action.  It  is 
urged  that  a  consideration  may  be  found  in  the  efforts  of  the 


CONSIDERATION.  759 

trustees  of  the  plaintifE  during  the  year,  and  the  time  and  labor 
■expended  by  them  during  that  time,  to  secure  subscriptions  in 
order  to  fulfill  the  condition  upon  which  the  liability  of  the  sub- 
scribers depended.  There  is  no  doubt  that  labor  and  services, 
rendered  by  one  party  at  the  request  of  another,  constitute  a  good 
consideration  for  a  promise  made  by  the  latter  to  the  former, 
based  on  the  rendition  of  the  service.  But  the  plaintiff  encoun- 
ters the  difficulty  that  there  is  no  evidence,  express  or  implied, 
on  the  face  of  the  subscription  paper,  nor  any  evidence  outside  of 
it,  that  the  corporation  or  its  trustees  did,  or  undertook  to  do 
anything  upon  the  invitation  or  request  of  the  subscribers.  Nor 
is  there  any  evidence  that,  the  trustees  of  the  plaintiff,  as  rep- 
resentatives of  the  corporation,  in  fact  did  anything  in  their 
corporate  capacity,  or  otherwise  than  as  individuals,  interested  in 
promoting  the  general  object  in  view. 

Leaving  out  of  the  subscription  paper  the  affirmative  statement 
of  the  consideration  (which,  for  reasons  stated,  may  be  rejected), 
it  stands  as  a  naked  promise  of  the  subscribers  to  pay  the  several 
amounts  subscribed  by  them  for  the  purpose  of  paying  the 
mortgage  on  the  church  property  upon  a  condition  precedent 
limiting  their  liability.  Neither  the  church  nor  the  trustees 
promise  to  do  anything,  nor  are  they  requested  to  do  anything, 
nor  can  such  a  request  be  implied.  It  was  held  in  Hamilton  Col- 
lege V.  Stewart  (1  N.  Y.  581)  that  no  such  request  could  be  im- 
plied from  the  terms  of  the  subscription  in  that  case,  in  which 
the  ground  for  such  an  implication  was,  to  say  the  least,  as  strong 
as  in  this  case.  It  may  be  assumed  from  the  fact  that  the  sub- 
scriptions were  to  be  paid  to  the  trustees  of  the  church  for  the 
purpose  of  paying  the  mortgage,  that  it  was  understood  that  the 
trustees  were  to  make  the  payment  out  of  the  moneys  received. 
But  the  duty  to  make  such  payment,  in  case  they  accepted  the 
money,  would  arise  out  of  their  duty  as  trustees.  This  duty 
would  arise  upon  the  receipt  of  the  money,  although  they  had 
no  antecedent  knowledge  of  the  subscription.  They  did  not 
assume  even  this  obligation  by  the  terms  of  the  subscription,  and 
the  fact  that  the  trustees  applied  money,  paid  on  subscriptions) 
upon  the  mortgage  debt,  did  not  constitute  a  consideration  for 
the  promise  of  the  defendants'  intestate. 


760  FORMATION  OF  CONTRACT. 

We  are  unable  to  distinguish  this  case  in  principle  from  Hamil- 
ton College  v.  Stewart,  1  N.  Y.  581.  There  is  nothing  that  can  be 
urged  to  sustain  this  subscription  that  could  not,  with  equal  force, 
have  been  urged  to  sustain  the  subscription  in  that  case.  In  both 
the  promise  was  to  the  trustees  of  the  respective  corporations.  In 
each  case  the  defendant  had  paid  part  of  his  subscription  and  re- 
sisted the  balance.  In  both,  part  of  the  subscription  had  been 
collected  and  applied  by  the  trustees  to  the  purpose  specified.  In 
the  Hamilton  College  case  (which  in  that  respect  is  unlike  the 
present  one)  it  appeared  that  the  trustees  had  incurred  expense 
in  employing  agents  to  procure  subscriptions  to  make  up  the  re- 
quired amount,  and  it  was  shown,  also,  that  professors  had  been 
employed  upon  the  strength  of  the  fund  subscribed.  That  case 
has  not  been  overruled,  but  has  been  frequently  cited  with 
approval  in  the  courts  of  this  and  other  States. 

The  cases  of  Barnes  v.  Ferine  (12  N.  Y.  18)  and  Roberts  v. 
Cohh  (103  Id.  600)  are  not  in  conflict  with  that  decision.  There 
is,  we  suppose,  no  doubt  that  a  subscription,  invalid  at  the  time 
for  want  of  consideration,  may  be  made  valid  and  binding  by  a 
consideration  arising  subsequently  between  the  subscribers  and 
the  church  or  corporation  for  Avhose  benefit  it  is  made.  Both  of 
the  cases  cited,  as  we  understand  them,  were  supported  on  this 
principle.  There  was,  as  was  held  by  the  court  in  each  of  these 
cases,  a  subsequent  request  by  the  subscriber  to  the  promisee  to  go 
on  and  render  service  or  incur  liabilities  on  the  faith  of  the  sub- 
scription, which  request  was  complied  with,  and  services  were 
rendered  or  liabilities  incurred  pursuant  thereto.  It  was  as  if 
the  request  was  made  at  the  very  time  of  the  subscription,  fol- 
lowed by  performance  of  the  request  by  the  promisor.  Judge 
Allen,  in  his  opinion  in  Barnes  v.  Ferine,  said,  "  the  request  and 
promise  were,  to  every  legal  effect,  simultaneous,"  and  he  ex- 
pressly disclaims  any  intention  to  interfere  with  the  decision  in 
the  Hamilton  College  case.  In  the  present  case  it  was  shown  that 
individual  trustees  were  active  in  procuring  subscriptions.  But, 
as  has  been  said,  they  acted  as  individuals,  and  not  in  their 
official  capacity.  They  were  deeply  interested,  as  was  Mr.  Crook, 
in  the  success  of  the  effort  to  pay  the  debt  on  the  church,  and 
they  acted  in  unison.    But  what  the  trustees  did  was  not  prompted 


CONSIDERATION.  761 

by  any  request  from  Mr.  Crook.  They  were  co-laborers  in  pro- 
moting a  common  object.  We  can  but  regret  that  the  intention 
of  the  intestate  in  respect  to  a  matter  in  which  he  was  deeply 
interested,  and  whose  interest  was  manifested  up  to  the  very  time 
of  his  death,  is  thwarted  by  the  conclusion  we  have  reached.  But 
we  think  there  is  no  alternative,  and  that  the  order  should  be 
affirmed.     All  concur. 

Order  affirmed  and  judgment  accordingly.^ 


(p.  199)  Mutual  subscriptions. 

SHERWIN  V.  FLETCHER. 
168  MASSACHUSETTS,  413.  — 1897. 

Contract  on  the  following  agreement : 

"  We,  the  undersigned  subscribers,  do  hereby  agree  to  pay  the  sura 
set  against  our  respective  names,  the  same  to  be  payable  under  and  in 
accordance  with  the  following  conditions,  namely : 

"1.  The  money  by  us  subscribed  is  to  be  used  for  the  purpose  of 
erecting  a  building  in  the  town  of  Ayer,  to  be  used  for  the  manufacture 
of  boots  and  shoes. 

"2.  The  details  regarding  the  plan  under  which  the  subscribers- 
hereto  shall  organize  themselves,  and  upon  which  said  building  shall 
be  erected  and  rented,  shall  be  hereafter  fixed  and  determined  by  a 

1  In  Ii-win  V.  Lombard  University,  56  Ohio  State,  9,  defendant's  intestate 
executed  and  delivered  a  promissory  note  to  plaintiff  "for  the  endowment  of 
said  institution,"  and  paid  interest  on  it  for  twenty  years  before  his  death. 
It  did  not  appear  that  the  intestate  requested  plaintiff  to  incur  obligations  or 
expenses  on  the  strength  of  his  promise  or  requested  others  to  subscribe, 
although  he  with  others  was  interested  in  the  institution  and  desirous  of 
obtaining  an  endowment  for  it,  and  "prompted"  by  the  promises  of  intes- 
tate and  others,  the  plaintiff  did  incur  obligations.  It  was  held  that  plaintiff 
could  recover  upon  the  note.  "A  promise  to  give  money  to  one  to  be  used  by 
him  according  to  his  inclination  and  for  his  personal  ends  is  prompted  only 
by  motive.  But  a  promise  to  pay  money  to  such  an  institution  to  be  used 
for  such  defined  and  public  purposes  rests  upon  consideration.  .  .  .  The  con- 
sideration for  the  promise  in  question  is  the  accomplishment,  through  the 
university,  of  the  purpose  for  which  it  was  incorporated  and  in  whose  aid 
the  promise  was  made."  Compare  Pratt  v.  Trustees,  93  111.  476,  ante,  p.  35  ; 
Bicketts  v.  Scothorn,  67  Neb.  61,  ante,  p.  732. 


762  FORMATION  OF  CONTRACT. 

majority  in  numbers  and  interest  of  the  subscribers  hereto,  at  a  meeting 
to  be  duly  called  for  that  purpose. 

"  3.  No  subscription  hereto  shall  be  binding  until  the  sum  of  twelve 
thousand  (12,000)  dollars  shall  have  been  raised. 

"Samuel  W.  Fletcher.    ^200." 

It  is  alleged  that  the  ^12,000  was  fully  subscribed;  that  at  a 
meeting,  duly  called,  a  majority  in  number  and  interest  of  the 
subscribers  organized  the  "Ayer  Building  Association,"  elected 
the  plaintiffs  trustees,  and  authorized  the  purchase  of  land  and 
the  erection  of  a  building;  that  relying  upon  defendant's  prom- 
ise the  trustees  purchased  the  land  and  erected  the  building ;  that 
defendant  refuses  to  pay,  etc. 

Defendant  demurred  on  the  ground  that  no  promise  was  made 
to  these  plaintiffs  and  that  there  was  no  consideration  for  the 
promise.     Demurrer  overruled.     Defendant  appeals. 

Allen,  J.  The  demurrer  to  the  declaration  was  rightly  over- 
ruled. The  written  agreement  signed  by  the  defendant  was  vir- 
tually a  promise  to  pay  to  such  person  or  persons  as  should  be 
fixed  at  a  meeting  of  the  subscribers.  This  promise  was  at  the 
outset  an  offer,  but  when  steps  were  taken  in  pursuance  of  Article 
2,  and  a  plan  was  fixed  and  determined  as  therein  provided,  and 
the  plaintiffs  were  chosen  trustees,  they  became  the  promisees ; 
and  when  they  proceeded  to  erect  a  building  in  reliance  upon  the 
subscriptions  of  defendant  and  others,  and  before  any  withdrawal 
or  retraction  by  him,  that  supplied  a  good  consideration,  and  the 
promise  became  valid  and  binding  in  law.  Atliol  Music  Hall  Co. 
V.  Carey,  116  Mass.  471 ;  Davis  v.  Smith  American  Organ  Co.,  117 
Mass.  456 ;  Cottage  Street  Church  v.  Kelmtdl,  121  Mass.  528 ;  Hudson 
Seal  Estate  Co.  v.  Tower,  156  Mass.  82 ;  S.  C.  161  Mass.  10. 

Judgment  affirmed. 

(P.  238)  Mistake  as  to  nature  of  contract.  ^  V7     (P'  ^^) 


238) 


P 


ALEXANDER  v.  BROGLEY. 
43  ATLANTIC   REP.  (N.  J.),  888.  — 1899. 


Action  by  Hamil  M.  Alexander  against  John  Brogley  and  others 
and  John  0.  Bedford.  Judgments  for  defendants  were  affirmed 
by  the  Supreme  Court  and  plaintiff  brings  error. 


•«i-— l^-^Jsi!^^ 


REALITT  OF  CONSENT :  MISTAKE.  763 


Dixon,  J.  These  suits  were  brought  by  the  plaintiff  as  assignee 
of  the  Biographical  Publishing  Company.  In  the  first  of  the  suits 
the  testimony  before  the  trial  coui-t  tended  to  prove  that  an  agent 
of  the  company,  engaged  for  it  in  collecting  data  and  obtaining 
subscriptions  for  a  book  of  biographies,  applied  to  the  defendant 
for  the  purpose  of  preparing  a  sketch  of  his  life,  and,  after  getting 
from  him  some  details  of  the  history  of  his  family  and  himself, 
handed  to  him  a  paper,  with  the  request  that  he  would  sign  his 
name  upon  it,  so  that  in  the  sketch  his  name  might  be  spelled 
correctly.  Thereupon  the  defendant,  not  noticing  anything  upon 
the  paper,  signed  his  name.  The  paper  thus  signed  contained  a 
printed  form  of  contract,  purporting  to  bind  the  subscriber  to  take 
acopy  of  the  book,  and  pay  the  publishing  company  $15  therefor. 
On  this  alleged  agreement  the  suit  was  brought,  and  at  the  trial 
the  judge  charged  the  jury,  in  effect,  that,  if  the  defendant  was  by 
the  fraud  of  the  agent  led  to  believe  that  he  was  signing  his  name 
only  for  the  purpose  of  showing  how  it  was  spelled,  then  he  was 
not  bound.  The  court  also  refused  to  charge  that,  if  the  defend- 
ant by  his  own  negligence  in  any  way  contributed  to  the  perpe- 
tration of  the  fraud,  he  could  not  set  up  the  defense  of  fraud. 
The  circumstances  of  the  second  suit  are  substantially  the  same, 
except  that,  instead  of  being  asked  to  sign  his  name  in  order  to 
show  how  it  was  spelled,  the  defendant  was  requested  to  sign  his 
name  as  an  autograph  to  be  used  with  the  sketch  of  his  life.  The 
defendants  have  obtained  verdicts  and  judgments,  the  plaintiff 
insists  that  the  cases  were  wrongly  submitted  to  the  jury,  in  the 
respects  above  indicated.  The  plaintiff  does  not  claim  that,  in 
the  absence  of  negligence,  the  fraudulent  representations  implied 
in  the  requests  made  by  the  agent  were  insufficient  to  defeat  the 
alleged  contracts,  but  he  urges  that  as  the  defendants  were  able  to 
read,  and  had  the  printed  papers  placed  in  their  hands,  they  had 
no  right  to  act  upon  the  representations,  but  were  bound  to  inform 
themselves  of  the  purport  of  the  documents,  and  that  their  negli- 
gence on  this  point  should  preclude  the  proposed  defense. 

No  doubt,  there  are  many  decisions  which  hold  that,  under 
certain  circumstances,  a  person  may  be  debarred  by  his  negli- 
gence from  defeating  what  appears  to  be  his  contract,  on  the 
ground  of  fraud.     Some  of  these  decisions  rest  upon  the  desira- 


764  FORMATIOX  OF  CONTRACT. 

bility  of  preserving  general  confidence  in  commercial  paper; 
others  upon  the  legal  maxim,  "  Caveat  emptor  " ;  others  upon  the 
equitable  doctrine  that,  when  one  of  two  persons  otherwise  inno- 
cent must  suffer,  he  should  suffer  whose  negligence  has  allowed 
the  loss  to  occur  ;^  and  still  others  upon  the  rule  of  evidence,  that, 
when  contracting  parties  execute  a  writing  supposed  to  express 
their  contract,  that  writing  becomes  the  conclusive  proof  of  the 
terms  of  their  agreement,  and  hence  there  is  cast  upon  the  parties 
a  stringent  duty  to  inform  themselves  of  the  real  meaning  of  the 
instrument  signed. 

The  last  two  classes  approach  the  case  in  hand,  but  neither  of 
them  includes  it.  In  the  first  place,  the  defendants  did  not  know 
they  were  signing  contracts,  and  therefore  were  not  callec^  npo^ 
to  exercise  that  vigilance  which  such  a  transactioja._ieas^ably 
deraands..  They  were  doing  acts  which  were  not  intended  ta 
have,  and,  if  the  representations  of  the  agent  had  been  honest,, 
could  not  have,  any  obligatory  force  or  legal  effect  whatever,  and 
as  to  which,  consequently,  there  was  no  legal  duty  of  care.^  In 
the  second  place,  the  plaintiff  does  not  stand  in  the  position 
of  an  innocent  person.  As  assignee,  he  is  entitled  only  to  the 
rights  of  his  assignor ;  and  the  assignor  is,  in  legal  contempla- 
tion, implicated  in  the  fraud  of  the  agent,  so  far  as  relates  to  the 
enforcement  of  the  alleged  contracts  from  which  the  defendants, 
have  hitherto  accepted  no  benefit.  Said  Mr.  Justice  Story  in  his 
work  on  Agency  (section  139),  ^t  is  a  "  sound  and  perfectly  well- 
settled  principle  that,  if  a  principal  seeks  to  enforce  a  contract 
made  by  his  agent,  he  is  as  much  bound  by  any  material  mis- 
representation made  therein  by  the  agent  as  if  made  by  himself." 
A  fortiori,  it  would  seem,  a  person  cannot  enforce  as  a  contract 

1  In  Page  v.  Krekey,  137  N.  Y.  307,  it  is  held  that  one  who  negligently 
signs  an  instrument,  fraudulently  represented  to  him  to  be  something  other 
than  what  it  is,  is  liable  thereon  to  any  innocent  person  who  is  damaged 
thereby.  "Such  cases  are  not  governed  by  the  rules  applicable  to  the  bona  ■ 
fide  holder  of  negotiable  paper  procured  by  fraud,  but  by  the  equitable  rule 
that,  where  one  of  two  innocent  parties  must  suffer,  he  who  has  put  it  in  the 
power  of  a  third  person  to  commit  the  fraud,  must  sustain  the  loss."  In  this 
case  defendant  signed  a  guaranty  fraudulently  represented  to  him  to  be  an. 
application  for  a  license  under  the  excise  law. 

^Accord :  Lems  v.  Clay,  67,  L.  J.  Q.  B.  224.  —Eds. 


REALITY  OF  CONSENT  :  MISTAKE.  765 

that  which  in  truth  never  was  intended  to  have  even  the  form  of 
a  contract,  but  which  has  assumed  such  a  form  through  the  fraud 
of  his  agent.  We  know  of  no  just  principle,  nor  have  we  been 
referred  to  any  judicial  decision,  sanctioning  the  notion  that,  in 
circumstances  like  these  before  us,  a  person  can,  out  of  the  fraud 
of  his  own  agent  and  the  negligence  of  a  third  party,  create  a 
contract  legally  binding  upon  the  latter. 

Our  conclusion,  therefore,  is  that  there  was  no  error  in  sub- 
mitting these  cases  to  the  jury,  and  that  the  judgment  should  be 
aflSlrmed. 


(p.  246)  Mistake  as  to  subject-matter.  (p.  254) 

KOWALKE    V.    MILWAUKEE    ELECTRIC    RAILWAY    & 

LIGHT   CO. 

103  WISCONSIN,  472.  — 1899. 

Action  by  Anna  Kowalke  against  the  Milwaukee  Electric  Rail- 
way &  Light  Company.  Erom  a  judgment  for  plaintiff,  defendant 
appeals. 

On  October  26,  1896,  plaintiff  was  injured  by  jumping  from 
defendant's  street  car  in  an  emergency,  so  as  to  make  its  liability 
for  injuries  probable.  On  the  day  following,  the  plaintiff's  hus- 
band applied  to  defendant  for  settlement  of  the  damage,  stating 
that  she  was  pregnant.  Accordingly  the  defendant's  surgeon 
secured  the  attendance  of  her  family  physician,  who  made  a 
cursory  examination,  which  disclosed  only  slight  bruises,  and 
soreness  naturally  resulting  therefrom.  They  also  learned  that 
she  was  having  a  slight  uterine  hemorrhage,  and  the  question  of 
her  pregnancy  was  raised,  and  an  examination  to  ascertain  that 
fact,  proposed  by  defendant's  surgeon.  She  repudiated  the  fact 
of  pregnancy,  stating  that  she  was  sure,  from  certain  symptoms, 
that  nothing  of  the  sort  existed,  and  refused  peremptorily  to 
submit  to  examination  either  by  the  two  physicians  or  by  her 
own  family  physician.  She  stated  the  result  of  the  transaction 
on  this  subject:  "When  this  release  was  made,  I  had  some 
bruises  and  was  flowing.    I  was  not  positive  I  was  pregnant. 


766  FORMATION  OF  CONTRACT. 

I  told  theni  I  was  not  in  the  family  way.  The  doctors  asked  me 
how  I  felt,  and  went  all  over  the  case,  and  asked  me  a  long  time 
how  I  felt ;  and  at  last  it  was  agreed  they  were  not  sure  I  was  in 
the  family  way,  and  they  agreed  that  Dr.  Golley  should  take  care 
of  me.  The  only  thing  that  was  known  about  my  condition  was 
that  I  was  flowing,  after  I  had  stated  to  them  I  was  not  in  family 
way,  and  that  I  had  these  pains  and  bruises  and  stiffness.  That 
was  all  I  knew  about  it."  The  defendant's  surgeon  returned  at 
evening,  when  the  plaintiff's  husband  was  at  home,  and  then  a 
settlement  was  negotiated,  and  the  plaintiff,  with  her  husband, 
signed  a  full  release  of  the  defendant  "of  all  claims  and  demands 
for  damages  or  otherwise  which  I  now  have  or  can  have  by  reason 
of  jumping  from  [described  car]."  Plaintiff's  hemorrhage  con- 
tinued intermittently  until  about  the  8th  of  November,  when  she 
suffered  a  miscarriage.  She  was  treated  by  Dr.  Golley  and  his 
assistant  throughout,  and  his  bill  paid  by  the  defendant.  With- 
out prior  communication  with  defendant,  the  plaintiff  on  March 
4,  1897,  commenced  this  suit,  which  came  to  trial  May  2,  1898. 
Plaintiff's  counsel,  at  the  opening  of  the  trial,  waived  all  claim 
for  damages  by  reason  of  expense  incurred  for  care,  medicine, 
surgical  attendance,  nursing,  and  loss  of  service,  the  same  being 
conceded  to  belong  to  the  husband.  The  parties  stipulated  in 
open  court  to  waive  jury  trial  as  to  all  questions  except  the 
amount  of  damages,  and  a  finding  was  accordingly  made  by  the 
court  to  the  effect  that  at  the  time  of  settlement  both  plaintiff's 
and  defendant's  physician  believed  she  was  not  pregnant  and 
that  her  injury  was  slight,  that  the  mutual  mistake  was  made 
in  good  faith,  and  that  the  settlement  was  made  by  reason  of 
said  mutual  mistake,  and  without  fraud  or  intentional  misrepre- 
sentation on  the  part  of  either.  The  jury  found  the  damages  at 
$2900,  and  the  court  set  aside  and  ignored  the  settlement  and 
release,  and  entered  judgment  for  that  amount,  from  which  this 
appeal. 

Dodge,  J.  The  Circuit  Court's  finding  of  entire  absence  of  any- 
thing like  fraud  perpetrated  by  the  defendant  or  its  representative 
upon  the  plaintiff  is  certainly  not  antagonized  by  the  preponder- 
ance of  the  evidence.  Indeed,  the  conduct  of  the  defendant's 
physician  seems  to  have  been  in  accordance  with  the  most  scrupu- 


REALITY  OF  CONSENT  :  MISTAKE.  767 

lous  rules  of  professional  and  contractual  ethics.  He  refrained 
from  visiting  the  plaintiff  for  examination  until  he  had  secured, 
at  the  company's  expense,  the  attendance  of  her  regular  physician. 
He  at  no  time  assumed  to  treat  her,  or  intrude  upon  the  relations 
between  her  and  her  attending  physician.  He  refrained  from  any 
negotiation  for  settlement  until  he  could  meet  her  in  company 
with  her  husband.  The  judgment,  however,  proceeds  exclusively 
upon  what  is  termed  by  the  court  below  "  a  mistake  of  fact,"  which 
is  predicated  upon  the  fourth  finding,  that  both  she  and  the 
defendant's  physician  "  believed  "  she  was  not  pregnant. 

To  formulate  an  accurate  and  practically  applicable  definition 
of  the  mistake  of  fact  which  will  warrant  rescission  of  a  contract, 
has  been  apparently  well-nigh  the  despair  of  law  Avriters.  Indeed, 
no  definition  or  general  rule  has  been  invented  which  is  sufficient 
or  accurate,  except  by  immediately  surrounding  it  with  numerous 
exceptions  and  qualifications  more  important  than  itself.  This 
is  not  surprising,  in  view  of  the  fact  that  the  whole  doctrine  is 
an  invasion  or  restriction  upon  that  most  fundamental  rule  of  the 
law,  that  contracts  which  parties  see  fit  to  make  shall  be  enforced, 
and  in  view  of  the  further  consideration  that  one  or  both  of  the 
parties  is  often,  if  not  usually,  ignorant  or  forgetful  of  some  facts, 
thoughtfulness  of  which  might  vary  his  conduct. 

The  most  philosophical  definition  we  have  found  is  that  pre- 
sented by  Pom.  Eq.  Jur.  §  839:  "An  unconscious  ignorance  or 
forgetfulness  of  the  existence  or  nonexistence  of  a  fqct,  past  or  pres- 
ent, material  to  the  contract."  This  definition  contains  several 
elements,  each  of  which,  as  above  suggested,  must  be  explained 
and  qualified  in  its  practical  application.  Thus,  the  ignorance 
must  be  unconscious ;  that  is,  not  a  mental  state  of  conscious 
want  of  knowledge  whether  a  fact  which  may  or  may  not  exist 
does  so.  Kerr,  Fraud  &  M.  p.  432.  This  idea  is  involved  in,  and 
furnishes  a  reason  for,  the  exception  pointed  out  by  Dixon,  C.  J., 
in  Hurd  v.  Hall  (12  Wis.  112, 127),  on  authority  of  Kelly  v.  Solan 
(9  Mees.  &  W.  54),  viz. :  Where  a  party  enters  into  a  contract, 
ignorant  of  a  fact,  but  meaning  to  waive  all  inquiry  into  it,  or 
waives  an  investigation  after  his  attention  has  been  called  to  it, 
he  is  not  in  mistake,  in  the  legal  sense.  These  limitations  are 
predicated  upon  common  experience,  that,  if  people  contract  under 


;\ 

1 

( 

/ 


768  FORMATION  OF  CONTRACT. 

such  circumstances,  they  usually  intend  to  abide  the  resolution 
either  way  of  the  known  uncertainty,  and  have  insisted  on  and 
received  consideration  for  taking  that  chance. 
\  Akin  to  the  rule  that  the  ignorance  must  be  unconscious,  though 
-  going  still  further  as  an  exception,  is  the  other  rule,  that  igno- 
1  ranee  must  not  be  due  to  negligence,  although  there  be  no  actual 
suspicion  with  reference  to  the  fact  in  question.  Pom.  Eq.  Jur. 
§  856 ;  Kerr,  Fraud  &  M.  p.  406 ;  Hurd  v.  Hall,  12  Wis.  126 ; 
Conner  v.  Welch,  51  Wis.  431.  The  last  case  is  a  good  illustrar 
tion.  A  mortgagee  took  a  new  mortgage,  and  released  an  old 
one,  on  the  understanding  that  his  new  lien  took  the  place  of  the 
old,  in  ignorance  of  existence  of  a  subsequent  judgment  against 
the  mortgagor.  The  court  held  that,  because  he  had  some  knowl- 
edge of  the  latter's  embarrassed  condition,  it  was  negligence  not  to 
have  investigated  as  to  judgments,  and  refused,  notwithstanding  the 
mistake,  to  rescind  the  transaction  and  reinstate  his  former  lien. 
Passing  the  requirement  that  the  fact  as  to  which  mistake  is 
made  must  be  either  past  or  present,  —  for  it  is  obvious  that  the 
coming  into  existence  of  any  future  fact  must  at  the  time  of  con- 
tracting have  been  understood  to  rest  in  conjecture,  and  the  con- 
tingency thereof  to  have  been  assumed  by  both  parties,  —  another 
essential  element  of  the  definition  is  that  the  fact  involved  in  the 
mistake  must  have  been  as  to  a  material  part  of  the  contract,  or,  as 
better  expressed  by  Mr.  Beach  (Mod.  Eq.  Jur.  62,  53),  an  intrinsic 
fact ;  that  is,  not  merely  material  in  the  sense  that  it  might  have 
had  weight  if  known,  but  that  its  existence  or  nonexistence  was 
d  intrinsic  to  the  transaction,  —  one  of  the  things  actually  con- 
f  tracted  about.  As,  in  the  familiar  illustration  of  the  sale  of  a 
horse,  the  existence  of  the  horse  is  an  intrinsic  fact.  Another  par- 
tial expression  of  this  requisite,  adopted  by  Mr.  Pomeroy  (Eq.  Jur. 
§  856)  is  as  follows :  "  If  a  mistake  is  made  as  to  some  fact  which, 
though  connected  with  the  transaction,  is  merely  incidental,  and 
not  a  part  of  the  very  subject-matter,  or  essential  to  any  of  its 
terms,  or  if  the  complaining  party  fails  to  show  that  his  conduct 
was  in  reality  determined  by  it,  in  either  case  the  mistake  will 
not  be  ground  for  relief,  affirmative  or  defensive."  The  last  part 
of  this  statement  is  adopted  in  Klauber  v.  Wright,  52  Wis.  303, 
30H ;  Grymes  v.  Sanders,  93  U.  S.  55,  60. 


REALITY  OF  CONSENT  :  MISTAKE.  769 

Some  illustrative  cases  of  this  aspect  of  the  subject  may  serve 
to  elucidate.  The  damaged  condition  of  a  ship  at  sea,  as  to  which 
both  parties  to  her  sale  are  ignorant,  held  merely  a  collateral  cir- 
cumstance, and  not  an  intrinsic  fact.  Barr  v.  Gibson,  3  Mees.  & 
W.  390.  Financial  condition  of  a  debtor  is  not  intrinsic  to  a  com- 
promise and  release  of  his  debt,  so  that  mistake  thereon  will  justify 
rescission.  Damhmann  v.  Schulting,  75  N.  Y.  55,  63.  Ignorance 
of  declaration  of  peace,  greatly  enhancing  value  of  merchandise, 
will  not  justify  rescission  of  sale.  Laidlaw  v.  Organ,  2  Wheat. 
178.  Sufficiency  of  security  for  a  debt  purchased  as  part  of  firm 
assets,  not  intrinsic.  Segur  v.  Tingleg,  11  Conn.  134,  143.  Cer- 
tain United  States  bonds  had  been  extended,  and,  as  a  result,  were 
commanding  premiiim  in  market.  Held  not  "  of  the  essence  "  of 
a  sale  at  par,  both  parties  being  ignorant  as  to  both  extension  and 
premium.  Sankey's  JEx'rs  v.  Bank,  78  Pa.  St.  48,  55.  One  who 
had  built  a  mill  partly  on  land  of  another  purchased  of  that  other 
two  lots,  both  parties  supposing  them  to  include  the  mill,  which, 
however,  was  found  to  be  on  a  third  lot.  Court  refused  to  rectify, 
holding  that  the  contract  related  to  purchase  and  sale  of  the  lots 
named,  and  that,  though  presence  of  mill  on  one  of  them  might 
have  been  an  important  consideration,  it  was  not  the  fact  as  to 
which  they  contracted,  not  intrinsic  to  the  transaction.  Webster 
V.  Stark,  78  Tenn.  406.  Fact  that  a  specific  tract  of  land  contains 
less  than  supposed,  not  affecting  identity  of  thing  purchased,  is 
not  "  of  the  very  subject-matter  of  the  sale."  Thompson  v.  Jaok- 
son,  3  Eand.  (Va.)  507.  The  foregoing  is  the  principle  on  which 
is  founded  the  rvde  well  stated  by  Kerr  (Fraud  &  M.  p.  433),  as 
follows :  "  Care  must  be  taken  in  distinguishing  cases  where  the 
parties  are  under  a  mutual  mistake  as  to  the  subject-matter  of  a 
contract  from  cases  where  there  is  no  doubt  as  to  the  subject-mat- 
ter, but  the  one  has  in  fact  sold  more  than  he  thought  he  was 
selling,  and  the  other  got  more  than  he  expected,"  —  illustrating 
by  sale  of  a-leasehold  having  longer  to  run  than  supposed.  O'Kill 
V.  Whittaker,  1  De  Gex  &  S.  83. 

_A  further  limitation  upon  the  maxim,  Ignorantia  facti  excusat, 
especially  applicable  to  cases  like  the  present,  is  that  where  par- 
ties have  entered  into  contract  based  upon  uncertain  or  contin- 
gent events,  purposely,  as  a  compromise  of  doubtful  claims  arising 


770  FORMATION  OF  CONTRACT. 

from  them,  in  absence  of  any  bad  faitli,  no  rescission  can  be  had, 
though  the  facts  turn  out  very  differently  from  the  expectation 
of  either  or  both  of  the  parties.  In  such  classes  of  agreements 
the  parties  are  presumed  to  calculate  the  chances,  receive  com- 
pensation therefor,  and  assume  the  risks.  Pom.  Eq.  Jur.  §  855 ;. 
Beach,  Mod.  Eq.  Jur.  §§  43,  56;  Bank  v.  McGeoch,  92  Wis.  286, 
313.  It  is  too  obvious  to  require  more  than  statement  that,  if 
parties  fairly  agree  to  abide  uncertainty  as  to  past  or  as  to  future 
events,  they  must  do  so.     Kercheval  v.  Doty,  31  Wis.  476. 

Applying  the  definitions  and  rules  of  law  above  set  forth,  with 
their  qualifications,  to  the  facts  of  this  case,  it  is  clearly  apparent 
that  if  there  was  a  mistake,  in  the  sense  in  which  that  word  is 
used  in  the  law,  the  fact  as  to  which  such  mistake  existed  was 
not  an  intrinsic  one,  —  it  was  not  of  the  subject-matter  of  the 
contract.  There  was  no  mistake  or  misunderstanding  as  to  the 
acts  of  the  defendant,  nor  as  to  the  injuries  which  the  plaintiff 
had  received.  The  effect  of  those  injuries  was,  of  course,  prob- 
lematical and  conjectural.  That  very  uncertainty  entered  into  the 
compromise  made,  and  was  the  consideration  of  a  certain  sum  on 
one  side,  and  the  surrender  of  any  larger  sum  on  the  other.  The 
elements  of  the  contract  of  settlement  were :  first,  whether  defend- 
ant was  liable;  and,  secondly,  what  amount,  in  view  of  all  the 
contingencies,  should  be  paid  and  received  in  satisfaction  of  such 
liability,  and  the  question  of  the  plaintiff's  condition,  whether 
pregnant  or  not,  was  merely  a  collateral  question.  It  was  no  part 
of  the  injury  caused  by  defendant,  nor  anything  for  which  dam- 
ages should  be  paid.  At  most,  it  was  but  one  of  the  surrounding 
conditions  which  might  or  might  not  increase  the  effect  of  the 
injuries.  It  is  probably  true,  in  the  great  majority  of  personal 
injury  cases,  that  the  effect  which  the  injuries  received  may  have, 
as  to  time  of  disability,  quantum  of  suffering,  and  the  like  may 
be  modified  by  the  physical  or  mental  condition  of  the  injured 
party.  For  example,  a  predisposition  to  rheumatism  would  be  a 
condition  likely  to  enhance  the  subsequent  effects  of  an  injury  — 
especially  a  dislocation  or  other  injury  to  a  joint.  A  disturbed 
condition  of  the  system  might  prevent  the  reuniting  of  a  broken 
bone,  otherwise  practically  certain.  A  predisposition  to  nervous 
troubles  might  vastly  multiply  the  effects  of  a  slight  spinal  injury. 


REALITY  OF  CONSENT  :  MISTAKE.  771 

So  that  if  the  mere  ignorance  of  such  surrounding  conditions 
can  suffice  to  render  ineffective  a  settlement,  because  after  events 
indicate  that  the  amount  paid  is  inadequate,  few  compromises  of 
the  damages  from  personal  injury  could  be  relied  on.  Compro- 
mise is  highly  favored  by  the  law,  and  any  rule  or  doctrine  by 
which  the  fair  meeting  of  the  minds  of  the  parties  to  that  end,  in 
the  great  majority  of  cases  which  arise  in  human  affairs,  must 
fail  to  be  permanent  or  effectual  to  settle  their  rights,  is  contrary 
to  the  whole  spirit  of  the  law,  and  should  not  be  adopted.  The 
question  in  each  such  case  is,  did  the  minds  of  the  parties  meet 
upon  the  understanding  of  the  payment  and  acceptance  of  some- 
thing in  full  settlement  of  defendant's  liability?  If  they  did, 
without  fraud  or  unfair  conduct  on  either  side,  the  contract  must 
stand,  although  subsequent  events  may  show  that  either  party 
made  a  bad  bargain,  because  of  a  wrong  estimate  of  the  damages 
which  would  accrue.  Seeley  v.  Traction  Co.,  179  Pa.  St.  334, 338; 
Homuth  V.  Railway  Co.,  129  Mo.  629 ;  Klauber  v.  Wright,  52  Wis. 
303. 

In  the  case  at  bar  there  can  be  no  question  but  that  the  agree- 
ment reached  was  for  full  settlement  of  all  defendant's  liability 
for  damages  resulting  from  the  accident.  The  written  agree- 
ment unambiguously  asserts  such  intention,  and  there  is  no  claim 
that  plaintiff  did  not  so  understand  it.  She  might  well  enter  on 
such  compromise,  for  every  advantage  of  knowledge  as  to  the 
injuries  received,  and  as  to  their  probable  effect,  was  with  her. 
She  had  the  benefit  of  her  own  observation,  and  the  counsel  of 
her  customary  physician,  while  the  defendant  had  but  the  oppor- 
tunity of  observing  a  single  brief  examination  of  her  person,  and 
that  much  less  complete  than  was  requested,  in  which  its  physi- 
cian was  necessarily  subject  to  be  deceived  by  simulated  symj)- 
toms  or  exaggerated  statements.  In  addition  to  all  which,  the 
settlement  cast  upon  the  plaintiff  a  share  of  the  contingencies 
of  an  underestimate  of  damages,  while  she  assumed  none  in  case 
an  overestimate  had  been  made.  All  charges  for  medical  attend- 
ance by  reason  of  her  injuries  were  assumed  by  defendant,  and  it 
might  with  some  reason  claim  that  it  should  not  pay  those  due  to 
the  miscarriage,  since  plaintiff  gave  the  most  vehement  assurances 
against  any  such  event.     But  both  parties  have  treated  this  obli- 


772  FORMATION  OF  CONTRACT. 

gation  as  one  to  be  performed  by  defendant,  notwithstanding 
the  luiexpected  enhancement  thereof.  On  the  other  hand,  no 
promptitude  of  recovery  or  overestimate  of  the  injury  was, 
by  the  agreement,  to  cause  a  retujn  of  any  of  the  consideration 
paid. 

It  may  be  noted  here  that  plaintiff  nowhere  suggests  that  she 
would  not  have  made  this  settlement,  had  she  been  aware  of  her 
pregnancy;  and,  under  this  branch  of  the  law  of  mistake,  it  is 
laid  down  that  it  must  clearly  appear  that  the  contract  would  not 
have  been  made,  had  the  fact  been  known.  This  is  a  material 
consideration.  Enhancement  of  her  damage  was  by  no  means 
certain  to  result  from  the  fact  of  pregnancy.  Indeed,  the  only 
evidence  on  the  subject  was  against  the  probability  of  any  such 
effect.  We  cannot  say  that  she  would  not  have  been  willing  to 
accept  this  settlement,  and  assume  the  contingency,  even  had  she 
known  the  fact  of  her  condition.  And,  even  if  the  fact  were  one 
intrinsic  to  the  transaction,  still  it  is  essential  to  the  extreme 
remedy  of  rescission  of  a  deliberate  contract  that  plaintiff  prove 
clearly  that  she  would  not  have  executed,  had  she  known  the 
truth.  Klmiber  v.  Wright,  52  Wis.  303;  Grymes  v.  Sanders,  93 
U.  S.  55. 

If,  however,  the  fact  of  pregnancy  had  been  one  intrinsic  to 
the  contract,  the  question  remains  whether  such  mistake  was 
made  with  reference  thereto  as  avoids  that  contract.  The  court 
helow  finds  that  a  mistake  existed  as  to  that  fact.  So  far  as  this 
is  a  finding  of  fact,  we  shall  accept  it  as  conclusive  in  the  light  of 
the  evidence ;  but  whether  it  is  such  a  mistake  as  justifies  rescis- 
sion of  a  deliberately  executed  agreement  is  a  question  of  law, 
and  present  before  us  for  decision.  We  have  already  pointed  out 
the  distinction  between  the  "  unconscious  ignorance  "  required  to 
accomplish  this  result,  and  the  mental  state  of  consciousness  of 
ignorance  whether  the  fact  exists  or  not,  —  where,  as  Dixon,  C.  J., 
phrases  it,  her  attention  being  called  to  the  subject,  she  waived 
any  investigation  of  it,  and  elected  to  proceed  without  inquiry 
into  it.  It  seems  clear  that  the  plaintiff  was  —  indeed,  that  both 
parties  were  —  in  the  latter  mental  condition.  The  plaintiff  had 
passed,  by  about  a  week,  the  proper  period  of  her  menstruation. 
She  was  a  woman  of  intelligence  and  experience,  —  already  the 


REALITY  OF  CONSENT  :  MISTAKE.  773 

mother  of  three  children.  She  necessarily  knew  that  the  ques- 
tion of  her  condition  was  one  of  uncertainty.  Her  conclusion 
thereon,  however  firm,  was  necessarily  but  a  conclusion  from  vari- 
ous facts,  circumstances,  and  symptoms,  some  of  which,  at  least, 
suggested  existence,  instead  of  nonexistence,  of  the  suspected 
state.  It  was  but  a  balancing  of  probabilities.  The  finding, 
indeed,  is  that  the  parties  believed,  not  that  they  were  ignorant ; 
and  plaintiff's  own  testimony  makes  it  apparent  that  the  situation 
was  little  more  than  a  state  of  doubt,  with  a  belief  that  the  prob- 
ability was  negative.  She  says:  "I  had  bruises  and  was  flowing. 
I  was  not  positive  I  was  pregnant.  I  told  them  I  was  not.  The 
doctors  went  all  over  the  case,  and  made  inquiries,  and  at  last  it 
was  agreed,  they  were  not  sure  I  was  in  the  family  way,  and  they 
agreed  that  Dr.  Golley  should  take  care  of  me."  In  a  case  of 
doubt  like  this,  if  the  doubtful  fact  is  material,  parties  may  com- 
promise and  include  the  uncertainty  among  those  covered  by  the 
settlement;  they  may  refuse  to  settle  until  the  uncertainty  is  re- 
moved, or  they  may  settle  everything  else,  and  expressly  omit 
therefrom  the  specified  contingency.  If  they  go  on  and  make 
settlement  in  terms  complete,  they  will  be '  presumed  to  have 
intended  the  apparent  effect  of  their  acts.  Any  other  presump- 
tion would  be  contrary  to  the  truth,  in  the  great  majority  of 
instances,  and  defeat  the  real  intention  of  the  parties,  and  we 
have  no  doubt  it  would  do  so  here.  It  seems  to  us  that  both 
parties  had  in  mind  the  possibility  of  pregnancy,  and  yet,  that 
both  intended  what  they  said  by  their  written  agreement,  namely, 
to  pay  and  accept  in  compromise  and  discharge  of  all  defendant's 
liability  a  present  sum  of  money,  and  payment  for  any  medical 
attendance  rendered  necessary  by  the  injuries.  The  defendant 
has  performed  that  agreement  on  its  part,  and  plaintiff  must  be 
held  to  abide  it  on  hers. 

Trial  by  jury  having  been  waived,  except  as  to  amount  of  dam- 
ages, it  is  proper  for  this  court  to  apply  the  law  to  the  facts 
established  in  the  court  below.  Those  facts  are  that  plaintiff, 
understandingly  and  without  fraud,  executed  the  release  set  forth, 
and  that  no  such  mistake  of  fact  as  warrants  rescission  of  that 
contract  appears.  As  a  result,  judgment  should  have  gone  for 
the  defendant. 


774  FORMATION  OF  CONTRACT. 

By  the  Court.  —  The  judgment  is  reversed,  and  the  cause  re- 
manded to  the  Circuit  Court,  with  directions  to  enter  judgment 
for  defendant. 

(p.  246)  Mistake  as  to  subject-matter.  (p.  254) 

SEARS  V.   GRAND  LODGE  OF  THE  ANCIENT  ORDER 
OF  UNITED  WORKMEN. 

163  NEW  YORK,  374.— 1900. 

Appeal  from  a  judgment  of  the  Appellate  Division,  reversing 
a  judgment  in  favor  of  plaintiff,  and  granting  a  new  trial. 

Bartlett,  J.     This  appeal  presents  rather  a  novel  question. 

On  the  31st  of  July,  1886,  one  Charles  R.  Baumgrass,  residing 
in  the  city  of  Syracuse,  became  a  member  of  a  subordinate  lodge 
of  defendant  and  received  a  certificate  of  membership,  which  pro- 
vided in  the  event  of  his  death  the  defendant  would  pay  to  his 
wife,  Mary  A.  Baumgrass,  the  sum  of  $2000. 

On  September  28,  1886,  Baumgrass  disappeared  and  was  not 
seen  or  heard  from  thereafter  until  April  15,  1896,  a  period  of 
nearly  ten  years.  In  the  meantime  important  transactions  and 
negotiations  had  taken  place  affecting  the  rights  of  the  parties. 

Mrs.  Baumgrass,  the  beneficiary,  was  advised  to  test  upon  her 
rights  until  seven  years  had  elapsed,  when  she  might  proceed 
under  the  legal  presumption  that  her  husband  was  dead.  She 
waited  about  nine  years  and  then  brought  an  action  against 
defendant  on  the  23d  of  September,  1895,  to  recover  $2000 
under  the  certificate  of  insurance. 

On  the  26th  day  of  March,  1896,  and  before  the  action  was 
tried,  she  entered  into  an  agreement  of  compromise  with  the 
defendant,  under  which  her  suit  against  it  was  discontinued 
without  costs. 

The  agreement  recited  the  facts  and  provided  for  the  settle- 
ment and  discontinuance  of  the  action ;  that  the  defendant  should 
pay  to  the  beneficiary  "  the  sum  of  $666  in  cash  promptly ; " 
that  said  $666  "  is  not  to  be  returned  in  any  event ; "  that 
$1334  should  be  placed  by  defendant  in  the  hands  of  a  trustee 
to  be  held  by  him  until  July  1,  1897,  subject  to  the  condition 
that  if  before  that  time  the  defendant  should  produce  reasonable 


REALITY  OF  CONSENT  :  MISTAKE.  775 

proof  that  the  insured  was  alive,  the  money  so  deposited  was  to 
be  returned  to  it,  but  failing  in  such  proof,  it  was  to  be  paid  to 
the  beneficiary  and,  in  the  language  of  the  agreement,  "  she  shall 
take  full  title  to  the  same." 

Twenty  days  after  the  execution  of  this  agreement,  and  before 
the  defendant  had  made  the  absolute  payment  of  $666  as  agreed, 
the  insured  was  proved  to  be  alive.  Thereupon  the  beneficiary 
demanded  payment  of  the  $666,  which  was  refused,  and  she 
assigned  her  claim  under  the  agreement  of  compromise  to  the 
plaintiff. 

The  facts  are  undisputed ;  the  Special  Term  rendered  judgment 
for  plaintiff,  which  was  reversed  by  the  Appellate  Division  with 
a  divided  court. 

The  defendant  rests  its  defense  on  the  legal  proposition  that 
the  agreement  on  which  the  plaintiff  seeks  to  recover  was  made 
while  both  parties  thereto  were  laboring  under  a  material  mistake 
of  fact,  to  wit,  the  supposed  death  of  the  insured,  and  is,  there- 
fore, unenforceable. 

The  counsel  for  the  defendant  has  cited  us  to  many  authorities 
to  the  general  effect  that  where  parties  to  a  contract  have  entered 
into  it  under  the  impression  that  a  certain  state  of  facts  existed 
which  proved  to  be  error,  equity  will  afford  relief. 

This  is  a  sound  proposition  of  law,  but  it  has  no  application  to 
the  facts  in  this  case. 

The  material  facts  may  be  briefly  stated.  The  insured  disap- 
peared absolutely,  leaving  his  wife  as  beneficiary  under  his  certifi- 
cate of  insurance  issued  by  the  defendant ;  she  waited  nine  years 
and  then  sued  to  recover  the  total  insurance  of  $2000.  In  this 
situation  the  defendant  seeks  a  compromise.  It  is  not  unreason- 
able to  assume  that  the  defendant  regarded  the  chances  of  suc- 
cess in  the  litigation  as  decidedly  in  favor  of  the  plaintiff ;  the 
legal  presumption  arising  at  the  end  of  seven  years,  that  the  in- 
sured was  dead,  had  existed  for  two  years.  What  then  was  there 
to  compromise  in  the  action  then  pending  ?  Clearly  but  one  thing 
was  dealt  with  or  could  be  in  the  agreement  of  settlement,  to  wit, 
the  possibility  that  the  insured  should  prove  to  be  alive. 

That  this  was  the  basis  of  compromise  upon  which  the  agree- 
ment rested  is  perfectly  apparent  on  the  face  of  the  instrument 


3 


776  FORMATION  OF  CONTRACT. 

The  defendant  said  to  the  beneficiary,  give  us  sixteen  months 
more  time  to  prove  the  insured  is  alive  and  discontinue  your  suit 
at  once.  If  you  do  this,  we  will  make  you  a  cash  payment  of 
$666,  which  is  not  to  be  paid  back  in  any  event,  and,  at  the 
expiration  of  the  sixteen  months,  if  we  fail  to  prove  the  insured 
is  alive,  we  will  pay  you  $1334,  which  is  to  be  held  for  both  of 
us  by  a  trustee  meanwhile,  and,  if  we  do  prove  it,  the  money  is  to 
be  returned  to  us. 

It  is  urged  that  there  is  no  consideration  for  this  agreement. 
The  discontinuance  of  action,  the  extension  of  time  in  which 
defendant  was  to  pay  the  insurance,  and  the  compromise  of  a 
doubtful  claim,  were  a  su£B.cient  consideration. 

It  is  also  urged  that  the  trial  judge  found  that  when  the  agree- 
ment was  entered  into,  both  parties  believed  the  insured  was  dead. 
It  was  also  found  that  notwithstanding  such  belief  the  contract 
recognized,  contemplated,  and  provided  for  the  possibility  of  the 
insured  being  alive. 

It  is  to  be  kept  in  mind  that  the  present  action  is  limited  to  the 
cash  payment  that  was  to  have  been  made  under  the  agreement, 
and  in  regard  to  which  the  defendant  was  in  default  at  the  time 
it  was  discovered  that  the  insured  was  alive.  This  payment 
should  have  been  made  when  the  contract  was  signed,  and  it  was 
then  distinctly  agreed  that  it  should  not  be  paid  back  "  in  any 
event,"  which  meant  it  should  not  be  repaid  even  if  it  were  subse- 
quently proved  that  the  insured  was  alive. 

In  view  of  all  the  circumstances,  it  cannot  be  said  that  the 
parties  entered  into  the  agreement  laboring  under  a  mutual  mis- 
take of  fact. 

Mr.  Pomeroy  in  his  work  on  Equity  Jurisprudence  (§  855, 
2d  ed.)  states  the  correct  rule  governing  this  case.  "Where 
parties  have  entered  into  a  contract  or  arrangement  based  upon, 
uncertain  or  contingent  events  put-posely  as  a  compromise  of  a 
doubtful  claim  arising  from  them,  and  where  parties  have  know- 
ingly entered  into  a  speculative  contract  or  transaction,  one  in 
which  they  intentionally  speculated  as  to  the  result,  and  there  is 
in  either  case  an  absence  of  bad  faith,  violation  of  confidence,  mis- 
representation, concealment,  and  other  inequitable  conduct  men- 
tioned in  a  former  paragraph,  if  the  facts  upon  which  such  agree- 


REALITY  OF  CONSENT  :  MISTAKE.  777 

ment  or  transaction  was  founded  or  the  event  of  the  agreement 
itself  turned  out  very  differently  from  what  was  expected  or  antici- 
pated, this  error,  miscalculation,  or  disappointment,  although  re- 
lating to  a  matter  of  fact  and  not  of  law,  is  not  such  a  mistake 
within  the  meaning  of  the  equitable  doctrine  as  entitles  the  disap- 
pointed party  to  any  relief  either  by  way  of  canceling  the  contract 
and  rescinding  the  transaction,  or  of  defense  to  a  suit  brought  for 
its  enforcement.  In  such  classes  of  agreements  and  transactions 
the  parties  are  supposed  to  calculate  the  chances  and  they  certainly 
assume  the  risks."  Again,  in  section  849,  Mr.  Pomeroy,  after 
dealing  with  relief  where  a  party  is  mistaken  as  to  his  legal  rights, 
interests,  or  relations,  closes  with  these  words :  "  It  should  be  care- 
fully observed  that  this  rule  has  no  application  to  compromises, 
where  doubts  have  arisen  as  to  the  rights  of  the  parties  and  they 
have  intentionally  entered  into  an  arrangement  for  the  purpose 
of  compromising  and  settling  those  doubts.  Such  compromises, 
whether  involving  mistakes  of  law  or  fact,  are  governed  by  special 
considerations."  A  number  of  instructive  authorities  are  cited  by 
the  learned  author  under  both  of  these  sections. 

It  may  be  observed  in  this  connection  that  the  trial  court  found 
that  there  was  no  fraud  on  the  part  of  the  beneficiary,  and,  sub- 
stantially, that  she  had  acted  throughout  in  good  faith. 

The  agreement  was  in  furtherance  of  a  lawful  compromise,  and 
enforceable  without  regard  to  the  validity  of  the  beneficiary's 
claim  under  the  original  certificate  of  insurance.  Compromises 
of  disputed  claims  fairly  entered  into  are  final,  and  will  be  sus- 
tained by  the  courts  without  regard  to  the  validity  of  the  claims. 
Wehmm  v.  Kuhn,  61  N.  Y.  623;  White  v.  Hoyt,  73  N.  Y.  505  j 
Dunham  v.  Griswold,  100  N.  Y.  224 ;  Crayis  v.  Hunter,  28  N.  Y. 
389 ;  Mowatt  v.  Wright,  1  Wend.  355. 

The  defendant,  in  executing  the  agreement  of  compromise,  as- 
sumed the  risk  and  calculated  the  chances  of  being  placed  in  the 
present  situation,  and  there  would  seem  to  be  no  reason  in  law  or 
public  policy  why  plaintiff  should  not  recover-. 

It  would  be  a  harsh  rule,  indeed,  that  would  preclude  insurer 
and  beneficiary  nine  years  after  the  insured  had  disappeared  from 
entering  into  an  enforceable  agreement  of  compromise  under  the 
state  of  facts  here  disclosed. 


778  FORMATION  OF  CONTRACT. 

The  judgment  of  the  Appellate  Division  should  be  reversed  and 
the  judgment  of  the  Trial  Term  affirmed,  with  costs  to  the  plaintiff 
in  all  the  courts. 

Parker,   C.  J.,  Martin,  Vann,  Cullen,  and  Werner,  JJ., 

concur ;  GRAr,  J.,  dissents. 

Judgment  reversed,  etc.^ 


/-• 


{P.  282)  Fraudulent  concealment.  (p.  288) 

THE   CLANDEBOYE." 

70  FEDERAL  REP.  (C.  C.  A.),  631.  — 1895. 

This  was  a  libel  by  Leo  Lomm,  master  of  the  steamtug  Daunt- 
less, against  the  steamship  Clandeboye,  W.  H.  Strickland,  master, 
claimant,  to  recover  compensation  for  salvage  service.  The  Circuit 
Court  rendered  a  decree  awarding  salvage  in  the  sum  of  $10,000, 
from  which  the  claimant  has  appealed. 

Seymour,  District  Judge.  The  material  facts  of  the  case  are 
as  follows  :  The  Clandeboye,  a  large  and  valuable  British  steamer, 
had  become  disabled  by  breakage  of  machinery,  and  had  arrived 
off  the  Little  Bahama  Islands.  Her  mate  had  been  sent  by  a  ship's 
boat  for  assistance,  and  had  on  the  loth  of  May,  1894,  arrived  at 
Savannah.  In  pursuance  of  telegraphic  instructions  cabled  to  him 
by  the  owners,  he  had  engaged  the  services  of  the  Morse  of  New 

^  In  Biegel  v.  American  Life  Ins.  Co.  (153  Pa.  St.  134)  a  creditor  had  a 
life  insurance  policy  on  the  life  of  his  debtor  for  §6000,  the  annual  premium 
being  $153.90.  For  thirteen  years  the  whereabouts  of  the  debtor  were 
unknown  and  as  the  payment  of  the  premiums  became  burdensome,  the 
creditor  took  a  paid-up  policy  for  .$2500  in  lieu  of  the  $6000  policy.  The 
creditor  supposed  the  debtor  to  be  then  living ;  the  Insurance  Company 
issued  a  policy  for  the  amount  to  which  the  creditor  was  entitled,  assuming 
the  insured  debtor  to  be  still  living.  In  fact,  unknown  to  either  party,  the 
insured  had  died  about  ten  days  before  the  old  policy  was  canceled  and 
the  new  one  issued.  The  creditor  brought  an  action  to  reinstate  the  old  policy 
and  the  court  held  (two  judges  dissenting)  that  there  was  a  mutual  mistake 
of  a  material  fact,  that  both  parties  proceeded  upon  the  assumption  that  the 
insured  was  still  living  and  that  the  element  of  doubt  as  to  whether  he  was 
living  or  dead  did  not  enter  into  the  transaction. 

2  Although  this  case  arises  in  admiralty,  the  principles  upon  which  it  is 
decided  are  drawn  from  the  common  law  and  equity.  —  Eds. 


REALITY  OF   CONSENT:  FRAUD.  779 

York,  then,  however,  lying  at  the  port  of  Philadelphia,  which  had 
agreed  to  proceed  forthwith  to  the  Little  Bahamas,  and  tow  the 
Clandeboye  to  Vera  Cruz,  her  port  of  destination,  for  the  sum  of 
$5,000.  Leo  Lomm,  the  libellant,  part  owner  and  master  of  the 
tug  Dauntless,  lying  at  the  time  at  its  home  port  of  Brunswick, 
Ga.,  having  learned  from  the  Savannah  papers  of  the  arrival  at 
that  port  of  the  mate  of  the  Clandeboye,  and  of  the  condition  and 
location  of  that  vessel,  on  the  17th  of  May  telegraphed,  through 
his  agents,  to  Savannah,  and  received  a  reply  stating  that  the  tug 
Morse  of  New  York  had  been  chartered  to  go  to  the  assistance  of 
the  Clandeboye.  The  distance  from  New  York  —  and  that  from 
Philadelphia  is  about  the  same  —  to  Stranger's  Cay,  where  the 
Clandeboye  was  lying,  is  more  than  1000  miles.  From  Bruns- 
wick the  distance  is  about  one-third  as  great.  Captain  Lomm's 
boat  was  lying  idle.  He  concluded  that  he  could  beat  the  Morse 
in  a  race  to  the  Clandeboye,  and  that,  the  master  of  the  latter  not 
knowing  of  the  employment  of  the  Morse,  he  could  obtain 
a  profitable  job  of  salvage.  The  telegram  announcing  the 
employment  of  the  Morse  by  the  Clandeboye's  owners  reached 
Brunswick  at  a  little  after  3  p.m.  of  the  17th.  Shortly  after 
dark  of  the  same  day  the  Dauntless  started  for  the  Bahamas. 
She  arrived  at  Stranger's  Cay  before  noon  of  the  19th.  Her 
master  had  the  interview,  and  made  with  the  master  of  the 
Clandeboye  the  contract,  which  is  a  matter  in  litigation,  imme- 
diately thereafter,  and  in  a  couple  of  hours  the  vessels  left  for 
Newport  News,  one  in  tow  of  the  other.  Between  three  and  four 
days  afterwards  the  Morse  reached  the  spot  where  the  Clandeboye 
had  been  lying  at  anchor,  to  find  that  she  had  gone.  The  con- 
versation between  the  masters  of  the  steamer  and  of  the  tug  at 
Stranger's  Cay  contains  the  contract  entered  into  between  them 
and  the  words  that  led  up  to  it.  .  .  .  The  material  facts  in  the 
testimony  are  that  Captain  Lomm  told  Captain  Strickland  of  the 
arrival  of  his  mate  in  Savannah,  but  did  not  tell  him  of  the  em- 
ployment of  the  Morse  for  his  relief. 

The  result  of  the  enterprise  of  Captain  Lomm  will  be  disastrous 
to  the  owners  of  the  Clandeboye  if  the  decree  of  the  District  Court 
is  allowed  to  stand.  Captain  Lomm  declined  to  take  the  Clande- 
boye to  Vera  Cruz,  the  port  to  which  her  cargo  was  consigned, 


780  FORMATION  OF  CONTRACT. 

and  did  tow  her  to  Newport  News,  where  she  was  repaired. 
Fifteen  hundred  tons  of  her  cargo  had  to  be  unloaded  and  then 
reloaded  before  she  proceeded  to  Vera  Cruz.  Her  owners  were 
compelled  to  pay  to  the  owners  of  the  Morse  the  sum  of  $1900 
for  the  services  of  that  tug,  and  salvage  compensation  amounting 
to  $10,000  —  double  what  the  Morse  had  agreed  to  charge  for 
towing  the  Clandeboye  to  Vera  Cruz  —  has  been  awarded  to  the 
Dauntless.  But  the  master  of  the  steamship,  in  charge  of  his 
vessel,  and  not  in  communication  with  his  owners,  was  fully  em- 
powered to  contract  with  the  owners  of  the  Dauntless.  The 
contract  made  was  binding,  unless  invalidated  by  the  conduct  of 
Captain  Lomm  in  concealing  the  fact  that  the  owners  of  the 
Clandeboye  had  engaged  the  services  of  the  Morse.  As  is  said 
by  the  judge  in  the  court  below : 

"  Whether  or  not  the  right  of  Captain  Lomm  to  a  salvage  reward  was 
forfeited  by  his  silence  on  the  subject  of  the  employment  of  the  Morse,  in 
hLs  conferences  at  the  Little  Bahama  banks  with  Captain  Strickland,  is  the 
question  on  which  the  case  depends.  There  is  no  doubt  that  Captain  Lomm 
ought  to  have  given  this  information  to  Captain  Strickland.  The  question 
is,  whether  his  obligation  to  do  so  was  so  stringent  as  to  constitute  the 
omission  a  fraudulent  piece  of  deception." 

While  the  right  to  salvage  does  not  necessarily  always  arise  out 
of  an  actual  contract,  it  does  so  in  the  case  at  bar.  Services  spon- 
taneously rendered  to  vessels  wrecked,  or,  under  the  conditions 
of  an  earlier  period,  set  upon  by  pirates,  or  attacked  by  enemies, 
or  captured  and  rescued,  are  recompensed  with  salvage  money, 
whether  the  services  were  or  were  not  requested.  The  present 
case,  however,  is  one  of  a  different  character.  The  Clandeboye, 
at  anchor  off  the  Bahamas,  though  disabled,  and  in  a  position  of 
contingent  peril,  was  not  wrecked.  She  had  remained  eleven  days 
without  injury  where  she  then  was,  and  was  under  the  plenary 
control  of  her  master,  who  was  at  full  liberty  to  accept  or  refuse 
the  services  of  the  Dauntless. 

The  arrangement  entered  into  between  the  two  masters  con- 
stituted a  contract,  and  is  subject  to  the  principles  which  regulate 
the  validity  of  contracts.  If  valid,  the  courts  of  admiralty  are 
bound  to  enforce  it ;  if  not,  to  set  it  aside,  in  accordance  with 
the  general  rules  affecting  all  contracts.     The  law  of  contracts 


REALITY  OF  CONSENT:  FRAUD.  781 

requires  of  the  parties  to  them  mutual  good  faith.  Is  there  any 
principle  of  mercantile  law  by  which  that  obligation  to  good  faith 
which  required  Captain  Lomm  to  inform  Captain  Strickland  of  the 
hiring  of  the  Morse  is  relaxed,  and  is  not  of  so  stringent  a  force 
as  to  make  the  omission  fraudulent?  If  there  is,  it  must  be 
sought  in  the  analogies  of  the  rule  of  caveat  emptor.  The  doc- 
trine of  caveat  emptor  belongs,  strictly  speaking,  to  the  law  of 
sales,  but  its  principles  apply  to  other  contracts.  Nor  is  it  a  doc- 
trine peculiar  to  the  common  law.  It  is  in  force  in  all  mercantile 
communities,  and  has  always  been  administered  under  the  civil 
law.  Pothier  says,  speaking  of  the  contract  of  sale :  "  Good  faith 
prohibits,  not  only  falsehood,  but  all  suppression  of  everything 
which  he  with  whom  we  contract  has  an  interest  in  knowing, 
touching  the  thing  which  makes  the  object  of  the  contract;"  but 
he  adds,  speaking  of  contracts  where  one  party  has  not  revealed 
all  his  information  to  the  other:  "The  interest  of  commerce" 
does  not  permit  "  parties  to  be  readily  admitted  to  demand  a  dis- 
solution of  bargains  which  have  been  concluded;  they  must 
impute  it  to  themselves  in  not  being  better  informed."  Poth. 
Cont.  Sale,  pt.  2,  c.  2,  §§  234,  239.  In  the  case  of  Laidlaw 
V.  Organ,  Chief  Justice  Marshall  says :  "  The  question  in  this 
case  is  whether  the  intelligence  of  extrinsic  circumstances  which 
might  influence  the  price  of  the  commodity,  and  which  was  exclu- 
sively within  the  knowledge  of  the  vendee,  ought  to  have  been 
communicated  by  him  to  the  vendor.  The  court  is  of  the  opinion 
that  he  was  not  bound  to  communicate  it.  It  would  be  difficult 
to  circumscribe  the  contrary  doctrine  within  proper  limits,  where 
the  means  of  intelligence  are  equally  accessible  to  both  parties." 
Laidlaw  v.  Organ,  2  Wheat.  178.  "  Under  the  general  doctrine 
of  caveat  emjotor,  the  vendor  is  not  ordinarily  bound  to  disclose 
every  defect  of  which  he  may  be  cognizant,  although  his  silence 
may  operate  virtually  to  deceive  the  vendee."  Story,  Cont.  §  516. 
The  general  rule,  both  of  law  and  equity,  in  respect  to  conceal- 
ments, is  that  mere  silence  with  regard  to  a  material  fact  which 
there  is  no  obligation  to  divulge  will  not  avoid  a  contract.  Thus 
if  A,  knowing  that  there  is  a  mine  in  the  land  of  B,  of  which  B 
is  ignorant,  should  contract  to  purchase  the  land  without  divulg- 
ing the  fact,  it  would  be  a  valid  contract,  although   the   land 


782  FORMATION  OF  CONTRACT. 

were  sold  at  a  price  which  it  would  be  worth  without  the  mine, 
because  A  is  under  no  legal  obligation,  by  the  nature  of  the  con- 
tract, to  give  any  information  thereof.  Fox  v.  Macreth,  2  Brown, 
Ch.  400, 1  White  &  T.  Lead.  Cas.  Eq.  *  172.  "  Without  some  such 
general  rule  the  facilities  of  sale  would  be  greatly  impeded,  and 
there  would  be  no  security  to  the  vendor "  or  to  the  vendee. 
Story,  Cont.  §  517. 

It  will  be  noticed  that  the  general  rule  of  law  is  a  requirement 
of  good  faith  in  mutual  dealings,  and  that  the  doctrine  of  caveat 
emptor  is  an  exception  to  such  requirement,  founded  upon  special 
reasons,  viz.  the  necessities  of  commerce,  and  the  impossibility  of 
so  limiting  any  other  doctrine  as  to  do  justice.  As  Chief  Justice 
Marshall  says,  "  it  would  be  difi&cult  to  circumscribe  the  contrary 
doctrine  within  proper  limits."  The  necessities  of  commerce  re- 
quire that  enterprise  should  be  encouraged  by  allowing  diligence 
at  least  its  due  reward,  and  not  interfering  with  any  proper  and 
reasonably  fair  c.ompetition  for  intelligence.  Any  other  course 
would  set  the  active  and  the  slothful  upon  an  equality.  "  Vigi- 
lantibus  non  dormientibus  jura  subveniunt." 

Even  more  weighty  is  the  second  reason  given  in  support  of  the 
doctrine.  The  law  works  with  blunt  tools.  Fallible  memories, 
prejudiced  statements,  intentional  falsehood,  the  bias  of  self- 
interest,  ignorance,  and  stupidity,  are  all  concomitants  of  much  of 
the  testimony  from  which  she  has  to  make  up  her  judgments. 
General  rules,  applicable  to  the  majority  of  cases,  but  sometimes 
having  an  oppressive  bearing  upon  particular  ones,  make  up  the 
principles  upon  which,  of  necessity,  she  founds  het  decisions,  for 
the  law  must  be  workable.  It  must  be  comprehensible  to  men 
who  live  under  its  rule,  and  must  not  be  so  complex  as  to  over- 
burden the  memory  with  minutiae.  Further,  were  it  open,  in  all 
cases  of  contracts,  for  a  dissatisfied  party  to  cry  off,  by  saying 
that  the  other  party  had  known  better  than  he  the  value  of  the 
subject-matter,  or  the  market  price,  or  some  other  extrinsic  cir- 
cumstance, there  would  be  no  finality  in  human  dealings,  and  the 
only  limitation  to  the  litigation  that  would  ensue  would  be  that 
imposed  by  the  diminution  of  business  caused  by  such  want  of 
finality  and  certainty. 

But  caveat  emptor  is  but  the  exception,  and  not  the  rule.     Its 


REALITY  OF  CONSENT:  FRAUD.  785 

operation  is  to  be  diligently  circnmscribed  within  proper  limits. 
The  doctrine  is  not  applied  (1)  to  cases  of  active  fraud,  one  variety 
of  which  consists  in  misrepresentation  of  facts,  including  what  is 
often  equivalent,  partial  statements ;  it  is  not  applied  (2)  to  cases 
in  which  trust  is  implied  by  reason  either  of  the  relations  to  one 
another  of  the  parties,  or  the  nature  of  the  contract ;  nor  (3)  to 
cases  in  which,  in  the  absence  of  laches  in  the  party  injured,  the 
persons  dealing  with  one  another  do  not  deal  upon  mutually  equal 
terms,  by  reason  of  there  being  special  knowledge  in  the  posses- 
sion of  one  party  which  is  inaccessible  to  the  other. 

(1)  The  case  of  actual  or  implied  misrepresentation  needs  no 
illustration. 

(2)  That  of  trust  includes  all  the  known  fiduciary  relations,  — 
such  as  those  of  attorney  and  client,  guardian  and  ward,  agent 
and  principal,  and  generally  of  all  who  stand  in  the  relation  of 
trustee  and  cestui  que  trust.  It  also  includes  dealings  with 
regard  to  all  matters  which  from  their  nature  demand  mutual 
confidence.  One  seeking  insurance  is  bound  to  state  all  facts 
within  his  knowledge  which  would  have  an  influence  on  the 
terms  of  the  contract,  but  are  unknown  to  the  insurer.  A  vendor 
of  goods  is  bound  to  point  out  any  latent  defect  in  them  known 
to  himself.  CA  person  selling  negotiable  paper  warrants  that  he 
has  no  knowledge  of  any  facts  which  prove  it  worthless]  (^It  is 
held  that  if  one  sells  to  another  a  check  of  a  third  party,  knowing 
that  other  checks  of  the  same  party  have  been  recently  dishonored, 
without  communicating  the  fact  to  the  buyer,  it  is  a  fraudulent 
concealmentJ    Brown  v.  Montgomery,  20  N.  Y.  287. 

(3^ The  case  of  information  possessed  by  one  party  and  abso- 
lutely unobtainable  by  the  other,  though  of  rarer  occurrence,  is 
one  in  which  the  enforcement  of  the  rule  of  good  faith  is  fully  as 
imperative  as  it  is  in  the  two  classes  of  cases  first  mentionedJ  It 
is  perhaps  not  properly  an  exception  to  the  doctrine  of  caveat 
emptor  but  rather  a  case  outside  of  its  terms.  The  purchaser 
cannot  look  out  for  what  he  cannot  have  knowledge  of.  It  is 
thus  stated  by  Chancellor  Kent  in  his  Commentaries :  "  If  there 
be  an  intentional  concealment  or  suppression  of  material  facts  in 
the  making  of  a  contract  in  cases  in  which  both  parties  have  not 
equal  access  to  the  means  of  information,  it  will  be  deemed  unfair 


784  FORMATION  OF  CONTRACT. 

dealing,  and  will  vitiate  and  avoid  the  contract."  2  Kent,  Comm. 
Lect.  39,  *482,  It  is  implied  in  Judge  Marshall's  opinion  in  Laid- 
law  V.  Organ,  already  cited,  in  the  sentence  ending  with  the  words, 
^'  where  the  means  of  intelligence  are  equally  accessible  to  both 
parties."  Supra.  Under  this  exception,  more  logically  than 
under  that  of  special  confidence,  where  it  is  generally  placed  in 
the  text  books,  comes  the  obligation  of  one  who  has  manufactured 
goods  to  reveal  to  a  purchaser  any  latent  defect  in  them  known 
to  himself,  and  the  similar  obligation  of  a  vendor  of  real  estate 
to  inform  a  vendee  of  all  incumbrances  placed  by  himself  upon 
the  land.  Where  one  party  to  a  contract  has  information  inac- 
cessible to  the  other,  neither  of  the  reasons  assigned  for  the 
principle  of  caveat  emptor  applies.  The  contract  is  not  one 
which  should  be  sustained  to  encourage  mercantile  competition 
and  diligence ;[ for,  where  knowledge  cannot  be  obtained,  compe- 
tition is  impossible  and  diligence  useless,  there  can  be  no  vigi- 
lance to  be  rewarded  or  sloth  to  be  discouraged?)  Nor  would  much 
danger  of  unsettling  the  finality  of  business  transactions  or  of 
opening  bargains  to  the  uncertainties  of  conflicting  testimony 
about  the  equality  of  knowledge  of  the  parties  be  likely  to  arise 
by  reason  of  the  invalidating  of  contracts  for  this  cause. 

The  case  at  bar  is  the  first  of  the  kind  that  has  come  before  a 
court  of  admiralty,  but  it  is  as  striking  a  one  as  could  be  imagined 
or  invented.  It  is  one  in  which  one  party  to  the  bargain  has 
knowledge  of  a  fact  which,  if  known  to  the  other,  would  have 
prevented  the  making  of  the  contract.  The  ignorance  of  the  fact 
on  the  part  of  the  second  party  is  one  which  cannot  be  made  a 
subject  of  controversy,  and  this  ignorance  was  knoAvn  to  the  party 
suing  upon  the  contract.  (To  give  him  the  benefit  of  it,  to  the 
injury  of  the  claimants,  would  be,  in  our  opinion,  a  startling  vio- 
lation of  the  fundamental  principle  of  all  law,  that  equity  is 
equality.!  We  think  that  the  agreement  between  the  masters  of  the 
two  vessels,  made  in  the  case  at  bar,  is  infected  with  all  three  of 
the  vices  just  stated,  and  is,  therefore,  not  within  the  doctrine  of 
caveat  emptor.  I  It  must,  therefore,  be  declared  void  under  the 
principle  that  requires  good  faith  in  mutual  dealings.^ 

1.  Without  placing  as  much  stress  upon  the  point  as  upon  the 
other  two,  we  yet  think  it  may  be  fairly  held  that  in  telling  a  part, 


REALITY  OF  CONSENT:  FRAUD.  785 

but  not  tlie  whole,  of  the  truth  to  Cai)taiii  Strickland,  Captain  Lomm 
was  guilty  of  that  suppressio  veri  w'hich  the  law  calls  fraud.  By 
this  concealment  he  induced  the  former  to  make  a  contract  which 
was  contrary  to  the  wishes  and  intents  of  his  owners,  who  had 
already  made  with  another  a  more  favorable  bargain,  —  a  contract 
that  he  would  not  have  made  had  the  facts  been  fully  disclosed. 

2.  The  relation  of  salvor  and  saved,  while  not  one  of  the 
fiduciary  relations  generally  referred  to  in  the  law  books,  and 
accurately  defined,  as  well  as  classified,  is  yet  a  fiduciary  one. 
This  will  be  readily  apparent  when  we  remember  that  in  a  large 
number  of  cases  of  salvage,  particularly  the  earlier  ones,  the  salvor 
has  actually  been  in  possession  of  the  property  saved,  holding  it 
for  the  lien  which  maritime  law  gives,  and  liable  as  trustee  to  the 
owner  after  the  receipt  of  salvage.  Besides  this  reason,  another 
is  to  be  found  in  the  special  confidence  resulting  from  the  very 
nature  of  the  services  rendered.  {jNe  think  special  confidence  as 
much  belongs  to  the  relation  between  salvor  and  saved  as  to  that 
between  insurer  and  insured!) 

3.  Were  the  other  reasons  of  declaring  the  contract  void  absent, 
we  should  unhesitatingly  do  so  on  the  third  ground,  vizj(because  the 
parties  were  not  dealing  on  terms  of  equality.^  There  was  on  the 
part  of  Captain  Lomm  an  intentional  suppression  of  a  material  fact, 
in  relation  to  which  he  was  informed,  while  Captain  Strickland  had 
not  access  to  any  means  of  obtaining  information  of  it.  Looking 
at  the  position  of  the  two  parties  to  the  bargain  from  another 
point  of  view,  there  appears  to  have  been  a  striking  inequality 
between  them.  The  master  of  the  Clandeboye  had,  when  the 
Dauntless  arrived  at  Stranger's  Cay,  been  for  nearly  four  weeks  in 
a  disabled  vessel.  He  had  lain  helpless  at  his  anchorage  for  eleven 
days.  His  only  assistant,  who  was  a  navigator  (the  mate  of  the 
vessel),  was  absent,  and  he  was  alone  in  authority  over  the  Clande- 
boye. He  was  suffering  from  the  pressure  of  anxiety,  responsi- 
bility, and  delay.  The  master  of  the  Dauntless,  aware  of  all  the 
circumstances,  intent  solely  upon  gain,  fresh  from  home,  with  a 
mind  disengaged  and  at  ease,  had  an  unfair  advantage  over  him. 
In  the  short  period  during  which  he  considered  and  agreed  to 
accept  the  services  proffered  to  him,  Captain  Strickland  can  hardly 
be  supposed  to  have  had  the  time  or  grasp  of  the  facts  that  would 


786  FORMATION  OF  CONTRACT. 

have  enabled  him  to  have  drawn  all  the  inferences  from  the  fact 
of  his  mate's  opportunities  in  Savannah  that  have  been  imagined 
by  counsel.  During  that  hurried  interview  between  the  masters 
of  the  two  vessels,  it  doubtless  confusedly  occurred  to  the  master 
of  the  Clandeboye  that  his  mate  was  trying  to  do  something  for 
him,  and  that  tugs  would  be  at  hand  in  a  short  time,  prepared  ta 
tow  him  somewhere.  Probably  he  thought  of  the  nearest  ports. 
His  conversation  shows  that  thoughts  of  this  kind  were  in  his 
mind.  He  was  anxious  to  get  away,  and  with  the  words  "  first 
come,  first  served,"  he  made  terms  with  Captain  Lomm,  whose  tug- 
had  arrived  first.  But  it  would  be  unjust  to  suppose  that  he 
expected  or  had  in  his  mind  any  thought  of  the  possible  existence 
of  what  was  actually  the  fact,  viz.  a  contract  under  which  a  power- 
ful tug  had  been  employed  by  his  owners  to  tow  him  to  the  place 
to  which  he  desired  to  be  taken  (Vera  Cruz),  and  was  already  on 
the  way  to  Stranger's  Cay,  near  the  Little  Bahamas,  where  he  was 
lying.  TWe  see  no  reason  to  doubt  his  statement  that,  if  he  had 
known  of  the  employment  of  the  Morse,  he  would  not  have  em- 
ployed the  Dauntless.  The  parties  were  not  dealing  on  equal 
terms,  and  their  contract  cannot  be  enforced?^ 

While,  however,  the  contract  must  be  set  aside,  it  does  not  nec- 
essarily follow  that  the  libellant  is  entitled  to  no  compensation. 
The  question  remains,  of  what,  if  anything,  the  Dauntless  is  en- 
titled to  for  any  net  benefit  actually  received  by  the  Clandeboye 
from  her  services.  It  would  be  inequitable  to  allow  the  latter  to 
refuse  to  pay  for  anything  of  use  actually  received  by  her.  Nor 
do  we  wish  to  extend  to  a  new  case  the  exaction  of  penalties  in 
civil  actions.  In  the  actual  condition  and  position  of  the  Clande- 
boye when  taken  in  tow  by  the  Dauntless  she  needed  two  things,  — 
repairs,  and  the  opportunity  of  taking  her  cargo  to  Vera  Cruz.  If 
Captain  Lomm  had  not  interfered,  she  would  have  been  towed  to 
Vera  Cruz  by  the  Morse  at  an  expense,  including  cost  of  taking  her 
mate  and  three  seamen  from  Tybee,  of  $5200.  Upon  arriving  at 
Vera  Cruz,  she  could  have  discharged  herself  of  her  cargo,  but 
could  not  have  been  repaired,  owing  to  the  fact  that  there  are  no 
facilities  there  for  docking  vessels.  It  would  therefore  have  been 
necessary  to  have  taken  her  to  some  port  possessed  of  such  facili- 
ties.    New  Orleans,  Pensacola,  and  Newport  News  have  been  sug- 


"  KEALITT  OF  CONSENT:  FRAUD.  787 

gested.  The  former  places  are  nearer  Vera  Cruz  than  Newport 
News,  but  the  latter  is  understood  to  have  very  superior  facilities 
of  the  kind  needed.  The  Dauntless  rendered  a  real  service  to  the 
Clandeboye  in  towing  her  to  Newport  News,  where  she  could  be 
docked.  After  being  repaired,  it  became  possible  for  her  to  pro- 
ceed to  Vera  Cruz  under  her  own  steam,  but  it  seems  probable 
from  the  testimony  that,  had  she  been  towed  to  Vera  Cruz  in  the 
first  instance,  she  would  have  been  compelled  to  take  a  tug  in 
her  journey  to  a  dry  dock.  This  expense  she  has  been  saved.  In 
addition  to  this,  she  was  saved  by  the  Dauntless  from  the  perils 
of  a  four  days'  longer  stay  at  her  anchorage.  On  the  other  hand, 
at  Newport  News  she  was  put  to  the  expense  of  unloading  and 
reloading  1500  tons  of  her  cargo,  which  is  stated  by  Captain 
Strickland  to  have  been  $1200.  The  captain  also  states  that  the 
time  occupied  was  sixteen  days,  and  estimates  demurrage  at  £45 
per  day.  From  this  demurrage  there  ought  to  be  deducted  the 
four  days'  time  saved  her  by  the  Dauntless  in  taking  her  from 
Stranger's  Cay  before  the  arrival  of  the  Morse.  I  suppose,  too, 
that  the  demurrage  is  estimated  at  charter-party  rates,  and  is- 
excessive.  I  should  be  disposed  to  allow  f  1700  for  it.  The- 
amount  lost  to  the  owners  of  the  Clandeboye  by  their  obligations; 
to  the  owners  of  the  Morse  was  $1900.  The  total  on  this  side,, 
as  I  estimate  it,  would  be  $4800,  besides  costs  of  steaming  from 
Newport  News  to  Vera  Cruz.  Against  this  is  the  saving  of  the 
$5200,  which  was  to  have  been  paid  for  the  services  of  the  Morse, 
the  cost  of  taking  the  Clandeboye  from  Vera  Cruz  to  a  port  with 
docking  facilities,  which  would  have  been  necessary  had  she  been 
towed  to  Vera  Cruz  before  being  repaired,  and  the  benefit  to  her 
of  her  earlier  rescue  from  the  perils  of  her  position  on  the  coast 
of  the  Little  Bahamas.  On  the  whole,  the  court  allows  $1000  as 
the  net  gain  to  the  owners  of  the  Clandeboye  for  the  services  of 
the  Dauntless. 

Decree  modified,  and  rendered  in  favor  of  the  libellant  in  the 
sum  of  $1000. 

GoFF,  Circuit  Judge.  I  agree  with  the  court  that  the  agree- 
ment made  by  the  masters  of  the  Clandeboye  and  the  Dauntless 
must,  under  the  circumstances  shown  to  have  existed  at  the  time 
it  was  entered  into,  be  declared  void,  and  that  it  cannot  be  en- 


788  FORMATION  OF  CONTRACT. 

forced  in  a  court  of  admiralty.  I  do  not  concur  in  that  part  of 
the  opinion  that  allows  the  libellant  compensation  for  the  services 
rendered  by  the  Dauntless,  undertaken,  as  they  were,  in  bad 
faith,  with  a  fraudulent  purpose,  and  the  intention  of  suppress- 
ing the  truth,  thereby  taking  advantage  of  a  vessel,  if  not  in 
danger,  at  least  in  distress,  and  causing  its  owners  an  additional 
and  unnecessary  expense.  In  a  case  of  this  character  a  court  of 
admiralty  is  a  court  of  equity,  and  a  party  who  asks  its  aid  must 
come  before  it  with  clean  hands,  and  with  such  facts  as  will,  ex 
cequo  et  bono,  show  -a  case  proper  for  its  interposition.  If  the 
salvors  have  been  guilty  of  misconduct  or  of  negligence,  or  have 
been  in  collusion  with  the  master,  or  have  attempted  to  take 
advantage  of  the  unfortunate,  they  have  thereby  forfeited  all 
claim  for  compensation  even  for  services  actually  rendered.  The 
Boston,  1  S-umn.  328,  Fed.  Cas.  No.  1673;  TJie  Byron,  5  Adm. 
Kec.  248,  Fed.  Cas.  No.  2275;  TJie  Lady  Worsley,  2  Spinks,  253; 
The  Bello  Comines,  6  Wheat.  152;  Marvin,  Wreck  &  Salv.  §  222; 
Jones,  Salv.  124;  Cohen,  Adm.  Law,  171. 

The  undisputed  facts  of  this  case  show  it  to  be  at  least  most 
peculiar,  the  books  containing  nothing  similar  to  it,  and  in  my 
judgment  the  courts  should  not  aid  in  duplicating  it  by  tolerat- 
ing such  litigation.  I  think  that  the  decree  of  the  District  Court 
should  be  reversed,  and  the  cause  remanded,  with  directions  that 
the  libel  be  dismissed,  and  that  the  claimant  recover  all  costs. 


ly 


(p.  308)  Duress. 

SILSBEE  V.   WEBBER. 
171  MASSACHUSETTS,  378.  — 1898. 

Contract,  to  recover  $1150,  alleged  to  have  been  obtaiiJed  by 
duress.  The  trial  judge  directed  a  verdict  for  defendant  and 
reported  the  case  for  the  consideration  of  the  Supreme  Court. 

Holmes,  J.  This  is  an  action  to  recover  money  alleged  to 
have  been  got  from  the  plaintiff  by  duress.  In  the  court  below, 
a  verdict  was  directed  for  the  defendant,  and  the  case  was  re- 


REALITY  OF  CONSENT:  DURESS.  789 

ported.  The  plaintiff's  son  had  been  in  the  defendant's  employ, 
had  been  accused  by  him  of  stealing  the  defendant's  money,  had 
signed  a  confession  (whether  freely  or  under  duress  is  not  mate- 
rial), and  had  agreed  to  give  security  for  $1500.  There  was  a 
meeting  between  the  plaintiff  and  the  defendant,  in  the  course 
of  which,  as  the  plaintiff  testified,  the  defendant  said  he  should 
have  to  tell  the  young  man's  father,  the  plaintiff's  husband.  At 
that  time,  according  to  her,  her  husband  had  trouble  in  his  head, 
was  melancholy,  very  irritable,  and  unable  to  sleep,  so  that  she 
feared  that,  if  he  were  told,  the  knowledge  would  make  him 
insane.  The  plaintiff  further  testified  that  she  previously  had 
talked  with  the  defendant  about  her  husband's  condition,  and 
that  she  begged  him  not  to  tell  her  husband,  and  told  him  that 
he  knew  what  her  husband's  condition  was ;  but  that  he  twice 
threatened  to  do  it  in  the  course  of  his  inquiries  as  to  what  prop- 
erty she  had,  and  that,  to  prevent  his  doing  so,  she,  the  next  day, 
went,  by  agreement,  to  the  office  of  the  defendant's  lawyer,  and 
executed  an  assignment  of  her  share  in  her  father's  estate.  Her 
son  was  present,  and,  as  he  says,  protested  that  this  was  extor- 
tion and  blood  money.  It  is  under  this  assignment  that  the 
money  sued  for  was  collected. 

In  the  opinion  of  a  majority  of  the  court,  if  the  evidence  above 
stated  was  believed,  we  cannot  say  that  the  jury  would  not  have 
been  warranted  in  finding  that  the  defendant  obtained  and  knew 
that  he  was  obtaining  the  assignment  from  the  plaintiff  solely  by 
inspiring  the  plaintiff  with  fear  of  what  he  threatened  to  do ;  that 
the  ground  for  her  fear  was,  and  was  known  to  be,  her  expecta- 
tion of  serious  effects  upon  her  husband's  health  if  the  defendant 
did  as  he  threatened;  and  that  the  fear  was  reasonable,  and  a 
sufficiently  powerful  motive  naturally  to  overcome  self-interest, 
and,  therefore,  that  the  plaintiff  had  a  right  to  avoid  her  act. 
Harris  v.  Carmody,  131  Mass.  51,  53,  54;  Morse  v,  Woodworth, 
155  Mass.  233,  250. 

It  is  true  that  it  has  been  said  that  the  duress  must  be  such  as 
would  overcome  a  person  of  ordinary  courage.  We  need  not  con- 
sider whether,  if  the  plaintiff  reasonably  entertained  her  alleged 
belief,  the  well-grounded  apprehension  of  a  husband's  insanity  is 
something  which  a  wife  ought  to  endure,  rather  than  to  part  with 


700  FORMATION  OF  CONTRACT. 

any  money,  since  we  are  of  opinion  that  the  dictum  referred  to, 

if  taken  literally,  is  an  attepapt  to  apply  an  external  standard  of 

conduct  in  the  wrong  place.     If  a  party  obtains  a  contract  by 

/  creating  a  motive  from  which  the  other  party  ought  to  be  free, 

\    and  which,  in  fact,  is,  and  is  known  to  be,  sufficient  to  produce  the 

\  result,  it  does  not  matter  that  the  motive  would  not  have  pre- 

/  vailed  with  a  differently  constituted  person,  whether  the  motive 

]be  a  fraudulently  created  belief  or  an  unlawfully  created  fear. 

Even  in  torts,  —  the  especial  sphere  of  external  standards,  —  if  it 

is  shown  that  in  fact  the  defendant,  by  reason  of  superior  insight, 

contemplated  a  result  which  the  man  of  ordinary  prudence  would 

not  have  foreseen,  he  is  answerable  for  it ;   and,  in  dealing  with 

contributory  negligence,  the  personal  limitations  of  the  plaintiff, 

as  a  child,  a  blind  man,  or  a  foreigner  unused  to  our  ways,  always 

are  taken  into  account.     Late  American  writers  repudiate  the 

notion  of  a  general  external  measure  for  duress,  and  we  agree 

with  them.      Clark,  Cont.  357;    Bish.  Cont.  (ed.  1887)   §   719. 

See  James  v.  Roberts,  18  Ohio,  548,  562 ;  Eadie  v.  Slimmon,  26 

K.  Y.  9,  12. 

The  strongest  objection  to  holding  the  defendant's  alleged 
action  illegal  duress  is  that,  if  he  had  done  what  he  threat- 
"^'■-^  ened,  it  would  not  have  have  been  an  actionable  wrong.  In 
general,  duress  going  to  motives  consists  in  the  threat  of  illegal 
acts.  Ordinarily,  what  vou  may  do  withonf.  lighnit.^  y^^^  ynay 
threaten  to  do  wi*^^T^^"jtf  1iQV|i1ify  See  Vegelahn  v.  Guntner,  167 
Mass.  92,  107 ;  Alle7i  v.  Flood  [1898]  App.  Gas.  1,  129,  165.  But 
this  is  not  a  question  of  liability  for  threats  as  a  cause  of  action, 
and  we  may  leave  undecided  the  question  whether,  apart  from 
special  justification,  deliberately  and  with  foresight  of  the  conse- 
quences, to  tell  a  man  what  you  believe  will  drive  him  mad,  is 
actionable  if  it  has  the  expected  effect.  Spade  v.  Railroad,  168 
Mass.  285,  290 ;  White  v.  Sander,  168  Mass.  296.  If  it  should  be 
held  not  to  be,  contrary  to  the  intimations  in  the  cases  cited,  it 
would  be 'only  on  the  ground  that  a  different  rule  was  unsafe 
in  the  practical  administration  of  justice.  If  the  law  were  an 
ideally  perfect  instrument,  it  would  give  damages  for  such  a  case 
as  readily  as  for  a  battery.  When  it  comes  to  the  collateral 
question  of  obtaining  a  contract  by  threats,  it  does  not  follow 


REALITY  OF  CONSENT:  DURESS.  791 

that,  because  you  cannot  be  made  to  answer  for  the  act^  you  may 
use  the  threat.  In  the  case  of  the  threat,  there  are  no  difficulties 
of  proof,  and  the  relation  of  cause  and  effect  is  as  easily  shown 
as  when  the  threat  is  of  an  assault.  If  a  contract  is  extorted  by  i 
brutal  and  wicked  means,  and  a  means  which  derives  its  immu- 
nity, if  it  have  immunity,  solely  to  the  law's  distrust  of  its 
own  powers  of  investigation,  in  our  opinion  the  contract  may  be 
avoided  by  the  party  to  whom  the  undue  influence  has  been 
applied.  Some  of  the  cases  go  further,  and  allow  to  be  avoided 
contracts  obtained  by  the  threat  of  unquestionably  lawful  acts. 
Morse  v.  Wbodworth,  155  Mass.  233,  251;  Adams  v.  Bank,  116 
]Sr.  Y.  606 ;  Williavis  v.  Bayley,  L.  R.  1  H.  L.  200,  210. 

In  the  case  at  bar  there  are  strong  gi'ounds  for  arguing  that  the 
plaintiff  was  not  led  to  make  the  assignment  by  the  duress  alleged. 
They  are  to  be  found  in  the  fact  that  the  plaintiff  sought  the 
defendant ;  in  her  testimony  that  when  she  made  the  assignment 
she  wanted  the  defendant  to  have  full  security  for  all  her  son 
owed  him ;  and  in  the  plaintiff's  later  conduct ;  but  we  are  con- 
sidering whether  there  was  a  case  of  duress  for  the  jury. 

The  assignment  was  on  October  10,  1894.  Before  March  12, 
1895,  the  plaintiff  had  joined  with  her  sisters  in  employing  a 
lawyer  to  secure  her  share  in  her  father's  estate,  intending  it  to 
be  paid  over  to  the  defendant.  On  March  12, 1895,  to  the  same 
end,  she  signed  a  petition  for  distribution,  setting  forth  the 
assignment,  and  afterwards  took  some  further  steps,  and  never 
made  any  claim  that  the  assignment  was  not  valid  until  Decem- 
ber, 1895,  before  which  time  it  had  come  to  the  knowledge  of  her 
husband.  Apart  from  the  weight  which  these  facts  may  give  to 
the  argument  that  the  plaintiff  did  not  act  under  duress,  they 
found  an  independent  one,  —  that,  if  she  did  act  under  duress, 
she  has  ratified  her  act.  The  assignment  was  formally  valid. 
The  only  objection  to  it,  if  any,  was  the  motive  for  it.  Fairbanks 
V.  Snow,  145  Mass.  153,  154.  Therefore  it  might  be  ratified  by 
the  plaintiff  when  she  was  free.  But  the  acts  relied  on  were 
done  in  connection  with  a  member  of  the  bar,  who  had  been  the 
defendant's  lawyer  before  he  undertook  to  act  for  the  plaintiff, 
and  who  plainly  appeared  to  be  acting  for  the  plaintiff  only  in 
the  defendant's  interest.     We  cannot  say  that  the  jury  might 


792  FORMATION  OF  CONTRACT. 

not  find  that  the  later  acts  of  the  plaintiff,  if  not  done  under  the 
active  influence  of  her  supposed  original  fear,  at  least  were  done 
before  the  plaintiff  had  gained  an  independent  foothold,  or  real- 
ized her  independence  or  her  rights.  We  are  of  opinion  that  the 
case  should  have  been  left  to  the  jury.  Adams  v.  Bank,  116 
\N.  Y.  606,  614,  615. 

KxowLTON,  J.,  dissented  upon  the  ground  that  there  was  not 
sufficient  evidence  to  go  to  the  jury  that  defendant  knew  that 
telling  the  father  would  be  likely  to  drive  him  insane,  or  seriously 
injure  his  mental  condition,  and  that  there  was  not  sufficient 
evidence  that  defendant  believed  that  the  statement  that  he 
should  tell  her  husband  would  overcome  the  plaintiff's  will. 
''Upon  his  understanding  of  the  facts,  such  a  suggestion  would 
not  be  expected  to  overcome  the  will  of  a  person  of  ordinary  firm- 
ness, and  there  is  no  evidence  that  she  was  supposed  by  him  to  be, 
or  that  she  was  in  fact,  less  firm  than  other  women.  Whether  the 
rule  so  often  stated  in  the  books,  that  to  avoid  a  contract  on  the 
ground  of  duress  by  threats,  a  threat  must  be  such  as  would  over- 
come the  will  of  a  person  of  ordinary  firmness,  be  of  universal 
application  or  not,  it  undoubtedly  furnishes  a  correct  guide  in 
cases  in  which  there  is  nothing  to  show  that  the  party  who  seeks 
to  avoid  the  contract  was  not  of  ordinary  courage  and  firmness.'^ 
Field,  C.  J.,  and  Lathrop,  J.,  concurred  in  the  dissent. 

Verdict  set  aside.     Case  to  stand  for  trial. 


(p.  308)  Duress. 

MARSHALL,  J.,  in  GALUSHA  v.  SHERMAK 

81  NORTHWESTERN  REP.   (Wis.),  495.  — 1900. 

It  [duress]  is  a  branch  of  the  law  that,  in  the  process  of  de- 
velopment from  the  rigorous  and  harsh  rules  of  the  ancient  com- 
mon law,  has  been  so  softened  by  the  more  humane  principles 
of  the  civil  law  and  of  equity,  that  the  teachings  of  the  older 
writers  on  the  subject,  standing  alone,  are  not  proper  guides. 
The  change  from  the  ancient  doctrine  has  been  much  greater  in 
some  jurisdictions  than  in  others.  There  are  many  adjudications 
based  on  citations  of  authorities  not  in  themselves  harmonious. 


REALITY  OF  CONSENT  :   DURESS.  79ft 

and  many  statements  in  legal  opinions  based  on  the  ancient 
theory  of  duress,  which  together  create  much  confusion  on  the 
subject,  not  only  as  it  is  treated  by  text  writers,  but  by  judges  in 
legal  opinions. 

Anciently,  duress  in  law  by  putting  in  fear  could  exist  only 
where  there  was  such  a  threat  of  danger  to  the  object  of  it  as  was 
deemed  sufficient  to  deprive  a  constant  or  courageous  man  of  his 
free  will,  and  the  circumstances  requisite  to  that  condition  were 
distinctly  fixed  by  law ;  that  is  to  say,  the  resisting  power  which 
every  person  was  bound  to  exercise  for  his  own  protection  was- 
measured,  not  by  the  standard  of  the  individual  affected,  but  by 
the  standard  of  a  man  of  courage ;  and  those  things  which  could 
overcome  a  person,  assuming  that  he  was  a  prudent  and  constant 
man,  were  not  left  to  be  determined  as  facts  in  the  particular 
case,  but  were  a  part  of  the  law  itself.     Co.  Litt.  253.  .  .  . 

Early  in  the  development  of  the  law,  the  legal  standard  of 
resistance  that  a  person  was  bound  to  exercise  for  his  own  pro- 
tection was  changed  from  that  of  a  constant  or  courageous  man 
to  that  of  a  person  of  ordinary  firmness.  That  will  be  found  by 
reference  to  some  of  the  earlier  editions  of  Chitty  on  Contracts. 
See  1  Chit.  Cont.  (11th  ed.)  p.  272 ;  2  Greenl.  Ev.  301.  But  the 
ancient  theory  that  duress  was  a  matter  of  law  to  be  determined 
prima  facie  by  the  existence  or  nonexistence  of  some  circumstance 
deemed  in  law  sufficient  to  deprive  the  alleged  wronged  person 
of  freedom  of  will  power,  was  adhered  to  generally,  the  standard 
of  resisting  power,  however,  being  changed,  so  that  circumstances 
less  dangerous  to  personal  liberty  or  safety  than  actual  depri- 
vation of  liberty  or  imminent  danger  of  loss  of  life  or  limb,  came 
to  be  considered  sufficient  in  law  to  overcome  such  power.  The 
oppressive  acts,  though,  were  still  referred  to  as  duress,  instead 
of  the  actual  effect  of  such  acts  upon  the  will  power  of  the 
alleged  wronged  person.  It  is  now  stated,  oftener  than  other- 
wise, in  judicial  opinions,  that  in  determining  whether  there  was 
or  was  not  duress  in  a  given  case,  the  evidence  must  be  con- 
sidered, having  regard  to  the  assumption  that  the  alleged 
oppressed  person  was  a  person  of  ordinary  courage.  .  .  .  Duress, 
in  its  broad  sense,  now  includes  all  instances  where  a  condition 
of  mind  of  a  person,  caused  by  fear  of  personal  injury  or  loss  of 


794  FORMATION  OF  CONTRACT. 

limb,  or  injury  to  such  person's  property,  wife,  child,  or  husband, 
is  produced  by  the  wrongful  conduct  of  another,  rendering  such 
person  incompetent  to  contract  with  the  exercise  of  his  free  will 
power,  whether  formerly  relievable  at  law  on  the  ground  of 
duress  or  in  equity  on  the  ground  of  wrongful  compulsion. 

The  making  of  a  contract  requires  the  free  exercise  of  the  will 
power  of  the  contracting  parties,  and  the  free  meeting  and  blend- 
ing of  their  minds.  In  the  absence  of  that,  the  essential  of  a 
contract  is  wanting;  and  if  such  absence  be  produced  by  the 
wrongful  conduct  of  one  party  to  the  transaction,  or  conduct  for 
which  he  is  responsible,  whereby  the  other  party,  for  the  time 
being,  through  fear,  is  bereft  of  his  free  will  power,  for  the  pur- 
pose of  obtaining  the  contract,  and  it  is  thereby  obtained,  such 
contract  may  be  avoided  on  the  ground  of  duress.  There  is  no 
legal  standard  of  resistance  which  a  party  so  circumstanced  must 
exercise  at  his  peril  to  protect  himself.  The  question  in  each 
case  is,  was  the  alleged  injured  person,  by  being  put  in  fear  by 
the  other  party  to  the  transaction  for  the  purpose  of  obtaining 
an  advantage  over  him,  deprived  of  the  free  exercise  of  his  will 
power,  and  was  such  advantage  thereby  obtained  ?  If  the  propo- 
sition be  determined  in  the  affirmative,  no  matter  what  the  nature 
of  the  threatened  injury  to  such  person,  or  his  property,  or  the 
person  or  liberty  of  his  wife  or  child,  the  advantage  thereby 
obtained  cannot  be  retained. 

The  idea  is  that  what  constitutes  duress  is  wholly  a  matter  of 
law  and  is  simply  the  deprivation  by  one  person  of  the  will  power 
of  another  by  putting  such  other  in  fear  for  the  purpose  of  obtain- 
ing, by  that  means,  some  valuable  advantage  of  him.  The  means 
by  which  that  condition  of  mind  is  produced  are  matters  of  fact, 
and  whether  such  condition  was  in  fact  produced  is  usually 
wholly  matter  of  fact,  though  of  course  the  means  may  be  so 
oppressive  as  to  render  the  result  an  inference  of  law.  It  is  a 
mistaken  idea  that  what  constitutes  duress  is  different  in  case  of 
an  aged  person  or  a  wife  or  child  than  in  case  of  a  man  of  ordi- 
nary firmness.  As  said  in  Wolff  y.  Bluhm  (95  Wis.  257),  the  con- 
dition of  mind  of  a  person  produced  by  threats  of  some  kind, 
rendering  him  incapable  of  exercising  his  free  will,  is  what  con- 
■stitutes  duress.     The  means  used  to  produce  that  condition,  the 


REALITY  OF  CONSENT:  DITRESS.  795 

age,  sex,  and  mental  characteristics  of  the  alleged  injured  party, 
are  all  evidentiary,  merely,  of  the  ultimate  fact  in  issue,  of 
whether  such  person  was  bereft  of  the  free  exercise  of  his  will 
power.  Obviously,  what  will  accomplish  such  result  cannot 
justly  be  tested  by  any  other  standard  than  that  of  the  particular 
person  acted  upon.  His  resisting  power,  under  all  the  circum- 
stances of  the  situation,  not  any  arbitrary  standard,  is  to  be  con- 
sidered in  determining  whether  there  was  duress.  The  more 
modern  text  writers  so  state  the  law  to  be.  .  .  . 

The  true  doctrine  of  duress,  at  the  present  day,  both  in  this 
country  and  England,  is  that  a  contract  obtained  by  so  oppressing 
a  person  by  threats  regarding  his  personal  safety  or  liberty,  or 
that  of  his  property,  or  of  a  member  of  his  family,  as  to  deprive 
him  of  the  free  exercise  of  his  will  and  prevent  the  meeting  of 
minds  necessary  to  a  valid  contract,  may  be  avoided  on  the 
ground  of  duress,  whether  the  oppression  causing  the  incompe- 
tence to  contract  be  produced  by  what  was  deemed  duress 
formerly,  and  relievable  at  law  as  such,  or  wrongful  compulsion 
remediable  by  an  appeal  to  a  court  of  equity.  The  law  no  longer 
allows  a  person  to  enjoy,  without  disturbance,  the  fruits  of  his 
iniquity,  because  his  victim  was  not  a  person  of  ordinary  courage ; 
and  no  longer  gauges  the  acts  that  shall  be  held  legally  sufficient 
to  produce  duress  by  any  arbitrary  standard,  but  holds  him  who, 
by  putting  another  in  fear,  shall  have  produced  in  him  a  state 
of  mental  incompetency  to  contract,  and  then  takes  advantage  of 
such  condition,  no  matter  by  what  means  such  fear  be  caused, 
liable  at  the  option  of  such  other  to  make  restitution  to  him  of 
everything  of  value  thereby  taken  from  him.  .  .  . 

An  arbitrary  rule,  that  a  threatened  lawful  arrest  and  imprison- 
ment implying  harsh  or  unreasonable  use  of  criminal  process,  and 
where  no  warrant  has  been  issued  and  there  is  no  danger  of  the 
threat  being  immediately  carried  out,  is  not  sufficient  to  produce 
duress,  seems  unreasonable.  Such,  however,  is  the  doctrine  of 
the  Supreme  Court  of  Maine,  and  the  cases  supporting  it  will  be 
found  very  generally  cited  by  text  writers  and  judges.  That  rule 
goes  naturally  with  the  doctrine  that  every  person,  without  regard 
to  actual  mental  power,  is  bound  to  come  up  to  the  standard  of 
average  men  in  that  regard  or  suffer  the  consequences.  .  .  . 


796  FORMATION  OF  CONTRACT. 

(p.  325)  Wagers  on  rise  and  fall  of  prices.  (p.  332)- 

ASSIGNED   ESTATE    OF   L.   H.   TAYLOR   &   COMPAI^Y. 
(Appeal  of  WILLIAM   H.   HOWARD.) 

192  PENNSYLVANIA  STATE,  304.— 1899. 

Exception  to  auditor's  report,  which  was  as  follows : 
Claim  of  W.  H.  Howard  for  $11,921.62.  Mr.  Howard  is  a 
capitalist  and  a  farmer.  On  March  13,  1893,  he  bought  100 
shares  of  L.  C.  &  N.  Co.  for  $4337.50,  and  the  next  day 
paid  L.  H.  Taylor  &  Co.  $2000.  During  the  month  of  April, 
1893,  he  appears  to  have  ordered  bought  and  sold  about  1200 
shares  of  stock.  On  April  30,  1893,  he  ordered  sold  "short"  100 
shares  of  B.  &  0.  and  100  shares  of  P.  R.  &  N.  E.  In  November, 
1895,  he  again  turned  "  bear,"  selling  "  short "  in  that  single 
month  500  shares  of  Reading  R.  Co.,  200  shares  of  American 
Tobacco  Co.,  100  shares  of  Welsbach  Light  Co.  In  December, 
1895,  he  also  made  short  sales  of  Welsbach  Light  Co.  and  Ameri- 
can Sugar  Refining  Co.  common.  The  account  had  been  closed 
in  1893,  but  reopened  thereafter.  No  stock  was  delivered  to  him 
after  March  13,  1893,  when  the  account  was  reopened.  He  tes- 
tified that  he  did  not  intend  to  gamble.  The  account,  however, 
including  his  enormous  short  sales,  has  all  the  earmarks  of  a 
gaming  transaction,  and  I  so  find.     I  disallow  the  claim. 

Mitchell,  J.  It  has  been  settled  by  this  court,  so  often  that  it 
ought  not  to  require  reiteration,  that  dealing  in  stocks,  even  on 
margins,  is  not  gambling.  Stocks  are  as  legitimate  subjects  of 
speculative  buying  and  selling  as  flour  or  dry  goods  or  pig  iron. 
A  man  may  buy  any  commodity,  stock  included,  to  sell  on  an  ex- 
pected rise,  or  sell  "  short,"  to  acquire  and  deliver  on  an  expected 
fall,  and  it  will  not  be  gambling.  Margin  is  nothing  but  security, 
and  a  man  may  buy  on  credit,  with  security  or  without,  or  on 
borrowed  money,  and  th€  money  may  be  borrowed  from  his  broker 
as  well  as  from  a  third  person.  The  test  is,  did  he  intend  to  buy, 
or  only  to  settle  on  differences  ?  If  he  had  bought  and  paid  for 
his  stock,  held  it  for  a  year  and  then  sold,  no  one  would  call  it 
gambling;  and  yet  it  is  just  as  little  so  if  he  had  it  but  an  hour. 


LEGALITY  OF  OBJECT.  797 

and  sold  before  he  had  in  fact  paid  for  it.  And  so  with  selling. 
Every  merchant  who  sells  you  something  not  yet  in  his  stock,  but 
which  he  undertakes  to  get  for  you,  is  selling  "  short,"  but  he  is 
not  gambling,  because,  though  delivery  is  to  be  in  the  future,  the 
sale  is  present  and  actual. 

The  true  line  of  distinction  was  laid  down  in  Peters  v.  Grim 
(149  Pa.  St.  163)  and  has  not  been  departed  from  or  varied :  "A 
purchase  of  stock  for  speculation,  even  when  done  merely  on  mar- 
gin, is  not  necessarily  a  gambling  transaction.  If  one  buys  stock 
from  A,  and  borrows  the  money  from  B  to  pay  for  it,  there  is  no 
element  of  gambling  in  the  operation,  though  he  pledges  the  stock 
with  B  as  security  for  the  money.  So,  if  instead  of  borrowing  the 
money  from  B,  a  third  person,  he  borrows  it  from  A,  or,  in  the 
language  of  brokers,  procures  A  to  'carry'  the  stock  for  him,  with 
or  Avithout  margin,  the  transaction  is  not  necessarily  different  in 
character.  But  in  this  latter  case,  there  being  no  transfer  or  de- 
livery of  the  stock,  the  doubt  arises  whether  the  parties  intended 
there  should  ever  be  a  purchase  or  delivery  at  all.  Here  is  the 
dividing  line.  If  there  was  not  under  any  circumstances  to  be  a 
delivery,  as  part  of  and  completing  a  purchase,  then  the  transac- 
tion was  a  mere  Avager  on  the  rise  and  fall  of  prices ;  but  if  there 
was,  in  good  faith,  a  purchase,  then  the  delivery  might  be  post- 
poned, or  made  to  depend  on  a  future  condition,  and  the  stock 
carried  on  margin,  or  otherAvise,  in  the  meanwhile,  without  af- 
fecting the  legality  of  the  operation."  This  has  been  uniformly 
folloAved.  Hojjkins  v.  O'Kane,  169  Pa.  St.  478 ;  Wagner  v.  Hilde- 
brand,  187  Pa.  St.  136.  And  the  rule  goes  so  far  that  an  agree- 
ment for  an  actual  sale  and  purchase  Avill  make  the  transaction 
valid,  though  it  originated  in  an  intention  merely  to  wager.  An- 
thony V.  Unangst,  174  Pa.  St.  10. 

Turning  noAv  to  the  facts  of  the  present  case,  it  is  clear  that  the 
laAv  was  not  correctly  applied  by  the  auditor  and  the  court  below. 
The  brokers  made  an  assignment  on  December  21, 1895,  on  which 
day  they  held  certain  stock  for  appellant,  AA^hich  they  had  bought  on 
his  order ;  and  he  had  certain  other  stock,  Avhich  they  had  sold  on 
his  order,  but  Avhich  he  had  not  yet  delivered  to  them.  He  desired 
to  close  the  account,  complete  the  mutual  deliveries,  and  receive 
the  balance  Avhich  the  transactions  left  in  his  favor.     He  Avas  en- 


798  FORMATION  OF  CONTRACT. 

titled  to  do  so.  Even  if  the  transactions  were  wagering  the  agree- 
ment of  the  parties  to  make  the  sales  actual  would,  under  Anthony 
V.  Unangst  (174  Pa.  St.  10),  have  made  them  valid.  It  is  true,  the 
settlement  was  not  actually  made  until  January  10th ;  but  it  was 
made  as  of  December  20th,  the  day  before  the  assignment,  and  the 
auditor  reports  that  there  had  been  no  change  of  values  mean- 
while. The  time  of  striking  a  balance  on  the  books  and  deliv- 
ering the  stock  was  not  important.  Delivery  is  not  in  itself  a 
material  fact.  Its  only  value  is  as  evidence  of  the  intent  to 
make  a  bo7ia  Jide  sale.  If  such  is  the  intent,  the  delivery  may  be 
present  or  future  without  affecting  validity. 

But  there  was  no  sufficient  evidence  that  the  transactions  were 
illegal  at  any  time.  The  auditor  reports  that  "  the  stocks  ordered 
to  be  bought  or  sold  by  the  customers  of  L.  H.  Taylor  &  Co.  were, 
as  shown  by  their  books,  actually  bought  and  sold ;  and,  as  this 
evidence  is  uncontradicted,  I  must  and  do  so  find.  .  .  .  Thus, 
so  far  as  L.  H.  Taylor  &  Co.  were  concerned,  the  transactions 
were  not  fictitious,  but  were  actual  purchases  and  sales  of  stock." 
This  finding  should  have  been  a  warning  to  caution  in  taking  a 
different  view  of  the  appellant's  position  in  the  transactions.  It 
is  true,  the  purchase  or  sale  may  be  actual  on  part  of  the  broker, 
and  merely  a  wager  on  part  of  the  customer  (see  Champlin  v. 
Smith,  164  Pa.  St.  481) ;  but  there  should  be  at  least  fairly 
persuasive  evidence  of  the  difference.  There  is  none  here.  The 
transactions  covered  by  the  accoimt  began  with  a  small  cash  bal- 
ance to  appellant's  credit,  followed  by  an  order  to  buy  200  shares 
of  Wabash  common,  which  were  bought  by  the  brokers,  paid  for 
by  appellant,  and  delivered  to  him.  The  close,  two  years  and  a 
half  later,  showed,  as  already  said,  a  large  number  of  shares  in  the 
hands  of  the  brokers  bought  for  appellant,  and  of  which  he  de- 
manded delivery,  and  other  shares  sold  for  him  and  which  he  had 
in  his  possession  ready  to  deliver.  As  to  the  intermediate  trans- 
actions, appellant  testified,  "  It  was  always  the  intention  to  buy 
the  stocks  out  and  out,  and  pay  for  them,  and  I  had  money  to  do 
it  with."  In  the  face  of  these  facts  and  this  uncontradicted  testi- 
mony, the  auditor  found  that  "  the  account,  including  his  enor- 
mous short  sales,  has  all  the  earmarks  of  a  gaming  transaction, 
and  I  so  find  it."    This  was  a  mere  inference,  unwarranted  by 


LEGALITY  OF  OBJECT.  79& 

the  account  itself,  and  wholly  opposed  to  all  the  evidence  in  the 
case. 

Judgment  so  far  as  it  relates  to  appellant's  claim,  reversed,  and 
claim  directed  to  be  allowed. 


(P.  351)  Agreements  to  arbitrage. 

MILES   V.   SCHMIDT. 
168  MASSACHUSETTS,  339.  — 1897. 

Bill  in  equity,  to  enforce  the  specific  performance  of  a  written 
contract. 

The  defendant  demurred  to  the  bill,  assigning  as  ground  there- 
for the  following  arbitration  clause  contained  in  the  contract : 

"It  is  further  mutually  agreed  that  in  case  of  any  alleged 
violation  of  the  promises  and  agreements  herein  made  by  said 
Schmidt  or  by  said  firm,  if  such  alleged  violation  is  continued 
after  thirty  days'  notice  in  writing  from  the  other  to  the  party 
charged  as  guilty  of  such  violation,  requiring  such  party  to  cease 
such  violation,  then  the  party  so  guilty  shall  be  liable  to  the  other 
for  all  damages  caused  by  such  violation,  to  be  determined  by  a 
board  of  referees  in  manner  as  follows : 

"  After  the  expiration  of  the  thirty  days'  notice  provided  for  in 
the  above  clause,  said  Schmidt  and  said  firm  shall  each  forth- 
with appoint  a  referee,  and  the  two  so  appointed  shall  appoint  the 
third.  If  either  party  fails  to  appoint  a  referee  for  ten  days, 
after  written  notice  of  such  appointment  by  the  other  party,  then 
the  referee  so  appointed  shall  appoint  a  second,  and  the  two  so 
appointed  shall  appoint  a  third. 

"  The  referees  shall  proceed  forthwith  to  hear  the  parties  and 
to  determine  whether  or  not  there  has  been  any  violation  of  the 
agreements  herein  contained,  and  whether  the  same  has  continued 
for  more  than  thirty  days  after  notice  to  discontinue  such  viola- 
tion above  provided  for,  and  what  damage  either  party  has  sus- 
tained by  reason  of  such  violation. 

"The  decision  of  a  majority  of  said  referees  shall  be  final  and 
binding  on  said  parties,  and  they  hereby  agree  to  abide  by,  sub- 


SOO  FORMATION  OF  CONTRACT. 

mit  to,  and  forthwith  to  comply  with  any  decision,  or  award,  of  a 
majority  of  said  referees.  The  expense  of  any  such  reference 
shall  be  borne  by  any  or  all  of  the  parties  in  such  proportion  as 
said  referees  may  determine." 

The  Superior  Court  susta,ined  the  demurrer  and  dismissed  the 
bill,  and  the  plaintiff  appealed 'to  this  court. 

MoRTOx,  J.  Perhaps,  if  the  question  were  a  new  one,  no  ob- 
jection would  be  found  to  permitting  parties  to  select  their  own 
tribunals  for  the  settlement  of  civil  controversies,  even  though  the 
result  might  be  to  oust  the  courts  of  jurisdiction  in  such  cases. 
But  the  law  is  settled  otherwise  in  this  State.  Rowe  v.  Williams, 
97  Mass.  163;  Wood  v.  Humphrey,  114  Mass.  185;  Pearl  v. 
Harris,  121  Mass.  390 ;  Vass  v.  Wales,  129  Mass.  38 ;  White  v. 
Middlesex  Railroad,  135  Mass.  216. 

When  the  question  is  a  preliminary  one,  or  in  aid  of  an  action 
at  law  or  suit  in  equity,  such,  for  instance,  as  the  ascertainment  of 
damages,  an  agreement  for  arbitration  will  be  upheld.  Wood  v. 
Hicmphrey,  114  Mass.,  185;  Reed  v.  Washington  Ins.  Co.,  138 
Mass.  572,  575;  Hutchinson  v.  Liverpool  &  London  &  Globe  Ins. 
Co.,  153  Mass.  143.  The  defendant  contends  that  the  agreement 
for  arbitration  in  this  case  goes  no  further  than  the  assessment  of 
damages.  But  it  is  expressly  provided,  amongst  other  things,  that 
the  referees  shall  "  hear  the  parties  and  determine  whether  or  not 
there  has  been  any  violation  of  the  agreements  herein  contained, 
.  .  .  and  what  damage  either  party  has  sustained"  thereby, 
and  that  "  the  decision  of  a  majority  of  said  referees  shall  be  final 
and  binding  on  said  parties."  The  evident  intent  is  to  submit  all 
the  disputes  relating  to  the  performance  of  the  agreement  to  the 
final  decision  of  a  tribunal  constituted  by  the  parties  themselves. 
The  referees  are  not  only  to  assess  the  damages,  but  also  are  to 
determine  whether  there  have  been  any  violations  of  the  agree- 
ment, and  their  decision  in  all  matters  is  to  be  final.  The  agree- 
ment to  submit  to  arbitration  was  therefore  in  violation  of  law, 
and  the  demurrer  should  have  been  overruled. 

Demurrer  overruled,  and  decree  dismissing  bill  set  aside.^ 

1  It  has  been  held  that  an  arbitration  provision  in  a  mutual  benefit  society 
policy  is  binding  and  enforceable.  Rood  v.  Railway  &c.  Ass'n,,  31  Fed.  R. 
62  ;   Van  Poucke  v.  Society,  63  Mich.  378  ;  Robinson  v.  Templar  Lodge,  117 


LEGALITY  OF  OBJECT.  801 

(p.  359)  Contracts  affecting  mantal  relations. 

POLSON  V.  STEWART. 
167  MASSACHUSETTS,  21L  — 1897. 

A  husband,  in  order  to  induce  his  wife  to  forbear  from  bringing 
a  suit  for  divorce,  to  which  she  was  entitled,  covenanted  to 
surrender  to  her  all  his  rights  in  lands  owned  by  her. 

Holmes,  J.     [After  deciding  that  this  contract,  made  in  North 

Carolina,  under  whose  laws  the  husband  and  wife  were  competent 

to  contract  with  each  other,  could  be  enforced  as  to  lands  situated 

in  Massachusetts.]     Objection  is  urged  against  the  consideration. 

The  instrument  is  alleged  to  have  been  a  covenant.     It   is   set 

forth,  and  mentions  one  dollar  as  the  consideration.     But  the  bill 

alleges  others,  to  which  we  have  referred.     It  is  argued  that  one 

of  them,  forbearance  to  bring  a  well-founded  suit  for  divorce,  was 

illegal.     The  judgment  of  the  majority  in  Merrill  v.  Peaslee  (146 

Mass.   460)   expressly   guarded  itself  against  sanctioning   such 

a  notion,  and  decisions  of  the  greatest  weight  referred  to  in  that 

case  show  that  such  a  consideration  is  both  sufficient  and  legal. 

Newsome  v.  Newsome,  L.  R.  2  P.  &  D.  306,  312 ;  Wilson  v.  Wilson, 

1   H.  L.  Cas.  538,  574;   Besarit  v.   Wood,  12  Ch.  D.  605,  622; 

Hart  V.  Hart,  18  Ch.  D.  670,  685 ;  Adams  v.  Adams,  91  N.  Y. 

381 ;  Sterling  v.  Sterling,  12  Ga.  20. 

Demurrer  overruled.^ 

Cal.  370.  And  this  doctrine  has  been  extended  to  mutual  fire  insurance  com- 
panies. Baymond  v.  Farmers^  Mut.  Fire  Lis.  Co.,  114  Mich.  386.  Courts 
now  seem  inclined  to  uphold  such  agreements  whenever  possible. 

iJn  Merrill  v.  Peaslee  (146  Mass.  460)  referred  to  above,  the  court  (three 
judges  dissenting)  held  that  where  a  wife  had  left  her  husband  on  account  of 
extreme  cruelty,  and  was  about  to  bring  a  suit  for  divorce,  a  promise  by  the 
husband  to  pay  her  $5000  on  consideration  that  she  would  forego  the  suit  for 
divorce  and  would  return  to  him  and  live  with  him  as  his  wife,  was  founded 
upon  an  illegal  consideration  so  far  as  it  consisted  of  the  resumption  of  the 
marital  relations.  "  It  is  as  much  against  public  policy  to  restore  interrupted 
conjugal  relations  for  money,  as  it  is  to  continue  them  without  interruption 
for  the  same  consideration." 

In  Adams  v.  Adams  (91  N.  Y.  381)  the  wife  withdrew  a  divorce  suit, 
condoned  the  offense,  and  returned  to  live  with  the  husband  on  his  promise 
to  pay  her  $1000,  and  it  was  held  that  this  was  a  valid  and  enforceable 
promise,  and  in  no  way  against  public  policy. 

FFF 


802  FORMATION  OF  CONTRACT. 

(P.  373)  Effect  of  illegality.  (p.  383) 

FISHELL  V.  GRAY. 

60  NEW  JERSEY  LAW,  5.  — 1897. 

Action  by  Fishell  against  Gray,  as  receiver  of  the  United 
States  Credit  System  Company,  to  recover  the  purchase  price  of 
a  business,  good  will,  etc.     Verdict  for  plaintiff. 

Beasley,  C.  J.  A  sealed  agreement  is  the  basis  of  this  suit. 
The  parties  to  the  deed  were  the  plaintiff,  Fishell,  and  the  United 
States  Credit  System  Company,  a  corporation,  that  has  become 
insolvent,  and  is  now  represented  by  Gray,  as  receiver.  By  this 
instrument  the  plaintiff  assigned  to  the  company  just  designated 
the  good  will  of  a  large  and  valuable  business  for  the  insurance  of 
merchants  against  losses  which  he  had  carried  on  and  established, 
together  with  certain  personal  property,  and  in  addition  stipu- 
lated as  follows,  viz. : 

^^  Fourth.  That  the  said  party  of  the  second  part,  for  the  con- 
sideration aforesaid,  hereby  agrees  not  to  interest  himself,  or  en- 
gage in,  or  have  others  interest  themselves  for  his  beneiit  or  in 
his  behalf  in  any  manner,  in  any  company,  corporation,  or  firm 
whose  business  is  that  of  guarantying  merchants  or  others, 
against  loss  in  business ;  and,  should  the  said  party  of  the  second 
part  violate  his  agreement  in  this  paragraph  contained,  the 
payments  agreed  to  be  made  to  him  in  the  third  paragraph  of 
this  contract  are  to  thereupon  cease,  and  to  be  forfeited  forever 
thereafter." 

The  action  is  brought  to  recover  the  moneys  agreed  to  be  paid 
by  the  company  in  return  for  the  transfer  above  mentioned,  and  the 
covenants  contained  in  the  agreement  on  the  part  of  the  plaintiff. 
The  jury,  under  the  instructions  of  the  court,  found  for  the  plain- 
tiff, and  motion  now  is  to  set  aside  that  verdict. 

The  principal  contention  against  a  recovery  on  the  deed  in 
question  argued  and  discussed  in  the  brief  of  the  counsel  of  the 
defendant  is  that  the  agreement  in  suit  is  illegal  and  void  by 
reason  of  the  stipulation  above  recited  to  the  effect  that  the  plain- 


LEGALITY  OF  OBJECT.  803 

tiff  would  not  in  any  wise  engage  in  the  insurance  business,  whose 
good  will  was  transferred  to  the  Credit  System  Company.  The 
proposition  posited  is  that,  as  this  part  of  the  consideration  for 
the  defendant's  promise  is  illegal,  the  entire  contract  falls,  and 
that  no  part  of  it  can  be  enforced.  In  support  of  this  position  a 
number  of  authorities  are  cited,  some  of  which  sustain  it.  The 
rule  is  generally  laid  down  by  the  text-writers  in  treating  of  the 
effect  of  an  illegal  element  in  the  consideration  of  contracts  in 
terms  so  general  that  it  embraces  the  class  of  stipulations  which 
provide  in  too  broad  a  form  against  competition  in  a  given  busi- 
ness. According  to  it,  a  contract  not  to  compete  in  a  certain 
business  within  reasonable  bounds  as  to  place  is  permissible,  but, 
if  it  possesses  too  wide  a  scope,  it  becomes  an  unnecessary  re- 
straint of  trade,  and  it  vitiates  all  promises  that  rest  upon  it,  in 
whole  or  in  part,  as  a  consideration.  As  a  consideration,  it  was, 
in  the  earlier  cases,  treated  as  devoid  of  legal  force,  but  it 
was  deemed  to  vitiate  all  other  considerations  with  which  it  was 
blended.  On  this  theory  an  agreement  to  abstain  generally  from 
carrying  on  a  certain  business,  as  in  the  present  case,  was  treated, 
as  though  it  were  an  agreement  to  commit  a  crime,  and,  as  a  con- 
sequence, it  illegalized  everything  that  it  touched.  But  this  view,, 
it  has  since  been  perceived,  is  unnecessarily  stringent,  and  is,  in 
fact,  quite  unreasonable.  There  is  nothing  immoral  or  criminal 
in  a  stipulation  not  to  engage  in  a  certain  business.  A  man  may 
bind  himself  to  such  an  abstention  without  incurring  any  legal 
penalty.  The  only  effect  is  that  such  an  engagement  cannot  be 
enforced,  either  at  law  or  in  equity.  And  this  is  the  aspect  in 
which  it  is  regarded  by  the  modern  authorities.  This  modifica- 
tion of  judicial  opinion  is  very  pointedly  stated  in  one  of  the 
cases  cited  in  the  brief  of  the  counsel  of  the  plaintiff.  The 
authority  thus  vouched  is  that  of  Green  v.  Price  (13  Mees.  &  W. 
695),  and  in  it.  Pollock,  C.  B.,  referring  to  the  sort  of  agreement 
now  in  question,  said :  "  It  is  not  like  a  contract  to  do  an  illegal 
act.  It  is  merely  a  covenant,  which  the  law  will  not  enforce,  but 
the  party  may  perform  it  if  he  chooses."  And  upon  the  citation 
by  counsel  of  cases  holding  a  contrary  doctrine  the  reply  of  the 
chief  baron  was :  "  The  policy  of  the  law  has  been  altered  since 
that  time.     It  has  been  found  to  be  beneficial  to  commerce  that 


804  FORMATION  OF  CONTRACT. 

there  should  be  a  restraint  of  trade  to  some  extent,  and  the  courts 
thereupon  retrace  their  steps." 

This  distinction  between  a  merely  unenforceable  promise  in  a 
matter  of  this  kind  and  one  that  is  criminal  is  illustrated  in  the 
decision  of  the  case  of  Erie  By.  Co.  ads.  Union  Locomotive  &  Ex- 
press Co.,  the  principle  being  maintained  that  a  stipulation  that 
was  not  immoral  would  not  vitiate  or  avoid  the  entire  agreement. 
And  if  we  regard  the  dictates  of  justice  alone,  no  other  doctrine 
is  possible.  This  is  obvious  from  the  present  case.  If  it  be  true 
that  by  reason  of  the  promise  of  the  plaintiff  to  abstain  from  this 
business  being  blended  with  the  residue  of  the  consideration  that 
consisted  of  valuable  interests  transferred  to  the  company,  will 
prevent  a  recovery  of  the  price  agreed  to  be  paid  for  such  prop- 
erty, and  will  enable  the  company  to  retain  it  without  giving  the 
equivalent  agreed  upon,  a  result  certainly  obtains  that  would  be 
both  wholly  unconscionable  and  impolitic.  According  to  the 
principle  forming  the  basis  of  the  decision  in  the  Erie  Railway 
case,  just  cited,  that  the  presence  in  a  contract  of  one  of  these 
inhibited  undertakings  does  not  in  any  degree  whatever  either 
add  to  or  deprive  it  of  its  legal  efficacy,  standing  alone  it  will 
not  constitute  a  legal  consideration,  nor  will  it,  to  any  extent,  be 
executed.  The  later  decisions  upon  the  subject  appear  to  regard 
this  as  the  true  principle.  Mallan  v.  May,  11  Mees.  &  W.  653; 
Wallis  V.  Day,  2  Mees.  &  W.  273. 

The  other  points  raised  in  the  brief  have  been  considered,  but 
none  of  them,  as  it  is  deemed,  are  possessed  of  sufficient  sub- 
stance to  require  judicial  exposition.  They  were  properly  dis- 
posed of  by  the  trial  judge. 

Let  the  rule  be  discharged.^ 


1  In  Pierce  v.  Pierce,  17  Ind.  App.  107,  it  was  held  that  where  A  sold  B 
his  stock  and  fixtures  "  including  the  license  to  sell "  and  by  law  the  transfer 
of  the  license  was  illegal,  A  could  recover  the  purchase  price  since  B  was 
bound  to  know  that  no  benefit  could  accrue  to  him  under  the  transfer  of  the 
license,  and  that  therefore  the  license  constituted  no  part  of  the  consideration. 


LEGALITY  OF  OBJECT.  805 


(p.  390)  Intention  of  the  parties  in  illegal  contracts.         (p.  395) 

ANHEUSEE-BUSCH  BEEWING  ASSOCIATION 
V.  MASON. 

44  MINNESOTA,  318.  — 1890. 

Collins,  J.  This  action  was  brought  to  recover  a  balance 
claimed  to  be  due  plaintiff  (a  corporation)  for,  and  on  account  of, 
bottled  beer  sold  to  the  defendant.  The  answer  alleged  that  at 
the  time  of  the  sale  defendant,  as  plaintiff  well  knew,  was  the 
keeper  of  a  house  of  prostitution;  that  plaintiff  sold  the  beer 
expressly  for  use  and  dispensation  in  and  for  carrying  on  and 
maintaining  said  house ;  and  that  when  sold  and  delivered  it  was 
agreed  between  plaintiff  and  defendant  that  the  beer  was  to  be 
paid  for  out  of  the  profits  accruing  to  the  latter  from  her  unlaw- 
ful occupation.  On  the  trial,  defendant  made  no  attempt  to 
establish  the  defense  as  pleaded,  but  relied  wholly  upon  admis- 
sions made  by  plaintiff's  agent,  when  testifying,  that  he  did  not 
know  just  what  was  done  with  the  beer,  but  that,  when  selling  it 
to  defendant,  he  supposed  she  would  sell  or  use  it  in  her  brothel. 
On  this  admission,  as  we  understand  the  record,  the  case  was 
dismissed  by  the  trial  court. 

While  it  would  seem  quite  unnecessary  so  to  do,  it  may  be 
well  to  call  attention  at  the  outset  to  the  fact  that  this  case 
should  not  be  confounded  with  one  wherein  the  vendor  in  selling 
his  goods  has  violated  a  statute  requiring  him  to  first  procure  a 
license,  as  was  that  of  Solomon  v.  Dreschler,  4  Minn.  197,  (278). 
Nor  is  it  one  in  which  the  vendor  has  sold  a  proper  article 
of  merchandise  in  a  legitimate  way,  but  with  the  knowledge  that 
it  is  to  be  disposed  of  by  the  vendee  in  direct  violation  of  the 
law;  for  illustration,  a  sale  of  spirituous  liquors  by  a  qualified 
wholesale  dealer,  with  full  knowledge  that  the  purchaser  intended 
to  retail  the  same  in  defiance  of  a  prohibitory  law,  or  without  first 
obtaining  the  required  license  to  sell,  or  a  sale  of  poison  by  a 
druggist,  knowing  that  it  was  intended  for  use  in  committing 
murder.  The  illegality  of  the  transaction  now  under  discussion 
occurs,  if  at  all,  in  a  matter  collateral  to  the  sale,  incidentally 


806  FORMATION  OF  CONTRACT. 

implicated  with  it,  and  out  of  considerations  of  public  policy 
solely. 

It  has  been  well  said  that  the  consideration  essential  to  a  valid 
contract  must  not  only  be  valuable,  but  it  must  be  lawful,  not 
repugnant  to  law  or  sound  policy  or  good  morals.  Ex  turpi  con- 
tractu actio  non  oritur.  The  reports,  both  English  and  American, 
are  replete  with  cases  in  which  contracts  of  all  descriptions  have 
been  held  invalid  on  account  of  an  illegality  of  consideration, 
illustrations  of  the  acknowledged  rule  that  contracts  are  unlawful 
and  non-enforceable  when  founded  on  a  consideration  contra  bonos 
mores,  or  against  the  principles  of  sound  policy,  or  founded  in 
fraud,  or  in  contravention  of  positive  provisions  of  a  statute. 
The  utmost  difficulty  has  been  experienced  by  the  courts  in  apply- 
ing the  general  rule,  however,  and  an  examination  of  the  authori- 
ties wherein  an  application  has  been  necessary  will  convince  the 
reader  tliat  the  conclusions  reached  and  announced  in  the  English 
tribunals  are  beyond  reasonable  reconciliation. 

This  want  of  harmony,  and  that  more  uniform  and  consistent 
results  have  obtained  in  tliis  country,  is  thoroughly  demonstrated 
in  two  cases  with  us  (Tracy  v.  Tahnage,  —  first  opinion  by  Judge 
Selden,  and  the  second,  on  motion  for  rehearing,  by  Judge  Com- 
stock,  — 14  N.  Y.  162,  and  Hill  v.  Spear,  50  X.  H.  253),  in  each  of 
which  the  principal  cases  in  both  countries  are  ably  and  carefully 
reviewed,  and  the  law  applicable  to  the  question  involved  in  this 
action  stated  in  accordance  with  the  great  weight  of  authority  in 
the  United  States  as  well  as  in  England.  These  cases,  now  re- 
garded as  leading  on  this  side  of  the  Atlantic,  announce  the  rule 
to  be  that  mere  knowledge  by  a  vendor  of  the  unlaAvful  intent  of 
a  vendee  will  not  bar  a  recovery  upon  a  contract  of  sale,  yet,  if, 
in  any  way,  the  former  aids  the  latter  in  his  unlawful  design 
to  violate  a  law,  such  participation  will  pi'event  him  from  main- 
taining an  action  to  recover.  The  participation  must  be  active 
to  some  extent.  The  vendor  must  do  something  in  furtherance  of 
the  purchaser's  design  to  transgress,  but  positive  acts  in  aid  of  the 
unlawful  purpose  are  sufficient,  though  slight.  While  it  is  cer- 
tain that  a  contract  is  void  when  it  is  illegal  or  immoral,  it  is 
equally  as  certain  that  it  is  not  void  simply  because  there  is 
something  immoral  or  illegal  in  its  surroundings  or  connections. 


LEGALITY  OF  OBJECT.  807 

It  cannot  be  declared  void  merely  because  it  tends  to  promote 
illegal  or  immoral  purposes.  The  American  text-writers  generally 
admit  this  to  be  the  prevailing  rule  of  law  in  the  States  upon  this 
point.  1  Whart.  Cont.  §  343;  Hill.  Sales,  490,  492;  1  Pars.  Cont. 
456;  Story,  Cont.  (5th  ed.)  §  671;  Story,  Confl.  Law,  §  253; 
Greenh.  Pub.  Pol.  589.  However,  it  has  been  suggested  that  this 
statement  is  subject  to  the  modification  that  the  unlawful  use,  of 
which  the  vendor  is  advised,  must  not  be  a  felony  or  crime  in- 
volving great  moral  turpitude.  See  Hanauer  v.  Doane,  12  Wall. 
342;  Tatum  v.  Kelley,  25  Ark.  209;  Milner  v.  Patton,  49  Ala.  423; 
Lewis  V.  Latham,  74  N.  C.  283 ;  Bickel  v.  Sheets,  24  Ind.  1 ;  Steele 
V.  Curie,  4  Dana,  381. 

Without  expressly  indorsing  the  result  in  some  of  the  cases,  or 
all  that  has  been  said  by  the  courts  in  their  opinions  when  mak- 
ing an  application  to  the  facts  then  in  hand,  of  the  rule  so  exhaus- 
tively examined  and  approved  in  Tracy  v.  Talmage,  and  Hill  v. 
Spear,  supra,  we  cite,  in  support  of  the  propositions  therein  con- 
tended for,  and  upon  which  we  rest  a  reversal  of  the  order  of 
dismissal  made  by  the  court  below,  Armstrong  v.  Toler,  11  Wheat. 
258;  Green  v.  Collins,  3  Cliff.  494;  Dater  v.  Earl,  3  Gray,  482; 
Armfield  v.  Tate,  7  Ired.  258;  Bead  v.  Tajl,  3  K.  I.  175;  Cheney 
T.  Duke,  10  Gill  &  J.  11 ;  Kreiss  v.  Seligman,  8  Barb.  439 ;  Michael 
v.  Bacon,  49  Mo.  474;  Brunswick  v.  Valleaxi,  50  Iowa,  120; 
Webber  v.  Donnelly,  33  Mich.  469;  Bishop  v.  Honey,  34  Tex.  245; 
Wright  v.  Hughes,  119  Ind.  324,  21  N.  E.  Rep.  907;  Feineman  v. 
Sachs,  33  Kan.  621,  7  Pac.  Rep.  222 ;  Rose  v.  Mitchell,  6  Colo. 
102;  Banchor  v.  Mansel,  47  Me.  58;  Henderson  v.  Waggoner,  2 
Lea,  133;  Gaylord  v.  Soragen,  32  Vt.  110;  Mahood  v.  Tealza, 
26  La.  Ann.  108;  Delavina  v.  Hill,  (N.  H.)  19  Atl.  Rep.  1000. 

The  agent  who  made  the  sales,  upon  whose  testimony  the  de- 
fendant saw  fit  to  rest  her  case,  knew  that  she  was  engaged  in 
the  unlawful  business  of  keeping  a  house  of  ill  fame,  and  admits 
also  that  he  supposed  the  beer  would  be  used  or  sold  in  her  place 
of  business.  Nothing  further  was  shown  which  connected  the 
plaintiff  or  its  agent  with  any  violation  of  the  law.  The  burden 
was  upon  the  defendant  to  show  that  an  enforcement  of  the  con- 
tract would  be  in  violation  of  the  settled  policy  of  the  State,  or 
injurious  to  the  morals  of  its  people,  and  no  court  should  declare 


808  FORMATION  OF  CONTRACT. 

a  contract  illegal  on  doubtful  or  uncertain  grounds.  And  it  may 
be  difficult  to  distinguish  between  the  cases  in  which  the  vendor, 
with  knowledge  of  the  vendee's  unlawful  purpose,  does  not 
become  a  confederate,  and  those  wherein  he  aids  and  assists  to 
an  extent  sufficient  to  vitiate  the  sale ;  but  this  difficulty  is  not 
apparent  in  the  case  at  bar. 

/  Order  reversed.'^ 


;5AX^< 


(p.  390)  Intention  of  tJie  parties  in  illegal  contracts.        (p.  395) 

BRYSON  V.  HALEY. 

68  NEW  HAMPSHIRE,  337.  — 1895. 

Assumpsit,  for  labor  and  materials.  Facts  found  by  the  court. 
The  plaintiff,  a  painter,  furnished  to  the  defendant,  at  his  re- 
quest, labor  and  materials  in  painting  and  decorating  a  bar  and 
the  room  containing  it.  The  plaintiff  knew  that  it  was  the  pur- 
pose of  the  defendant  to  use  the  room  and  bar  in  illegally  selling 
intoxicating  liquors;  and  after  their  completion  they  were  so 
used.  The  plaintiff  took  no  part  in  their  illegal  use.  It  was 
held  that  the  defendant  was  liable,  to  which  ruling  he  excepted. 

Blodgett,  J.  The  plaintiff  is  not  precluded  from  a  recovery 
of  the  value  of  his  labor  and  materials  upon  the  bar  and  the  room 
containing  it  by  his  knowledge  that  the  defendant  intended  to 
use  them  for  an  unlawful  purpose.  The  case  is  not  distinguish- 
able in  principle  from  Delavina  v.  Hill,  65  N.  H.  94.  See,  in 
addition,  Tracy  v.  Talmage,  14  N.  Y.  162,  67  Am.  Dec.  132,  and 
note ;  Tyler  v.  Carlisle,  79  Me.  210,  1  Am.  St.  Rep.  301,  and  note ; 
Michael  v.  Bacon,  49  Mo.  474,  8  Am.  Rep.  138,  and  note ;  Webber 
V.  Donnelly,  33  Mich.  469 ;  Hubbard  v.  Moore,  24  La.  Ann.  591, 
13  Am.  Rep.  128 ;  Mahood  v.  Tealza,  26  La.  Ann.  108,  21  Am. 
Rep.  546. 

Exception  overruled. 

Chase,  J.,  did  not  sit.     The  others  concurred. 

1  But  if  the  seller  intends  to  aid  and  abet  the  immoral  purpose,  he  cannot 
recover  the  purchase  price  of  the  goods.     Beed  v.  Brewer,  90  Tex.  144. 


^ 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  80^ 

(P.  420)  Promise  for  benefit  of  third  party.  (p.  437) 

BUCHANAN  V.  TILDEK 
158  NEW  YORK,  109. —1899. 

Appeal  from  an  order  of  the  Appellate  Division  of  the  Supreme 
Court  reversing  a  judgment  (5  App.  Div.  354)  in  favor  of  plain- 
tiff for  $54,421.18,  entered  upon  a  verdict  directed  by  the  court, 
and  ordering  a  new  trial. 

Action  by  Adelaide  E.  T.  Buchanan  against  George  H.  Tilden 
to  recover  the  sum  of  $50,000  upon  a  contract  made  by  defend- 
ant with  her  husband  for  her  benefit. 

Bartlett,  J.  At  the  close  of  plaintiff's  case  both  parties 
moved  for  a  directed  verdict,  and  neither  asked  to  go  to  the 
jury  on  any  question.  The  trial  judge  thereupon  directed  a  ver- 
dict for  the  plaintiff.  The  Appellate  Division,  with  a  divided 
court,  reversed  the  judgment  in  plaintiff's  favor  entered  upon 
the  verdict,  and  ordered  a  new  trial.  The  plaintiff  has  appealed 
from  that  order,  stipulating  for  judgment  absolute  in  case  of 
affirmance,  and  presents  for  our  determination  a  single  question 
of  law  arising  upon  undisputed  facts.  Before  stating  that  ques- 
tion, reference  will  be  made  to  the  material  facts : 

The  plaintiff  is  the  adopted  daughter  of  Moses  Y.  Tilden,  a 
brother  of  the  late  Samuel  J.  Tilden.  The  defendant  is  an  heir 
at  law  and  next  of  kin  of  Samuel  J.  Tilden.  On  the  20th  day 
of  October,  1886,  the  defendant  began  an  action  against  the  exec- 
utors of  the  estate  of  Samuel  J.  Tilden  and  others,  praying  judg- 
ment that  the  thirty-fifth  article  of  Mr.  Tilden's  will  be  adjudged 
void,  and  that  the  property  therein  mentioned  be  declared  undis- 
posed of  by  any  provision  thereof.  The  defendant  being  without 
means  to  prosecute  this  action,  applied  to  Robert  D.  Buchanan, 
the  husband  of  the  plaintiff,  for  assistance  in  raising  the  funds 
necessary  to  carry  on  the  litigation.  Buchanan  expressed  his 
willingness  to  aid  defendant,  if  certain  arrangements  were  made, 
and  said  that  his  uncle,  Robert  G.  Dun,  might  be  willing  to 
advance  the  money  required.  The  defendant  expressed  himself 
as  willing  "  to  do  anything  in  the  world  to  raise  the  money,  — 
to  make  any  arrangement  that  was  reasonable," — and  said  to 


810  OPERATION  OF  CONTRACT. 

Buchanan  that,  if  the  contest  was  successful,  Mrs.  Buchanan 
"  sliould  come  in,  share  alike,  with  the  rest  of  them."  It  was 
evidently  within  the  contemplation  of  the  parties  that,  if  this 
action  of  the  defendant  was  successful,  the  result  would  be  that, 
as  to  a  very  large  part  of  his  estate,  Mr.  Tilden  died  intestate, 
and  that,  while  the  plaintiff,  as  an  adopted  child  of  Moses  Y. 
Tilden,  and  not  of  Samuel  J.  Tilden's  blood,  might  take  no  part 
thereof,  yet  there  were  the  strongest  moral  and  family  reasons 
why  she  should  be  regarded  as  an  heir  at  law  and  next  of  kin. 
Buchanan  induced  Dun  to  make  certain  necessary  advances,  to 
the  extent  of  $5000,  and  Dun  consented  to  do  so  solely  on  the 
ground  that  plaintiff  was  to  share  the  fruits  of  a  successful  con- 
test, he  being  unacquainted  with  the  defendant.  This  portion  of 
the  money  was  advanced  by  Dun  about  the  time  defendant  began 
his  action,  and  he  was  then  presented  to  Dun,  and  repeated  to 
him  the  promise,  in  regard  to  plaintiff  sharing  alike  with  the  rest 
of  the  heirs,  that  he  had  made  to  her  husband. 

In  February,  1887,  the  defendant  asked  Buchanan  if  he  could 
raise  more  money.  Buchanan  testified  that,  in  response  to  this 
application,  "  I  told  him  that  I  thought,  before  any  more  money 
was  talked  about,  that  the  arrangement  that  had  been  talked 
about  had  better  be  whipped  into  line,  .  .  .  and  he  said  they 
were  all  pefectly  willing  to  share  and  share  alike  in  that  matter. 
I  said,  '  That  does  not  satisfy  me ;  that  is  not  what  I  want ;  I 
want  some  positive  agreement.'  After  considerable  further  talk, 
he  said  that  his  brothers  and  sisters  were  scattered;  that  he  could 
not  get  it  into  shape  just  then,  but  that  he  had  to  have  some  more 
money,  and  had  to  have  it  right  away,  and,  in  order  to  get  the 
money,  and  have  it  right  away,  he,  on  his  own  personal  behalf, 
having  nothing  to  do  with  his  brothers  or  sisters  in  any  sense, 
would  obligate  himself  to  pay  personally  fifty  thousand  dollars." 
Thereupon  defendant  and  Buchanan  went  to  the  office  of  counsel, 
where  the  following  letter  was  drawn  up,  signed  by  defendant, 
and  delivered  by  Buchanan  to  Dun : 

New  York,  February  19,  1887. 
Robert  G.  Dun,  Esq.,  No.  314  B'way,  N.  Y.  City, 

My  dear  Sir  :  It  is  understood  between  Mr.  R.  D.  Buchanan  and 
myself  that,  in  the  event  of  the  success  of  the  proceedings  now  pending, 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  811 

or  any  which  may  be  taken,  to  practically  set  aside  the  thirty-fifth  sec- 
tion of  the  will  of  my  late  uncle,  Samuel  J.  Tilden,  in  view  of  the 
assistance,  looking  to  that  end,  which  has  been  and  may  be  rendered 
by  Mr.  Buchanan,  as  well  as  by  yourself,  that  I  will,  and  hereby  do, 
become  responsible  for  the  payment  to  Mrs.  Adelaide  E.  Buchanan,  or 
her  order,  of  the  sum  of  fifty  thousand  dollars.  It  is  further  understood 
between  us  that,  while  I  am  not  strictly  authorized  to  speak  in  behalf 
of  my  brothers  and  sisters  in  that  respect,  that  from  what  has  already 
transpired  between  me  and  them,  in  the  event  of  such  success,  they 
will  be  disposed  to  act  generously  with  Mrs.  Buchanan  in  the  premises. 

Yours  very  resp'y, 

George  H.  Tilden. 

It  will  be  observed  that  this  letter,  while  charging  defend- 
ant in  a  fixed  sum,  leaves  open  the  general  adjustment  between 
plaintiff  and  defendant's  brothers  and  sisters.  After  receiving 
this  written  declaration  of  the  defendant.  Dun  continued  his 
advances,  until  they  aggregated  over  $20,000.  A  long  contest 
followed  in  the  courts.  Defendant  succeeded  in  his  action,  and 
he  and  others  became  entitled  to  a  very  large  sum  of  money  that 
the  late  Samuel  J.  Tilden  supposed  he  had  dedicated  to  public 
uses  under  the  thirty-fifth  article  of  his  will.  Dun  testified  that 
the  defendant  had  repaid  his  advances ;  that  they  were  collected 
through  his  attorney,  but  he  thought  an  action  was  brought 
against  him.  Defendant  paid  plaintiff  $8150,  on  account  of 
the  $50,000,  under  the  letter  of  February  19,  1887.  As  nothing 
more  was  paid,  and  plaintiff  received  no  recognition  from  the 
heirs  at  law  and  next  of  kin  of  Mr.  Tilden,  she  brought  this 
action  to  recover  the  balance  of  the  $50,000  and  interest. 

One  of  the  learned  judges  of  the  Appellate  Division  thus  states 
the  question  of  law  presented  in  this  case :  "  Can  a  wife  enforce 
payment  in  her  own  name,  where  the  husband  renders  valuable 
services,  and  stipulates  with  the  person  to  whom  the  same  are 
rendered  that  compensation  therefor  shall  be  made,  not  to  him, 
but  to  her  ?  "  In  answering  this  question  in  the  negative,  the 
main  positions  of  the  court  below  may  be  briefly  stated.  While 
admitting  that  there  is  a  distinct  class  of  cases  where  promises 
have  been  made  to  a  father,  or  other  near  relative,  for  the  benefit 
of  a  child,  or  other  dependent  relative,  in  which  the  person  for 
whose  benefit  the  promise  was  made  has  been  permitted  to  main- 


812  OPERATION  OF  CONTRACT. 

tain  an  action  for  the  breach  of  it,  and  further  admitting,  for 
argument's  sake,  that  the  duty  and  obligation  of  the  husband  to 
the  wife  is,  as  a  consideration,  quite  equal  to  the  duty  and  obli- 
gation of  the  father  to  the  child,  yet  the  fact  still  remains,  in  the 
case  at  bar,  that  this  is  not  a  contract  looking  towards  the  dis- 
charge of  the  obligation  which  the  husband  owed  to  support  the 
wife,  and  must,  therefore,  be  supported,  if  at  all,  upon  the  mere 
relation  of  husband  and  wife.  The  learned  court  then  states  that 
it  has  found  no  authority  for  holding  that  a  promise  made  to  the 
husband  by  a  third  person  for  the  benefit  of  his  wife,  which  was 
not  intended  to  provide  for  her  support,  or  to  discharge  the 
husband's  duty  in  that  regard,  could  be  enforced  by  the  wife. 
It  is  also  intimated  that  there  is  no  disposition  to  extend  the 
principle  of  some  of  the  cases  relating  to  father  and  child  to  any 
other  relationship.  As  to  this  latter  suggestion,  we  do  not  think 
it  will  be  seriously  questioned,  on  principle,  that  the  relation  of 
husband  and  wife  is  fully  equal  to  that  of  parent  and  child  as  a 
consideration  to  support  a  promise. 

Before  discussing  this  appeal  in  the  light  of  the  authorities,  we 
have  to  say  that,  in  our  judgment,  the  learned  Appellate  Division 
have  failed  to  give  due  weight  to  certain  controlling  features  of 
this  case.  In  the  first  place,  the  question  formulated  by  the 
court  below  does  not  contain  what  we  regard  as  one  of  the  most 
important  points  disclosed  by  the  evidence,  to  wit,  the  large  equi- 
table interest  the  plaintiff  had  in  this  scheme  to  attack  the  will, 
under  the  provisions  of  the  agreement  made  to  raise  funds  for  that 
purpose.  This  is  not  the  case,  simply,  of  a  husband  rendering 
valuable  services  to  a  third  party  upon  the  latter's  promise  to  pay 
the  compensation,  not  to  him,  but  to  his  wife.  While  this  case 
embraces  that  feature,  it  involves  the  further  element  of  the  wife's 
joint  interest  in  the  scheme  to  attack  the  will.  It  may  fairly  be 
inferred,  from  this  record,  that  the  defendant  was  powerless  to 
conduct  the  action  he  had  begun  unless  some  one  furnished  him 
the  funds.  This  assistance  was  rendered  by  Buchanan  and  Dun, 
upon  the  express  agreement  and  understanding  that  the  plain- 
tiff should  receive,  in  case  of  success,  $50,000  from  defendant 
as  part  of  her  share  of  the  estate,  and  generous  treatment  from 
his  brothers  and  sisters.     Plaintiff,  in  equity  and  good  conscience. 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  813 

as  an  adopted  child  of  Moses  Y.  Tilden,  was  entitled  to  come  in 
and  share  with  the  other  heirs  and  next  of  kin  the  large  fund 
that  had  been  freed  from  the  provisions  of  the  will.  When  this 
equitable  right  or  interest  is  coupled  with  the  relation  of  husband 
and  wife,  we  have  presented  a  situation  that  affords  ample  con- 
sideration for  the  contract  sued  upon,  —  a  situation  that  distin- 
guishes this  action  from  any  of  the  cases  where  the  party  suing 
npon  a  promise  rests  exclusively  upon  a  debt  or  duty  owed  him 
by  the  promisee. 

Another  general  feature  of  this  case,  to  which  we  think  the 
court  below  has  failed  to  give  due  prominence,  is  the  extent  of 
the  legal  and  moral  obligation  resting  upon  a  husband  to  support 
and  provide  for  his  wife.  A  brief  quotation  from  one  of  the 
opinions  below  will  make  this  point  clear :  The  court  says :  "  It 
is  quite  true  that  the  husband  is  under  an  obligation  to  support 
the  wife,  and  it  may  be  that  any  contract  which  he  makes  with 
a  third  party,  having  for  its  object  the  carrying  out  of  the  obli- 
gation, would  be  enforced  in  the  courts."  Then,  coming  to  the 
case  at  bar,  the  court  continues :  "  There  is  no  obligation,  legal 
or  equitable,  here,  on  the  part  of  the  husband  towards  the  wife, 
to  entitle  her  to  the  performance  of  this  contract.  This  was  not 
a  contract  for  her  support,  nor  was  it  one  to  do  anything  which, 
under  any  circumstances,  the  husband  could  be  compelled  to  do. 
It  was  simply  an  obligation  on  the  part  of  the  defendant  to  pay 
the  plaintiff  a  sum  of  money,  as  an  independent  fortune  for  her 
separate  estate,  in  case  the  husband  rendered  some  service  to 
him.  So  far  as  the  plaintiff  and  her  husband  were  concerned, 
as  to  this  contract,  there  were  no  legal  relations  between  them. 
They  occupied  no  different  relations  from  that  of  any  other  man 
and  woman,"  etc.  It  seems  to  us  that  this  is  an  entire  miscon- 
ception of  the  duties  and  relations  existing  between  man  and 
wife.  It  is,  in  effect,  said  that  it  is  only  the  duty  of  bare  main- 
tenance that  is  a  consideration  sufficient  to  support  the  promise 
of  a  third  party.  We  are  of  opinion  that  a  husband  rests  under 
other,  and  far  higher,  moral  and  legal  obligations  that  the  law 
will  recognize  as  a  sufficient  consideration  to  support  a  covenant 
in  favor  of  the  wife.  There  is  no  evidence  in  this  case  to  bear 
out  the  statement  that  this  was  not  a  contract,  for  the  wife's 


814  OPERATION  OF  CONTRACT. 

support ;  but,  assuming  that  she  had  food,  raiment,  and  shelter, 
—  the  necessaries  of  life,  —  can  it  be  said  that  these  represent 
the  full  measure  of  the  moral  and  legal  obligations  imposed  upon 
a  husband  by  the  common  law  ?  Is  it  not  his  bounden  duty,  if 
opportunity  offers,  to  provide  for  his  wife  against  that  day  when 
he  may  be  incapacitated  by  disease  or  removed  by  death  ?  If,  as 
in  the  case  at  bar,  the  husband  seeks  to  provide  for  his  wife, 
beyond  the  duty  of  furnishing  food  and  shelter,  by  securing  a 
fund  to  which  she  is  equitably  entitled,  that  may  perpetuate  his 
protecting  care  after  he  has  departed  this  life,  shall  it  be  said 
that  this  is  not  an  obligation  that  a  court  can  recognize  as  a 
sufficient  consideration  to  support  a  covenant  on  her  behalf? 
We  are  of  opinion  that  this  broader  view  of  the  duties  and 
obligations  of  a  husband  is  to  be  invoked  in  determining  the 
rights  of  this  plaintiff. 

We  come,  then,  to  a  consideration  of  this  case  in  the  light  of 
precedent.  The  court  below  recognized  the  strong  eqiuties  of 
the  plaintiff's  case,  and  expressed  regret  that  the  action  is  not 
sustainable  in  her  behalf.  Our  full  discussion  of  the  facts  and 
the  position  of  the  court  below  discloses,  we  think,  a  very 
strong  case  in  favor  of  the  plaintiff  maintaining  this  action. 
While  it  is  true  that  for  more  than  two  hundred  years  the 
courts  of  England  and  this  country  have  been  discussing  the 
vexed  question  of  when  a  party  may  sue  upon  a  promise  made 
for  his  benefit  to  a  third  party,  yet  we  are  of  opinion  that,  under 
the  peculiar  facts  of  this  case,  the  plaintiff  can  recover  by  in- 
volving legal  principles  that  are  well  established  by  authority. 
In  order  to  maintain  the  plaintift"'s  cause  of  action,  it  is  not 
necessary  to  invoke  the  principle  established  by  Lawrence  v.  Fox 
(20  N.  Y.  268),  and  the  cases  that  have  followed  it  in  this  State, 
to  the  effect  that  an  action  lies  on  a  promise  made  by  the  defend- 
ant upon  valid  consideration  to  a  third  person  for  the  benefit 
of  the  plaintiff,  although  the  latter  was  not  privy  to  it.  It  will 
be  recalled  in  that  case  one  Holly  loaned  the  defendant.  Fox, 
money,  stating  at  the  time  that  he  owed  the  amount  to  the  plain- 
tiff, Lawrence,  for  money  borrowed,  which  he  had  agreed  to  pay 
the  then  next  day.  The  defendant,  in  consideration  of  the  loan 
to  him,  agreed  to  pay  plaintiff  the  then  next  day.     This  court,  in 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  815 

holding  that  the  plaintiff,  Lawrence,  could  enforce  that  promise 
in  an  action  of  law,  established  a  legal  principle  that  the  courts 
of  England  have  never  recognized.  The  plaintiff  in  the  case  at 
bar,  if  driven  to  it,  might  doubtless  derive  aid  and  comfort  from 
the  doctrine  laid  down  in  Lawrence  v.  Fox  by  parity  of  reason- 
ing ;  but  we  think  her  case  rests  upon  very  different  principles. 

The  first  case  to  be  considered  is  Dutton  v.  Poole  (1  Vent.  318, 
332),  decided  in  England  in  the  reign  of  Charles  II.  The  plain- 
tiff declared  in  assumpsit  that  his  wife's  father,  being  seised  of 
certain  lands  now  descended  to  the  defendant,  and  being  about 
to  cut  £1000  worth  of  timber  to  raise  a  portion  for  his  daughter, 
the  defendant  promised  to  the  father,  in  consideration  that  he 
would  forbear  to  fell  the  timber,  that  he  would  pay  the  daughter 
£1000.  After  verdict  for  the  plaintiff  on  non  assumpsit,  it  was 
moved  in  arrest  of  judgment  that  the  father  ought  to  have 
brought  the  action,  and  not  the  husband  and  wife.  The  court 
said :  "  It  might  have  been  another  case  if  the  money  had  been 
to  have  been  paid  to  a  stranger ;  but  there  is  such  a  nearness  of 
relation  between  the  father  and  the  child,  and  'tis  a  kind  of  debt 
to  the  child  to  be  provided  for,  that  the  plaintiff  is  plainly  con- 
cerned." The  judgment  was  affirmed  in  the  exchequer.  2  Lev. 
212,  T.  Eaym.  303. 

In  one  of  the  opinions  of  the  Appellate  Division  in  the  case  at 
bar,  it  is  stated  that  Dutton  v.  Poole  has  been  repudiated  by  the 
English  courts  in  Tweddle  v.  Atkins,  101  Eng.  C.  L.  R.  393.  A  care- 
ful examination  of  this  latter  case  shows  that  Justice  Blackburn, 
while  attacking  Dutton  v.  Poole,  says :  "  We  cannot  overrule  a 
decision  of  the  exchequer  chamber."  Lord  Mansfield  said  of 
Dutton  V.  Poole,  one  hundred  years  later,  that  it  was  difficult  to 
conceive  how  a  doubt  could  have  been  entertained  about  the 
case.  Martyn  v.  Hind,  Cowp.  443 ;  Doug.  142.  It  has  also  been 
repeatedly  followed  in  this  State. 

The  learned  counsel  for  the  defendant,  in  an  able  and  compre- 
hensive brief,  complains  that  Dutton  v.  Poole  has,  on  several 
occasions,  been  cited  to  sustain  the  broad  doctrine  that  a  stranger 
to  the  consideration  and  to  the  promise  may  maintain  an  action 
on  a  contract.  He  points  out  that  such  an  alleged  erroneous 
citation  appears  in  Schemerhorn  v.  Vanderheyden  (1  Johns.  139), 


816  OPERATION  OF  CONTRACT. 

and  that  it  has  led  to  confusion  in  subsequent  cases.  We  are  not 
concerned  at  this  time  whether  this  is  a  just  criticism  or  not,  as 
there  can  be  no  doubt  that  Dutton  v.  Poole  rests  upon  the  near- 
ness of  the  relation  between  father  and  child,  and  to  this  extent 
is  undoubted  authority. 

In  Shepard  v.  Shepard  (7  Johns.  Ch.  57),  Dutton  v.  Foole  is- 
approved  and  followed,  and  Chancellor  Kent  also  recognizes  the 
principle,  contended  for  in  this  case,  that  the  consideration  of 
natural  affection,  and  to  make  sure  the  maintenance  of  a  wife  in 
case  she  survived  her  husband,  is  "very  meritorious."  There 
were  two  principal  points  decided  by  Chancellor  Kent  in  this 
case ;  the  first  being  that,  although  a  deed  from  a  husband  directly 
to  his  wife  is  void  in  law,  yet,  where  the  conveyance  of  the  hus- 
band is  for  the  purpose  of  making  a  suitable  provision  for  the 
wife  "  in  case  she  should  survive  him,"  equity  will  lend  its  aid  to 
enforce  its  provisions.  The  second  point  held  that,  where  a  hus- 
band conveyed  land  to  his  son,  for  a  nominal  sum,  on  his  cove- 
nanting to  pay  an  annuity  to  his  mother  during  her  widowhood, 
that  the  wife  could  sue  on  this  covenant  so  made  for  her  benefit, 
and  that  an  attempted  release  of  the  son  from  the  covenant  by  the 
husband,  in  his  lifetime,  was  fraudulent  and  void.  The  learned 
chancellor  said :  "  But,  if  the  deed  of  1808  was  out  of  the  ques- 
tion, I  should  then  have  no  difficulty  in  declaring  that  the  defend- 
ant was  bound  to  pay  her  the  stipulated  annuity,  or  the  gross  sum 
of  $400,  in  lieu  of  it,  on  her  releasing,"  etc.  "  The  relationship 
between  husband  and  wife  was  sufficient  to  entitle  the  plaintiff 
to  her  action  upon  the  covenant  to  her  husband,  and  which  was 
made  for  her  benefit.  The  consideration  inured  from  the  hus- 
band and  arose  from  the  obligations  of  that  relation,"  etc.  The 
chancellor  then  comments  approvingly  and  at  length  upon  Dutton 
V.  Poole,  points  out  the  subsequent  commendation  of  it  by  Lord 
Mansfield,  and  concludes  by  saying :  "  The  same  doctrine  appears 
in  the  more  early  case  of  Starkey  v.  Mill  (Style,  296),  and  it  has 
had  the  sanction,  also,  of  Mr.  Justice  Buller  in  Marchington  v. 
Vernon  (1  Bos.  &  P.  101),  in  notis,  but  it  is  quite  unnecessary  to 
dwell  longer  on  this  second  point."  While  the  chancellor  allowed 
relief  to  the  plaintiff  by  enforcing  her  deed  in  equity,  yet  he 
distinctly  held  that  she  had  the  additional  remedy  of  an  action 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  817 

on  the  covenant  between  her  husband  and  the  son,  if  there  were 
no  dQed,  by  reason  of  the  relations  and  obligations  of  husband 
and  wife,  resting  his  decision  squarely  on  the  case  of  Button  v. 
Poole. 

With  this  case  approved  by  Lord  Mansfield,  Justice  Buller,  and 
Chancellor  Kent,  and  followed  in  this  State,  it  is  not  of  controll- 
ing importance  that  the  doctrine  of  this  and  other  early  cases  is 
said  to  be  questioned  in  England  at  the  present  day.  In  a  juris- 
diction where  the  doctrine  of  Lawrence  v.  Fox  is  the  settled  law, 
there  is  no  difficulty  in  sustaining,  both  in  law  and  equity,  the 
kindred  principle  announced  in  Button  v.  Poole. 

It  is  quite  impossible  to  follow  the  learned  counsel  on  both 
sides  of  this  case  in  the  exceedingly  interesting  and  exhaustive 
discussion  of  the  questions  involved,  as  the  limits  of  an  ordinary 
opinion  forbid  it.  We  shall  content  ourselves  with  the  citation 
of  but  one  more  case.  In  Todd  v.  Weber  (95  N.  Y.  181)  this 
court  held  that  the  relation  of  parent  and  child,  even  between  a 
father  and  his  illegitimate  daughter,  was  a  sufficient  consideration 
for  a  contract  made  by  him  with  the  relatives  of  his  unfortunate 
child  to  pay  for  her  support  and  maintenance,  and  that  she  could 
enforce  it  by  action.  The  learned  judge  writing  for  the  court  in 
that  case,  in  an  opinion  that  does  honor  to  his  heart  as  well  as 
his  intellect,  quotes  with  approval  Button  v.  Poole.  We  see  no 
valid  distinction,  in  principle,  between  the  relation  of  parent  and 
child  and  husband  and  wife,  as  affording  an  ample  consideration 
for  covenants  inuring  to  the  benefit  of  the  child  or  wife.  The 
relation  of  husband  and  wife  has  been  twice  recognized  in  this 
State,  in  cases  just  cited,  as  a  sufficient  consideration  for  sup- 
porting a  covenant  in  the  wife's  favor,  and  amply  sustains  the 
plaintiff's  cause  of  action  in  the  case  at  bar.  This  court  has 
recently  held  that,  while  the  common-law  rule  that  husband  and 
wife  are  one  has  been  to  some  extent  abrogated  by  special  legis- 
lation, yet  there  are  situations  where  that  unity  still  exists. 
Wetmore  v.  Wetmore,  149  N.  Y.  520,  529 ;  Bertles  v.  Ntman,  92 
IST.  Y.  152.  The  case  before  us  illustrates  a  situation  where  that 
unity  survives  for  the  purpose  of  aiding  the  wife  to  enforce  a 
covenant  for  her  benefit  made  by  her  husband,  and  which  equity 
and  good  conscience  approve. 

G6G 


818  OPERATION  OF  CONTRACT. 

The  Appellate  Division  refer  to  Durnherr  v.  Rau  (135  N.  Y. 
219),  as  "  a  case,  while  not  directly  in  point,  is,  in  its  controlling 
principles,  adverse  to  the  plaintiff's  right  to  maintain  this  action." 
We  think  that  case  has  no  application  to  the  one  before  us.  The 
husband  of  plaintiff  conveyed  to  the  defendant  certain  premises, 
the  latter  covenanting  to  pay  all  incumbrances  on  the  j)remises- 
"  by  mortgage  or  otherwise."  The  deed  declared  that  the  wife 
(the  plaintiff)  reserved  her  right  of  dower.  By  the  foreclosure  of 
mortgages  on  the  premises,  existing  at  the  time  of  the  conveyance 
and  in  which  the  Avife  joined,  her  dower  interest  was  extinguished. 
The  wife  sued  on  the  defendant's  covenant  in  the  deed  to  pay  all 
incumbrances,  and  sought  to  recover  the  value  of  her  dower 
interest  cut  off  by  the  foreclosure.  This  court  held  that  the 
covenant  was  with  the  husband  alone,  as  the  wife  was  not  bound 
to  pay  the  mortgages,  and  that  the  joinder  of  the  wife  in  the 
mortgages  was  a  voluntary  surrender  of  her  right  of  dower  for 
the  benefit  of  the  husband,  and  bound  her  interest  to  the  extent 
necessary  to  protect  the  securities.  It  is  perfectly  clear,  under 
this  state  of  facts,  that  the  husband  rested  under  no  duty  to 
protect  the  wife's  dower  interest.  There  was  no  legal  or  equitable 
obligation  which  the  wife  could  lay  hold  of  to  enable  her  to  sue 
on  the  covenant.  The  court  points  out  that  it  is  not  sufficient 
that  the  performance  of  a  covenant  may  benefit  a  third  person, 
but  it  must  have  been  entered  into  for  his  benefit. 

The  case  at  bar  is  decided  upon  its  peculiar  facts.  We  do  not 
hold  that  the  mere  relation  of  husband  and  wife  alone  constituted 
a  sufficient  consideration  to  enable  the  plaintiff  to  maintain  this 
action.  We  deem  it  unnecessary  to  decide  that  question  at  this 
time.  What  we  do  hold  is  that  the  equities  of  the  plaintiff  were 
such  that,  when  considered  in  connection  with  the  duty  of  her 
husband  to  provide  for  her  future,  and,  with  that  purpose  in  view, 
the  money  was  procured  for  the  defendant  to  institute  and  pursue 
the  necessary  litigation  to  secure  the  fund  to  which  her  equities 
related,  they,  all  taken  together,  were  sufficient  to  sustain  the 
plaintiff's  action. 

The  order  of  the  Appellate  Division  granting  a  new  trial,  and 
the  judgment  entered  thereon,  should  be  reversed,  and  the  origi- 
nal judgment  in  favor  of  the  plaintiff  and  against  the  defendant 
affijmed,  with  costs  in  all  the  courts. 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  819 

Gray,  J.  (dissenting).  I  think  that  the  order  appealed  from 
should  be  affirmed,  and  that  any  other  doctrine  than  that  laid 
down  by  the  Appellate  Division  would  be  without  support  in 
principle  or  in  the  cases.  The  defendant  needed  money  in  order 
to  prosecute  an  action  to  set  aside  certain  provisions  of  the  will 
of  Samuel  J.  Tilden,  deceased.  He  applied  to  the  plaintiff's 
husband  for  that  purpose,  and  the  latter  procured  Dun  to  advance 
the  money.  The  agreement  between  the  defendant  and  the  plain- 
tiff's husband  was  that,  in  the  event  of  the  success  of  the  action, 
in  view  of  the  assistance  rendered  by  the  latter  as  well  as  by 
Dun,  the  defendant  would  become  responsible  for  the  payment  to 
the  plaintiff  of  the  sum  of  $50,000.  The  action  was  successful, 
aiid  the  defendant  repaid  the  money  loaned.  In  addition,  he 
gave  to  the  plaintiff  a  sum  of  $8500 ;  but  she  has  brought  this 
action  to  compel  the  payment  by  the  defendant  of  the  whole  sum 
mentioned  in  the  agreement. 

The  question  is  whether  the  plaintiff  had  a  cause  of  action 
upon  the  contract.  It  seems  to  me  that  this  case  is  not  brought 
within  that  class  of  cases  wherein  a  third  person  is  entitled  ta 
enforce  a  promise  which  has  been  made  by  one  person  to  another, 
because  of  the  absence  of  the  essential  element  that  some  liability 
or  duty  must  exist  from  the  promisee  to  such  third  person  in 
connection  therewith.  As  it  was  held  in  Dumherr  v.  Rau  (135 
N.  Y.  219),  the  rule  is  that,  to  permit  a  third  party  to  enforce 
such  a  promise,  the  promisee  must  have  a  legal  interest  that  the 
covenant  be  performed  in  favor  of  the  party  claiming  perforln- 
ance.  How  was  that  the  case  here  ?  Could  it  be  because  of 
the  general  obligation  on  the  part  of  the  plaintiff's  husband  to 
support  and  maintain  her  ?  That,  of  course,  is  a  well-recognized 
obligation  in  the  law  ;  but  did  the  contract  in  question  have 
that  for  its  object  ?  I  cannot  so  regard  it.  It  related  solely  to 
the  payment  of  a  large  sum  of  money  contingently  upon  the  suc- 
cess of  a  certain  litigation,  of  which  the  defendant  was  the  pro- 
moter, and  promised  a  reward  or  compensation  to  the  party  with 
Avhom  made  for  his  aid  in  furnishing  the  needed  moneys.  It  is 
perfectly  clear  that  this  contract  was  not  based  upon  marital  obli- 
gations, but  that  it  was  simply  a  mode,  suggested  by  the  husband 
and  adopted  by  both  parties,  for  the  payment  by  the  defendant 


820  OPERATION  OF  CONTRACT. 

of  the  consideration  for  his  (the  plaintiff's  husband's)  services 
in  the  matter.  It  does  not  appear  that  the  plaintiff's  cause  of 
action  has  any  other  basis  than  the  mere  fact  of  the  marital 
relation.  While  that  relation  imposes  strong  legal  and  moral 
obligations  upon  the  husband,  it  is  difficult  to  see  that  they 
involve  a  liability  on  his  part  to  provide  a  separate  estate  for  his 
wife;  and  yet,  if  there  is  not  that  liability,  what  liability  was 
there  towards  the  plaintiff,  which  furnished  the  element  required 
to  exist  in  order  that  the  third  person,  the  plaintiff  here,  might 
claim  the  right  to  enforce  the  promise  ?  It  is  not  necessary  that 
the  wife  should  be  privy  to  the  consideration  of  the  promise ;  but 
it  is  necessary  that  the  promisee,  her  husband,  should  owe  some 
debt  or  duty  to  her,  in  connection  with  the  promise,  to  enable  her 
to  sue  upon  it. 

I  think  that  the  insuperable  legal  objection  to  the  plaintiff's 
cause  of  action  is  that  the  contract  in  question  was  not  one  which 
looked  towards  the  discharge  of  any  obligation  owing  by  him  to 
her,  and,  therefore,  is  not  enforceable,  upon  the  doctrine  which 
underlies  the  cases  where,  as  in  the  relation  of  parent  and  child, 
the  promisee  owed  a  duty  which  the  contract  was  supposed  to 
meet.  I  am  prepared  to  admit,  as  it  is  argued,  that  we  should 
recognize  the  obligation  of  the  husband  to  support  the  wife  to  be 
as  meritorious  as  the  obligation  of  the  parent  to  support  the 
•child,  and,  if  this  contract  could  be  regarded  in  that  light,  I 
might  be  prepared  to  extend  to  the  present  case  the  principle  of 
the  cases  referred  to.  But,  as  previously  suggested,  the  relation- 
ship between  the  parties  here  does  not  help  us  out  in  endeavoring 
to  find  support  for  the  plaintiff's  cause  of  action,  for  the  reason 
that  the  contract  which  is  sought  to  be  enforced  does  not  bear 
upon  the  husband's  obligation,  and  is  not  connected  with  it,  but 
simply  provides  for  the  payment  of  a  sum  of  money  as  a  compen- 
sation for  his  services  in  the  event  of  success.  In  view  of  the 
more  elaborate  discussion  in  the  opinion  below,  I  think  nothing 
more  need  be  said,  and  that  the  order  should  be  affirmed. 

Haight,  Maktin,  and  Vann,  JJ.,  concur  with  Bartlett,  J., 

for  reversal,  Parkeb,  C.  J.,  and  O'Brien',  J.,  concur  with  Gray, 

J.,  for  af&rmance. 

Order  reversed,  etc. 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  821 

(p.  420)  Promise  for  benefit  of  third  party.  (p.  437) 

SULLIVAN  V.  SULLIVAN. 

161  NEW  YORK,  554.  — 1900. 

Action  by  Patrick  R.  Sullivan,  as  administrator,  etc.,  against 
Catherine  Sullivan.  From  a  judgment  of  the  Appellate  Division 
(39  App.  Div.  99)  affirming  a  judgment  for  the  plaintiff,  defend- 
ant appeals. 

Werxer,  J.  On  the  10th  day  of  October,  1892,  the  plaintiff's 
intestate,  Catherine  Sullivan,  deposited  with  the  Chemung  Canal 
Bank  the  sum  of  $2000  and  received  therefor  a  certificate  of 
deposit  in  the  following  form : 

"$2000.  Elmira,  N.  Y.,  Oct.  10th,  1892. 

"Catherine  Sullivan  has  deposited  in  this  bank  two  thousand  dollars, 
payable  one  day  after  date  to  the  order  of  herself,  or,  in  the  case  of  her 
death,  to  her  niece,  Catherine  Sullivan,  of  Utica,  upon  the  return  of  this 
certificate,  with  interest  at  3  per  cent,  per  annum,  if  held  six  months.  Not 
subject  to  check. 

"No.  26,638.  J.  H.  ARNOT,  V.  P." 

She  retained  possession  of  said  certificate  until  her  death, 
which  occurred  on  the  8th  day  of  February,  1893,  and  after  her 
death  it  was  found  among  her  papers. 

This  action  was  originally  brought  against  the  individuals  who 
composed  the  firm  known  as  the  Chemung  Canal  Bank,  and  was 
upon  their  application  continued  against  the  present  defendant, 
who  claims  to  be  entitled  to  the  moneys  represented  by  said 
certificate.  Upon  the  trial,  oral  evidence  was  adduced  to  show, 
and  the  court  found,  that  it  was  the  intention  of  the  plaintiff's 
intestate  to  have  the  said  certificate  of  deposit  so  drawn  that  in 
case  of  her  death,  without  having  withdrawn  the  deposit,  it  could 
be  drawn  by  the  defendant.  The  trial  court  also  found  that  "  no 
attempt  was  made  by  the  plaintiff's  intestate  to  create  a  trust  to 
exist  during  the  life  of  the  said  intestate.  Until  her  death,  the 
bank  was  her  debtor."  Defendant's  father,  whose  real  name  was 
Brown,  was  a  nephew  of  the  plaintiff's  intestate,  and  lived  with 
her  for  thirty-six  years,  taking  the  name  of  Sullivan,  and  being 
regarded  and  treated  as  an  adopted  son,  although  no  legal  adop- 


822  OPERATION  OF  CONTRACT. 

tion  was  ever  consummated.  The  defendant  was  born  in  the 
house  of  plaintiff's  intestate,  inElmira,  and  lived  there  for  four  or 
five  years  after  her  birth,  at  the  end  of  which  period  she  removed 
with  her  parents  to  the  city  of  Utica.  Plaintiff's  intestate,  who 
was  childless,  exhibited  and  expressed  on  all  occasions  great  fond- 
ness for  the  defendant,  and  at  the  time  of  said  deposit  stated  to 
the  teller  of  said  bank  that  "  she  wanted  it  fixed  to  herself,  or,  in 
case  of  her  death,  to  her  niece,  Catherine  Sullivan,  of  Utica." 

In  asserting  her  claim  to  this  fund,  the  defendant  invokes 
several  distinct  principles  of  law,  the  first  of  which  is  that  the 
deposit  of  this  money  and  the  issuance  of  this  certificate  consti- 
tuted a  valid  contract  between  plaintiff's  intestate  and  the  bank 
for  the  benefit  of  the  defendant.  Buchanan  v.  Tilden,  158  N.  Y. 
109 ;  Button  v.  Pool,  1  Vent.  318,  and  Todd  v.  Weber,  95  N.  Y. 
181,  are  cited  in  support  of  this  contention.  As  I  read  these 
cases,  they  have  no  application  to  the  case  at  bar ;  for  in  each 
of  them  there  was  a  valid  contract,  founded  upon  a  sufficient 
consideration,  for  the  benefit  of  a  third  person,  which  the  latter 
could  enforce.  Here  there  was  no  contract  to  which  the  defend- 
ant was  a  privy,  nor  can  it  be  said  that  the  relations  of  the 
plaintiff's  intestate  and  the  defendant  were  such  as  to  furnish 
any  consideration  for  such  a  contract,  if  one  had  existed. 

(The  court  then  holds  that  the  transaction  did  not  create 
a  trust.)  Judgment  affirmed.^ 


(p.  420)  Promise  for  benefit  of  third  party.  (p.  437) 

WHITEHEAD  v.  BURGESS. 

61  NEW  JERSEY  LAW,  75.  — 1897. 

Action  by  Edward  Whitehead  against  William  W.  Burgess  on  a 
contract.    Heard  on  demurrer  to  declaration.    Demm-rer  overruled. 

Vax  Syckel,  J.  The  first  count  of  the  declaration  sets  out 
that  the  defendant,  being  the  owner  of  a  stallion  known  as  "  Lynne 
Bel,"  published  a  certain  circular,  in  which  he  offered  the  services 

1  See  Edson  v.  Parsons,  155  N.  Y.  555,  571 ;  Lawrence  v.  Oglesby,  178 
111.  122. 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  823 

/of  the  said  stallion  for  the  sum  of  $100,  and  therein  promised  to 
pay  the  owner  of  the  first  one  of  the  foals  of  said  stallion  that 

I  should  trot  a  mile  in  2  minutes  and  30  seconds,  or  less,  the  sura  of 
^750.  The  declaration  further  sets  out  that  one  Pursell,  being 
the  owner  of  a  mare  called  "  Eva,"  bred  the  said  mare  to  said  stal- 
lion, and  paid  the  said  defendant  the  sum  of  $100  for  the  privilege 
of  so  doing ;  that  the  said  defendant,  in  consideration  of  such  pay- 
ment, promised  the  said  Pursell  to  pay  the  owner  of  the  foal  of 
the  said  mare  the  sum  of  $750  if  such  foal  should  prove  to  be  the 
first  one  of  the  get  of  said  stallion  that  should  trot  a  mile  in  2 
minutes  and  30  seconds ;  that  the  plaintiff,  having  knowledge  of 
the  said  promise  made  to  said  Pursell,  did  purchase  the  foal 
of  the  said  mare  "  Eva  "  by  the  said  stallion,  and  while  the  said 
foal  was  owned  by  the  plaintiff  the  said  foal  trotted  a  mile  in  less 
than  2  minutes  and  30  seconds,  and  was  the  first  one  of  the  get  of 
said  stallion  to  make  the  said  time.  The  second  count  is  substan-  / 
tially  like  the  first  count,  except  that  it  avers  that  at  the  time  the 
service  money  was  paid  the  defendant  repeated  to  said  Pursell 
the  promise  and  undertaking  in  said  circular  set  forth.  A  sepa- 
rate demurrer  is  filed  to  each  count  of  the  declaration.  .  .  . 

A  further  reason  to  support  the  demurrer  is  that  the  promise 
as  alleged  was  made  to  Pui-sell,  and  that  there  is  no  privity  of  con- 
tract between  the  plaintiff  and  defendant.^  The  law  of  this  State 
is  that  an  action  may  be  maintained  on  a  promise  made  by  the  de- 
fendant to  a  third  person  for  the  benefit  of  the  plaintiff  without 
anx  consideration  moving  from  the  plaintiff  to  the  defendant. 
Joslin  V.  Car-Spring  Co.,  36  N.  J.  Law,  141.  The  fact  that  the 
person  to  whose  benefit  the  promise  may  inure  is  uncertain  at 
the  time  it  is  made,  and  that  it  cannot  be  known  until  the  hap- 
pening of  a  contingency,  cannot  deprive  the  person  who  after- 
wards establishes  his  claim  to  be  the  beneficiary  of  the  promise  of 
the  right  to  recover  upon  it.  In  the  familiar  case  of  a  promise  to 
give  a  reward  for  the  arrest  and  conviction  of  a  criminal,  the 
right  of  the  person  who  secures  such  conviction  to  recover  the 
reward  is  well  settled.     Sergeant  v.  Stryker,  16  K.  J.  Law,  465 ; 

Furman  v.  Parke,  21  N.  J.  Law,  310. 

Demurrer  overrtJed. 

1  Only  so  much  of  the  opinion  is  given  as  relates  to  this  point.  —  Ed. 


824  OPERATION  OF  CONTRACT. 

(P.  420)  Promise  for  benefit  of  third  party.  (p.  437) 

ECONOMY  BUILDING  &  LOAN  ASS'N  v.  WEST 
JERSEY   TITLE   &    GUARANTEE    CO. 

44  ATLANTIC  REP.   (N.  J.),  854.  — 1899. 

This  action  is  upon  contract.  Its  purpose  is  a  recovery  of 
damages  alleged  to  have  been  suffered  by  plaintiff  because  it  made 
a  loan  on  the  security  of  a  mortgage  on  real  estate  upon  the  faith 
of  a  certificate  of  defendant  that  it  was  free  from  prior  incum- 
brances, which  certificate  was  untrue,  there  being  in  fact  a  prior 
recorded  incumbrance,  the  foreclosure  of  which  caused  the  loss  of 
plaintiff's  loan.  Plaintiff  has  set  out  his  cause  of  action  in  two_ 
specialcgunts,  and  defendant  has  demurred  to  each.     Overruled. 

Magie,  C.  J.  It  is  not  claimed  that  there  has  been  imposed  by 
law  upon  defendant  a  duty  in  respect  to  the  transaction  with 
plaintiff  for  the  breach  of  which  an  action  would  lie  under  the 
authority  of  Appleby  v.  State,  45  N.  J.  Law,  161.  In  the  opinion 
of  Mr.  Justice  Depue  in  that  case  it  was  suggested  whether  the 
liability  of  a  county  clerk  for  untrue  statements  in  a  certificate  of 
search  of  title  would  arise  out  of  his  official  position,  or  rather  out 
of  his  employment  to  make  the  search,  in  which  case  his  liability 
would  extend  only  in  favor  of  the  person  employing  him,  and 
with  whom  he  was  in  privity  by  the  contract  of  employment. 
iThe  defendant  has  no  official  character,  but  from  the  statements 
/of  the  declaration  we  must  assume  that  it  has  corporate  capacity 
to  do  the  acts  which  it  is  charged  with  doing,  viz.  examining  the 
/title  of  real  estate,  and  certifying  to  incumbrances  thereon.  If 
I  possessed  of  such  capacity,  there  can  be  no  doubt  that,  upon  being 
'  employed  to  examine  and  certify,  it  undertook  a  duty  in  favor  of 
the  employer  for  the  breach  of  which  it  would  become  liable  to 
him. 

The  question  presented  by  the  demurrers  is  whether  these 
counts  sufficiently  disclose  a  duty  owed  by  defendant  to  plaintiff, 
and  a  breach  of  such  duty.  It  will  be  convenient  to  first  consider 
the  second  count.  Omitting  extraneous  and  unnecessary  matters, 
that  count  may  be  thus  paraphrased :  It  charges  that  one  Moore 
desired  to  procure  a  loan  of  $3000,  and  applied  to  plaintiff  there- 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  826 

for;  that  plaintiff  agreed  to  make  the  loan  on  condition  that  Moore 
should  secure  it  by  a  mortgage  on  certain  land,  which  mortgage 
should  be  certified  by  defendant  to  be  a  first  lien  on  said  lands ; 
that  Moore  applied  to  defendant,  and  made  known  to  it  his  agree- 
ment with  plaintiff ;  that  he  reqiiested  defendant  to  make  the  re- 
quired search  and  certificate,  which  it  agreed  to  do ;  that  it  agreed 
to  make  and  deliver  such  search  and  certificate  to  Moore,  to  be  by 
him  delivered  to  plaintiff,  and  used  for  the  purpose  of  obtaining 
said  loan ;  that  it  made  the  certificate,  a  copy  of  which  was  an- 
nexed to  and  made  part  of  the  declaration,  and  delivered  it  to 
Moore,  who  paid  defendant  therefor,  and  then  delivered  iti 
to  plaintiff,  who  thereupon  made^the  loan  on  the  faith  of  the  cer-| 
tificate.  The  certificate  avers  that  the  mortgaged  lands  were 
not  incumbered  by  any  previous  mortgage.  The  count  proceeds 
to  aver  that  the  certificate  was  carelessly  made,  and  was  un- 
true, because  the  lands  were  in  fact  subject  to  a  prior  recorded 
mortgage,  which  has  since  been  foreclosed,  to  the  injury  of  plain- 
tiff. 

(/      The  sole  contention  of  the  demurrant  is  that  the  count  discloses 

I  no  privity  between  it  and  plaintiff,  but  only  a  contract  between  it 

'^and  Moore.     But  this  is  too  narrow  a  view  of  the  transaction  set 

out  in  this  count.     Upon  its  averments  there  is  disclosed  either 

a  contract  between  plaintiff  and  defendant,  made  through  the 

I  agency  of  Moore,  by  which  defendant  was  employed  to  examine 
and  certify  the  title,  or  a  contract  of  like  employment  between 
Moore  and  defendant,  made  for  the  benefit  of  plaintiff,  upon 
which  a  right  of  action  by  plaintiff  would  arise.  JosUn  v.  Spring^ 
Co.,  36  N.  J.  Law,  141 ;  Whitehead  v.  Burgess,  61  N.  J.  Law,  75. 
It  is  unnecessary  to  determine  in  which  aspect  the  facts  averred 
place  the  plaintiff's  right  of  action.  Either  will  support  this 
count.  In  either  aspect  the  contract  disclosed  a  contract  which 
included  an  undertaking  to  use  care  in  discovering  and  certifying^ 
to  previous  recorded  incumbrances.  The  averment  that  defendant 
carelessly  omitted  to  certify  to  a  previous  incumbrance  appearing 
in  the  public  records  establishes  a  complete  right  of  action  on  the 
contract.    This  demurrer  must  be  overruled* 

The  question  whether  the  first  count  demurred  to  exhibits  a 
good  cause  of  action  in  favor  of  plaintiff  is  of  more  difficulty. 


826  OPERATION  OF  CONTRACT. 

The  court  is  equally  divided  in  its  views  upon  that  question. 
It  results  that  the  demurrer  to  that  count  must  also  be  over- 
ruled.^ 


{p.  420)  Promise  for  benefit  of  third  party.  (p.  437) 

ADAMS  V.  UNION  R.  CO. 

42  ATLANTIC  REP.   (R.  I.),  515. —1899. 

Action  by  Everett  W.  Adams  against  the  Union  Railroad 
•Company.     Judgment  for  plaintiff. 

Stiness,  J.  Pub.  Laws  189l7c.  975  (Act  May  29,  1891),  gave 
authority  to  towns  to  "  pass  ordinances  or  make  contracts  "  grant- 
ing franchises  to  corporations  for  operating  street  railways,  etc. 
October  15,  1892,  the  town  of  East  Providence  made  such  a  con- 
tract with  the  defendant,  in  which  it  was  agreed  that,  "  during 
the  continuance  of  said  exclusive  franchise,  the  fare  from  one 
point  to  any  other  point  on  the  lines  of  said  party  of  the  second 
part  in  said  town  shall  not  exceed  five  cents." 

In  the  agreed  statement  of  facts  it  appears  that  a  line  was 
constructed  which  ran  from  Rumford  to  Riverside,  which  Avas 
discontinued  before  this  alleged  cause  of  action  accrued,  but  that 
both  Riverside  and  Rumford  were  still  upon  its  lines  by  connect- 

1  In  Ward  v.  Savings  Bank,  100  U.  S.  195,  it  is  held  (three  justices  dis- 
senting) that  an  attorney  employed  by  A  to  examine  and  report  upon  A's 
title  to  certain  premises,  and  who  gives  a  certificate  that  A's  title  "  is  good  and 
tmiiicumbered,"  is  not  liable  to  B,  who  lends  money  on  the  strength  of  this 
certificate,  taking  the  premises  as  security,  and  afterwards  discovers  that  there 
was,  at  the  time  the  certificate  was  given,  a  prior  duly  recorded  conveyance 
of  the  premises  by  A.  This  case  is  followed  in  Day  v.  Beynolds,  28  Hun 
■(N.  Y.),  131 ;  Mechanics  Bldg.  Ass'n  v.  Whitacre,  92  Ind.  547  ;  Mallory  v. 
Ferguson,  50  Kans.  685  ;  Ziceigardt  v.  Birdseye,  57  Mo.  App.  462 ;  Tapley 
v.  Wright,  61  Ark.  275  ;  Contra,  Dickie  v.  Abstract  Co.,  89  Tenn.  4-31  ; 
Gate  City  Abstract  Co.  v.  Post,  55  Neb.  742.  If  it  is  shown  that  the 
abstractor  or  attorney  is  acting  for  the  plaintiff,  although  he  is  engaged  and 
paid  by  another  person,  a  duty  is  undertaken  toward  plaintiff  for  the  breach 
of  which  an  action  will  lie.  Laicall  v.  Groman,  180  Pa.  St.  532 ;  Brown  v. 
Sims,  22  Ind.  App.  317. 

In  Buckley  v.  Gray,  110  Cal.  339,  it  is  held  that  an  attorney  employed  by 
a  testator  is  not  liable  to  a  legatee  for  negligently  having  the  legatee  witness 
the  will,  thus  rendering  the  will  ineffective  as  to  him. 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  827 

ing  roads.  October  23,  1896,  the  plaintiff  boarded  the  Warren 
avenue  car,  paid  his  fare,  stating  to  the  conductor  that  he  wanted 
to  go  to  Eumford;  and,  at  the  nearest  point  of  connection,  he 
demanded  a  receipt  showing  that  he  had  paid  his  fare,  or  a  trans- 
fer to  Kumford,  which  the  conductor  refused  to  give.  He  then 
boarded  the  first  car  going  to  Rum  ford,  by  the  only  route  he 
<;ould  take,  stated  to  the  conductor  that  he  had  paid  his  fare  on 
the  other  car,  that  he  desired  to  go  to  llumford,  and  that  he  had 
asked  for  a  transfer  or  other  evidence  that  he  had  paid  his  fare, 
"which  had  been  refused.  The  conductor  insisted  upon  his  paying 
his  fare  on  that  line,  and,  upon  the  plaintiff's  refusal  to  pay,  the 
-conductor  ejected^hiin  from  the  car.  The  plaintiff  sues  in  trespass 
for  assault  and  battery.  The  defendant  pleads  in  justification, 
setting  up  a  charter  to  the  South  Main  Street  Horse  Railroad 
C!ompany,  to  which,  with  other  companies,  the  Union  Railroad 
Company  is  successor,  which  gave  to  the  formey  company  the  right 
to  extend  its  lines  into  East  Providence,  and  to  fix  rates  of  fare 
not  exceeding  ten  cents  for  each  passenger  between  any  two 
points  on  said  road ;  that  in  accordance  with  such  authority,  con- 
tinued to  the  defendant,  and  under  ordinances  of  East  Providence 
relating  thereto,  the  defendant  has  established  and  charges  a  law- 
ful fare  of  five  cents  for  one  continuous  ride  on  any  car  of  said 
Union  Railroad  Company  in  said  town  of  East  Providence ;  that, 
upon  the  plaintiff's  refusal  to  pay  such  fare,  he  Avas  ejected  from 
the  car  by  the  conductor,  using  no  more  force  than  was  necessary. 

We  think  the  contract  of  October  15, 1892,  recited  above,  super- 
sedes the  rights  under  the  charter  and  said  statutory  provisions 
pleaded.  The  statute  of  May  29,  1891,  gives  authority  to  make 
a  contract,  and  by  it  the  defendant  waives  its  previous  rights 
in  respect  to  fare,  for  the  consideration  of  extension  of  lines  and 
an  exclusive  right  to  maintain  them.  Under  this  view  of  the 
contract,  a  plea  in  justification,  so  far  as  it  rests  upon  rights 
previously  held,  is  of  no  avail. 

The  only  question  is  the  one  which  has  been  chiefly  pressed 
in  argument,  —  whether  the  plaintiff  can  avail  himself,  as  an 
individual,  of  the  right  to  claim  the  benefit  of  the  provisions 
of  that  contract  in  this  action.  The  plea  does  not  wholly  fall, 
because  it  still  has  the  averment  that  the  plaintiff  was  ejected  for 


828  OPERATION  OF  COXTRACT. 

refusal  to  pay  the  lawful  fare.  The  terms  of  the  contract  are 
plain,  —  that  "the  fare  from  one  point  to  any  other  point  on  the 
lines  of  said  party  of  the  second  part  shall  not  exceed  five  cents." 
We  cannot  vary  this  language  by  reason  of  the  fact  that,  when 
the  contract  was  made,  two  rides  for  five  cents  was  not  the  estab- 
lished rate  of  fare.  The  contract  makes  no  such  reservation,  and 
it  was  entered  into  with  a  view  of  new  or  extended  lines  within 
the  town.  If,  then,  it  is  of  general  application,  it  is  controlling 
in  this  case. 

The  plaintiff  cites  a  large  number  of  cases  to  the  effect  that 
a  promise  made  by  A  to  B,  for  the  benefit  of  C,  may  be  sued  on 
by  C.  Most  of  these  cases  relate  to  debt,  where  there  has  been 
a  substantial,  though  not  a  technical,  novation.  In  Wilbtcr  v. 
Wilbur  (17  R.  I.  295)  this  court  held  that  it  was  not  prepared 
to  extend  the  doctrine  to  cases  where  no  debt  was  assumed.  The 
case  was  an  action  of  assumpsit,  on  the  promise  to  another  to  pay 
a  note  without  consideration  and  void  in  law.  The  language  of 
the  opinion  must  be  taken  in  its  relation  to  the  question  before 
the  court,  which  was  whether  a  promise  to  pay  to  the  plaintiff 
a  sum  of  money,  as  for  a  debt,  could  be  enforced  by  him  when 
in  fact  no  debt  existed.  We  do  not  think  that  the  court  meant 
to  lay  down  the  rule  that  in  no  case,  excepting  debt,  can  a  person 
avail  himself  of  a  promise  to  another. 

The  contract  in  question  was  made  for  the  benefit  of  passengers 
using  the  defendant's  cars.  The  town  can  hardly  show  damages 
for  its  breach,  and  therefore,  if  the  people  for  whose  benefit  it 
was  made  cannot  recover  for  its  breach,  no  one  can.  True,  the 
town  might  take  steps  to  avoid  the  contract  and  stop  the  road  for 
failure  to  perform  conditions ;  but,  in  so  doing,  it  would  cut  off 
the  privileges  of  many  to  redress  the  wrong  of  one.  This  would 
neither  be  a  reasonable  nor  an  adequate  remedy.  It  must  have 
been  intended  to  be  a  contract  for  the  benefit  of  the  public,  made 
through  the  town  as  their  corporate  representative,  upon  which 
passengers  could  rely,  and  for  breach  of  which  they  could  seek 
redress ;  otherwise,  it  is  a  contract  of  little  obligation  and  force. 
Suppose  the  defendant  should  charge  ten  cents  for  one  ride,  and 
should  eject  a  passenger  for  refusing  to  pay  it ;  under  its  conten- 
tion, the  passenger  would  be  without  redress. 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  829 

*  In  Little  v.  Banks  (85  N.  Y.  258)  the  State  made  a  contract 
with  the  defendant  to  publish  reports  of  the  Court  of  Appeals, 
in  which  it  was  stipulated  that  he  should  furnish  copies  to  book- 
sellers, and,  upon  default,  to  pay  the  sum  of  $100  as  liquidated 
damages,  "to  be  sued  for  and  recovered  by  the  person  so  ag- 
grieved." It  was  held  that  the  plaintiff  was  entitled  to  recover. 
This  last  clause  quoted  introduces  an  element  not  in  this  case, 
but  it  is  not  an  important  one  in  the  view  of  the  New  York  court. 
The  court  held  that  the  contract  was  for  the  benefit  of  book- 
sellers, such  as  the  plaintiff,  and  that  he  had  a  right  under  it,  the 
clause  quoted  being  intended  to  carry  out  the  purpose  of  the 
contract  by  fixing  a  sum  of  liquidated  damages.  The  general 
principle  as  to  the  plaintiff's  right  is  laid  down  by  the  court  as 
follows :  "  Contractors  with  the  State,  who  assume,  for  a  considera- 
tion received  from  the  sovereign  power,  by  covenant,  express  or 
implied,  to  do  certain  things,  are  liable,  in  case  of  neglect  to  per- 
form such  covenant,  to  a  private  action  at  the  suit  of  the  party 
injured  by  such  neglect ;  and  such  contract  inures  to  the  benefit 
of  the  individual  who  is  interested  in  the  performance."  The 
principle  is  put  upon  the  ground  of  public  policy  essential  to  the 
public  welfare.  In  PoHer  v.  Railroad  Co.  (97  N.  C.  46),  the 
defendant  agreed  with  the  city  of  Charlotte  to  pay  a  part  of 
a  policeman's  salary,  to  be  on  duty  at  its  depot.  It  was  held  that 
he  could  sue  the  defendant  on  the  contract.  Benge  v.  Hiatt's  Adtn'r 
(82  Ky.  666)  gave  a  child  the  right  to  sue  on  a  contract  made  by 
his  putative  father  with  his  mother,  for  the  child's  benefit,  in 
consideration  of  the  surrender  of  the  child  to  the  father  by  the 
mother.  In  Coster  v.  Mayor,  etc.  (43  N.  Y.  399),  the  city  under- 
took improvements  under  a  statute  by  which  it  was  to  pay  for 
damages  to  property.  Judge  Folger,  in  the  opinion,  said :  "  Here 
is  the  promise,  the  consideration,  and  the  promisee,  definitely 
brought  out.  The  ultimate  beneficiary  is  uncertain."  The  court 
held  that  a  party  damaged  could  maintain  an  action  against  the 
city  for  such  damage  as  he  had  shown. 

The  distinction  to  be  made  in  cases  of  this  sort  is  well  stated 
by  Brown,  J.,  in  House  v.  Waterworks  Co.,  88  Tex.  233.  « It  is 
not  true  that  for  every  failure  to  perform  a  public  duty  an  action 
will  lie  in  favor  of  any  person  who  may  suffer  injury  by  reason 


830  OPERATION  OF  CONTRACT. 

of  such  failure.  If  the  duty  is  purely  a  public  duty,  then  the 
individual  will  have  no  right  of  action ;  but  it  must  appear  thai 
the  object  and  purpose  of  imposing  the  duty  was  to  confer  a 
benefit  upon  the  individuals  composing  the  public."  The  dis- 
tinction is  clearly  brought  out  in  Aldricli  v.  Howard,  7  R.  I.  199. 
In  that  case  a  statute  required  buildings  within  certain  limits  to 
be  built  in  the  manner  and  of  the  materials  described  in  the  act. 
The  plaintiff,  as  adjoining  proprietor,  alleged  a  violation  of  the 
act,  and  special  damage  to  his  estate.  On  demurrer,  upon  the 
ground  that  there  was  no  private  right  of  action,  the  court  held 
that  the  penalty  was  the  remedy  through  which  the  public  could 
compel  a  compliance  with  the  law,  but  that  the  private  right 
existed  also  for  one  suffering  special  injury.  Ames,  C.  J.,  in  the 
opinion,  said  that  the  case  was  within  the  rule  so  long  ago  laid 
down  by  Lord  Holt  that,  "  in  every  case  where  a  statute  enacts  or 
prohibits  a  thing  for  the  benefit  of  a  person,  he  shall  have  a 
remedy  upon  the  same  statute  for  the  thing  enacted  for  his 
advantage,  or  for  the  recompense  of  the  wrong  done  to  him  con- 
trary to  the  said  law."  In  Taylor  v.  Railroad  Co.  (45  Mich.  74) 
Cooley,  J.,  said :  "  The  burden  that  individuals  are  required  to 
have  for  the  public  protection  or  benefit  may  in  part  be  imposed 
for  the  protection  or  benefit  of  some  particular  individual  or  class 
of  individuals  also,  and  then  there  may  be  an  individual  right  of 
action  as  well  as  a  public  prosecution,  if  a  breach  of  the  duty 
causes  individual  injury." 

Most  of  the  cases  cited  by  the  respondent  arise  out  of  contracts 
for  the  supply  of  water  to  a  town  or  city,  under  a  general  public 
duty,  and  not  for  the  benefit  of  individuals  or  a  class  of  indi- 
viduals. They  hold  that  there  is  no  contract  in  favor  of  a 
private  plaintiff,  while  some  rest  upon  the  lack  of  authority  to 
impose  conditions. 

The  statute  of  May  29,  1891,  gives  authority  to  a  town  to  act 
by  ordinance  or  contract.  If  it  acts  by  contract,  as  in  this  case, 
the  necessary  implication  is  that  it  may  stipulate  for  terms 
other  than  those  expressed  in  the  act.  As  to  the  rate  of  fare, 
section  four  provides  that  the  charge  for  service  shall  not  be 
greater  than  the  price  actually  charged  by  the  corporation  at  the 
time  of  granting  the  franchise,  which  also  clearly  implies  that  it 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  881 

may  be  less ;  otherwise,  it  would  be  the  same  price.  We  do  not 
think,  therefore,  that  the  contract  was  ulti-a  vires,  as  claimed  by 
the  defendant.  The  plea  of  justification  ignores  the  contract,  but 
it;  is  made  a  part  of  the  statement  of  facts.  It  is  to  be  noted  that 
this  case  is  not  brought  upon  the  contract,  as  in  most  of  the  cases 
cited.  The  plaintiff  sues  for  tresj)ass.  The  defendant  pleads  a 
justification  upon  the  ground  that  the  plaintiff  was  ejected  for 
refusing  to  pay  a  "  lawful  fare."  The  evidence  of  the  contract 
shows  what  we  construe  to  be  a  waiver  of  any  right  on  the  part 
of  the  defendant,  if  any  such  existed,  to  charge  for  fares  under 
the  charters  set  out  in  the  plea ;  and  hence  that  the  provision, 
"  The  fare  from  one  point  to  any  other  point  on  the  lines  of  said 
party  of  the  second  part  in  said  town  shall  not  exceed  five  cents," 
fixes  such  fare  as  the  maximum  lawful  fare  between  the  points  in 
question  in  this  case.  The  plaintiff,  having  paid  this  fare,  has 
paid  all  that  he  could  be  required  to  pay  under  the  contract, 
which,  being  for  the  benefit  of  passengers,  a  class  of  which  he 
was  one,  was  for  his  benefit,  and  of  which  he  could  take  advan- 
tage, under  the  principles  stated  above.  ^Ve^think,  therefore, 
that  the  plea  of  jnstifioation_is  jiot__sustained. 
^  Another  point  taken  by  the  defendant  is  that,  because  the 
plaintiff  boarded  the  cars  for  the  purpose  of  making  a  test  case, 
this  is  a  moot  case,  which  the  court  will  not  entertain.  A  moot 
case  is  one  which  seeks  to  determine  an  abstract  question,  which 
does  not  rest  upon  existing  facts  or  rights.  Where  a  concrete 
case  of  fact  or  right  is  shown,  we  know  of  no  principle  or  policy 
of  law  which  will  deprive  a  party  of  a  determination,  simply 
because  his  motive  in  the  assertion  of  such  right  is  to  secure  such 
determination.  It  is  a  matter  of  common  practice.  Most  of  the 
cases  of  trespass  to  try  title  are  of  this  sort.  We  are  therefore 
of  opinion  that  the  case  is  not  objectionable  on  this  ground. 

We  think  that  the  plaintiff  is  entitled  to  judgment,  which, 
according  to  agreement  of  parties,  will  be  for  nominal  damages. 
Judgment  for  the  plaintiff  for  ten  cents  and  costs. 


832  OPERATION  OP  CONTRACT. 


(P.  420)  Promise  for  benefit  of  third  party.  (p.  437) 

BOSTON    SAFE-DEPOSIT    AND    TRUST   CO.   v.    SALEM 
WATEK    CO.     (Sharp,  Intervener.) 

94  FEDERAL  REPORTER,  238.  — 1899. 
\^Circuit  Court,  N.  D.  Ohio.'\ 

Ricks,  District  Judge.  In  December,  1892,  at  the  suit  of  the 
Boston  Safe-Deposit  &  Trust  Company,  trustee  of  the  mortgage 
securing  bonds  of  the  Salem  Water  Company,  a  receiver  was  ap- 
pointed for  the  water  company.  Thereafter  Alonzo  Sharp,  as 
adminstrator  of  one  Thomas  Sharp,  filed  an  intervening  petition 
in  this  action  against  said  receiver,  alleging,  among  other  things, 
that  the  Salem  Water  Company  and  its  receiver  derived  their 
right  to  maintain  and  operate  the  water  plant  in  the  city  of 
Salem  from  a  certain  contract,  entered  into  on  the  19th  day  of 
March,  1887,  between  the  village  of  Salem  and  certain  assignors 
of  said  water  company,  by  the  terms  of  which  contract  said  water 
company  was  authorized  to  establish,  maintain,  and  operate 
waterworks  in  said  village,  and  was  obligated  to  furnish  "  an  abun- 
dant supply  of  water  for  fire,  domestic,  manufacturing,  street, 
sewerage,  and  other  proper  purposes  for  a  period  of  twenty  years," 
and  to  "  construct  and  maintain  a  standpipe  as  part  of  said  system 
of  waterworks,  and  to  supply  or  attach  to  the  same  an  electrical, 
pneumatic,  or  hydraulic  valve,  and  to  so  connect  the  said  valve 
with  the  said  pump  station  of  said  works  or  system  that  said 
valve  could  be  closed  at  any  moment  and  the  entire  force  of  the 
pumps  be  confined  to  the  mains,  and  to  so  construct  and  maintain 
said  waterworks  that  the  said  Salem  Water  Company  would 
be  able  to  furnish  a  plentiful  supply  of  water  to  said  Salem  and 
its  inliabitants  for  personal,  domestic,  and  manufacturing  pur- 
poses, and  al§o  for  the  extinguishing  of  fires  and  conflagrations, 
and  other  proper  purposes,"  and  also  to  construct  and  maintain 
the  same  so  as  to  be  sufficient  at  all  times  to  provide  a  certain 
pressure  of  water  throughout  the  system.  The  intervener  further 
states  in  his  petition  that  on  the  22d  day  of  April,  1894,  certain 
buildings,  machinery,  tools,  etc.,  of  which  his  decedent,  Thomas 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  833 

Sharp,  was  the  owner,  were  destroyed  by  fire,  the  said  fire  not 
being  caused  by  any  negligence  on  the  part  of  his  decedent,  but 
that  the  damage  caused  by  said  fire  would  not  have  exceeded  $300 
had  the  receiver  complied  with  the  terms  of  said  contract  with 
the  village  of  Salem,  in  which  he  was  operating  the  waterworks, 
and  that  the  receiver  had  failed  in  many  respects  to  comply  with 
his  said  contract,  and  by  reason  of  his  failure  the  intervener  had 
been  damaged  in  the  sum  of  $30,000.  To  this  intervening  peti- 
tion the  receiver  filed  a  demurrer  and  exceptions,  upon  which  the 
case  was  heard. 

Counsel  for  the  receiver  maintained  that  there  was  no  privity 
of  contract  between  the  intervener's  decedent  and  either  the 
Salem  Water  Company  or  its  receiver,  and  that,  in  the  absence  of 
a  duty  resting  either  upon  the  common  law  or  upon  a  contract, 
the  Salem  Water  Company  or  its  receiver  owed  no  obligation  to 
the  intervener's  decedent  to  comply  with  its  contract  with  the 
village  of  Salem.  That  this  action  is  not  founded  upon  any  com- 
mon-law duty,  and  does  not,  therefore,  sound  in  tort,  is  quite 
evident ;  that  it  is  not  based  upon  a  contractual  relation  between 
the  parties  has  been,  with  one  exception,  uniformly  held  in  every 
jurisdiction  within  the  United  States  where  the  question  has 
arisen.  Davis  v.  Waterivorks  Co.,  54  Iowa,  59, 6  K.  W.  126 ;  Becker 
V.  Watencorks,  79  Iowa,  419, 44  N.  W.  694 ;  Britton  v.  Waterworks 
Co.,  81  Wis.  48,  51  N.  W.  84 ;  Hayes  v.  City  of  Oshkosh,  33  Wis. 
314 ;  Nickerson  v.  Hydraulic  Co.,  46  Conn.  24 ;  Eaton  v.  Water- 
works Co.,  37  Neb.  546,  56  N.  W.  201 ;  Beck  v.  Water  Co.  (Pa.  Sup.), 
11  Atl.  300 ;  Stone  v.  Water  Co.,  4  Pa.  Dist.  R.  431 ;  Phoenix  Ins. 
Co.  V.  Trenton  Water  Co.,  42  Mo.  App.  118 ;  Howsmon  v.  Water 
Co.,  119  Mo.  304,  24  S.  W.  784;  Fitch  v.  Water  Co.  (Ind.  Sup.), 
37  N.  E.  982 ;  Foster  v.  Water  Co.,  3  Lea,  42 ;  Ferris  v.  Water  Co., 
16  Nev.  44;  Fowler  v.  Watenvorks  Co.,  83  Ga.  219,  9  S.  E.  673; 
Mott  V.  Manufacturing  Co.,  AS  Kan.  12, 28  Pac.  989;  Bush  v.  Water 
Co.  (Idaho),  43  Pac.  69 ;  Waitiwright  v.  Water  Co.,  78  Hun,  146, 
28  N.  Y.  Supp.  987 ;  House  v.  Waterworks  Co.  (Tex.  Sup.),  31 
S.  W.  179 ;    Waterworks  Co.  v.  Brownless,  10  Ohio  Cir.  Ct.  R.  620. 

The  general  doctrine  held  by  the  foregoing  cases  is  that,  where 
a  city  contracts  with  a  water  company  to  furnish  a  supply  of 
water  for  use  in  extinguishing  fires,  such  supply  to  be  paid  for  by 


834  OPERATION  OF  CONTRACT. 

I  a  levy  of  taxes  upon  the  taxpayers  of  the  city,  there  is  no  such 

privity  of  contract  between  a  citizen  or  resident  of  such  city  and 

'the  water  company  as  will  authorize  such  resident  or  citizen  to 

j  maintain  an  action  against  said  water  company  for  the  injury  or 

destruction  of  his  property  by  fire  caused  by  the  failure  of  the 

water  company  to  fulfill  its  contract ;  and  this  is  held  even  where 

I  the  ordinance  granting  the  water  company  its  franchise  provides 

',  that  the  water  company  shall  pay  all  damages  that  may  accrue  to 

( any  citizen  of  the  city  by  reason  of  a  failure  on  the  part  of  such 

water  company  to  supply  a  sufficient  amount  of  water  to  put  out 

fires.     See  Mott  v.  Manufacturing  Co.,  and  other  cases  cited  supra. 

The  only  case  in  all  the  books  where  the  water  company  has 

been  held  liable  for  failure  to  furnish  suflicient  water  for  the 

extinguishment  of  fires  is   the  case  of  Paducah  Lumber  Co.  v. 

Paducah  WcUer-supply  Co.,^  89  Ky.  340, 12  S.  W.  554,  and  13  S.  W. 

249,  in  which  case  it  was  unnecessary  for  the  court  to  have  held 

this  doctrine,  as  there  was  a  private  contract  between  the  water 

company  and  the  consumer  for  the  furnishing  of  fire  pressure. 

This  Kentucky  case  has  been  repeatedly  criticised  by  the  courts 

of  the  various  States  in  which  this  question  has  been  decided. 

See  Mott  v.  Manufacturing  Co.,  Britton  v.  Waterworks  Co.,  Fitch  v. 

Water   Co.,  Howsmon  v.    Water  Co.,  House   v.   Waterworks   Co.y 

Waterworks  Co.  v.  Brownless,  and  Eaton  v.  Waterworks  Co.,  cited 

supra. 

The  following  cases  are  cited  to  show  the  general  grounds  upon 
which  privity  of  contract  may  be  asserted  by  a  person  not  a  party 
thereto :  Simson  v.  Brown,  68  iST.  Y.  355 ;  Burton  v.  Larkin,  36 
Kan.  249, 13  Pac.  398;  Wright  v.  Terry,  23  Fla.  169,  2  South.  6j 
House  V.  Waterworks  Co.  (Tex.  Sup.),  31  S.  W.  180 ;  Anderson  v. 
Fitzgerald,  21  Fed.  294 ;  Second  Nat.  Bank  of  St.  Louis  v.  Grand 
Lodge  of  Missouri  A.  F.  &  A.  M.,  98  U.  S.  123;  Vrooman  v. 
Turner,  69  N.  Y.  280;  Bank  v.  Rice,  107  Mass.  37;  Safe  Co.  v. 
Ward,  46  N.  J.  Law,  19. 

That  a  city  owning  its  own  waterworks  cannot  be  held  liable 
for  failure  to  furnish  sufficient  water  supply  to  extinguish  fires 


1  See  also  Gorrell  v.  Greensboro  Water  Supply  Co.,  124  N.  Car.  328,  post, 
p.  836. 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  835 

is  undisputed.  2  Dill  Mun.  Corp.  §  975 ;  Wheeler  v.  Cincinnati, 
19  Ohio  St.  19 ;  Fowler  v.  Watencorks  Co.,  83  Ga.  222,  9  S.  E. 
673 ;  Wainwright  v.  Water  Co.,  78  Hun,  146,  28  N.  Y.  Supp.  987 ; 
Tainter  v.  City  of  Worcester,  123  Mass.  311 ;  Vanhorn  v.  City  of 
Des  Moines,  63  Iowa,  447,  19  N.  W.  293;  Hayes  v.  City  of  Oshkosh, 
33  Wis.  314 ;  Stone  v.  Water  Co.,  4  Pa.  Dist.  R.  431 ;  House  v. 
Waterworks  Co.  (Tex.  Sup.),  31  S.  W.  179,  185.  If  the  city  itself 
cannot  be  held  liable  for  damage  resulting  from  failure  to  furnish 
a  fire  pressure  to  its  citizens,  and  if  there  is  no  privity  of  contract 
between  the  water  company  operating  under  a  franchise  from  the 
city  and  the  citizens  or  residents  of  such  city,  it  is  clear,  upon 
principle  as  well  as  authority,  that  no  legal  obligation  exists  on 
the  part  of  such  water  company  and  in  favor  of  the  individual 
citizen  to  maintain  a  sufficient  pressure  at  the  city  water  mains 
to  extinguish  fires  which  may  occur  upon  the  premises  of  such 
individual  citizen. 

On  the  24th  day  of  December,  1892,  Calvin  A.  Judson  was 
appointed  receiver  of  the  Salem  Water  Company.  He  after- 
wards resigned,  and  Herman  A.  Kelley  was  appointed  his  suc- 
cessor on  the  19th  of  January,  1897.  On  March  19,  1887,  a 
certain  contract  was  entered  into,  by  and  between  the  common: 
council  of  the  village  of  Salem  and  Messrs.  Turner,  Clark  & 
Eawson,  of  Boston,  whereby  the  latter  agreed  to  build  and  con- 
struct waterworks  and  standpipes,  having  improved  engines  and 
pumping  facilities,  and  to  furnish  the  city  of  Salem  with  water 
privileges  of  the  character  described  in  the  petition.  Afterwards, 
on  the  22d  day  of  April,  1894,  the  buildings,  machinery,  tools, 
patterns,  and  all  property  of  every  description  on  the  premises 
described  in  the  intervening  petition,  and  owned  by  Thomas 
Sharp,  were  destroyed  by  fire.  The  intervener  declares  and 
alleges  that  the  fire  could  have  been  extinguished  if  proper 
niachinei-y  had  been  furnished  by  the  company,  and  if  the  obli- 
gations on  their  part  in  the  contract  between  themselves  and 
the  city  had  been  faithfully  observed.  There  was  no  contract 
between  the  intervening  petitioner  and  the  company,  or  the  city, 
that  in  case  of  fire  he  should  be  reimbursed  for  any  loss  he  might 
sustain.  If  there  were  such  a  contract  that  could  be  enforced,  ■ 
there  would  be  some  foundation  for  the  petitioner's  claim  in  this 


836  OPERATION  OF  CONTRACT. 

case ;  but  I  think,  under  tlie  facts  stated,  there  is  no  privity  of 
■  contract,  and  the  demurrer  filed  by  the  receiver  must,  therefore, 
!  be  sustained,  and  the  intervening  petition  dismissed.     This  case 

'jhas  been  very  fully  briefed  by  the  receiver,  and,  while  it  is  not 

Necessary  to  review  the  authorities,  they  seem  overwhelming  upon 

the  propositions  above  stated. 


(P.  420)  Promise  for  benefit  of  third  party.  (p.  437) 

GORRELL  V.   GEEE:>^SB0R0  WATER   SUPPLY  CO. 

124  NORTH   CAROLINA,  328. —1899. 

Action  by  Gorrell  against  the  Greensboro  Water  Supply  Com- 
pany to  recover  damages  for  a  building  alleged  to  have  been 
burned  in  consequence  of  the  breach  of  the  defendant's  contract 
with  the  city  of  Greensboro  to  supply  an  adequate  quantity  of 
water  for  fire  purposes. 

Clark,  J.  (After  setting  out  the  complaint.)  The  demurrer, 
so  far  as  it  relates  to  the  merits  of  the  case,  is,  substantially, 
that  the  complaint  has  stated  no  caiise  of  action  (1)  because 
the  plaintiff,  though  a  citizen  and  taxpayer  of  Greensboro  (as 
alleged  in  the  complaint),  is  neither  a  party  nor  privy  to  the 
•contract,  the  breach  of  which  is  the  foundation  of  the  action ; 
(2)  the  failure  of  the  defendant  to  furnish  water  was  not  the 
proximate  cause  of  the  plaintiff's  loss. 

It  is  true,  the  plaintiff  is  neither  a  party  nor  privy  to  the 
contract,  but  it  is  impossible  to  read  the  same  without  seeing 
that,  in  warp  and  woof,  in  thread  and  filling,  the  object  is  the 
comfort,  ease,  and  security  from  fire  of  the  people,  the  citizens 
of  Greensboro.  This  is  alleged  by  the  eleventh  paragraph  of 
the  complaint,  and  is  admitted  by  the  demurrer.  The  benefit 
to  the  nominal  contracting  party,  the  city  of  Greensboro,  as  a 
corporation,  is  small  in  comparison,  and,  taken  alone,  would 
never  have  justified  the  grants,  concessions,  privileges,  benefits, 
and  payments  made  to  the  water  company.  Upon  the  face  of 
the  contract,  the  principal  beneficiaries  of  the  contract  in  con- 
templation of  both  parties  thereto  were  the  water  company  on 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  837 

the  one  hand  and  the  individual  citizens  of  Greensboro  on  the 
other.  The  citizens  were  to  pay  the  taxes  to  fulfill  the  money 
consideration  named,  and  furnishing  the  individual  citizens  with 
adequate  supply  of  water,  and  the  protection  of  their  property 
from  fire,  was  the  largest  duty  assumed  by  the  company. 

One  not  a  party  or  privy  to  a  contract,  but  who  is  a  beneficiary 
thereof,  is  entitled  to  maintain  an  action  for  its  breach.  This  has 
been  sustained  by  many  decisions  elsewhere.  Tillis  v.  Harrison, 
104  Mo.  270 ;  Lawrence  v.  Fox,  20  N.  Y.  268 ;  Sivison  v.  Brown, 
68  N.  Y.  355 ;  Vrooman  v.  Turner,  69  N.  Y.  280 ;  Wright  v.  Terry, 
23  Fla.  160 ;  Austin  v.  Seligman,  18  Fed.  519  ;  Burton  v.  Larkin, 
36  Kan.  246.  And  even  when  the  beneficiary  is  only  one  of  a 
class  of  persons,  if  the  class  is  sufficiently  designated.  Johannes 
V.  Insurance  Co.,  66  Wis.  50.  It  was  considered,  though  without 
decision,  by  this  court,  in  Haim  v.  Btirrell,  119  N.  C.  544,  548 ; 
and  Sams  v.  Price,  119  N.  C.  572.  Especially  is  this  so  when 
the  beneficiaries  are  the  citizens  of  a  municipality  whose  votes 
authorized  the  contract,  and  whose  taxes  discharge  the  finan- 
cial burdens  the  contract  entails.  The  officials  who  execute 
the  contract  are  technically  the  agents  of  the  corporation,  but 
the  corporation  itself  is  the  agent  of  the  people,  who  are  thus 
effectively  the  principals  in  the  contract.  The  acceptance  of  the 
contract  by  the  water  company  carries  with  it  the  duty  of  sup- 
plying all  persons  along  its  mains.  Griffin  v.  Water  Co.,  122 
N.  C.  206 ;  Hangen  v.  Water  Co.  (Or.),  28  Pac.  244. 

In  Paducah  Lumber  Co.  v.  Paducah  Water  Supply  Co.  (1889), 
89  Ky.  340,  it  is  held :  "  If  a  water  company  enter  into  a  contract 
with  a  municipal  corporation  whereby  the  former  agrees,  in  con- 
sideration of  the  grant  of  a  franchise  and  a  promise  to  pay  certain 
specified  prices  for  the  use  of  hydrants,  to  construct  waterworks 
of  a  specified  character,  force,  and  capacity,  and  to  keep  a  supply 
of  water  required  for  domestic,  manufacturing,  and  fire  protection 
purposes  for  all  the  inhabitants  and  property  of  the  city,  a  tax- 
payer of  the  city  may  recover  of  the  water  company  when,  through 
a  breach  of  its  contract,  he  is  left  without  means  of  extinguishing 
fire,  and  his  property  is,  on  that  account,  destroyed;"  and  it  is 
therein  further  held:  "Where  a  party  undertakes  to  furnish  water 
in  such  mode  and  quantity  that  it  may  be  used  to  extinguish  fires 


838  OPERATION  OF  CONTRACT. 

in  the  city  in  which  it  is  to  be  supplied,  damages  sustained  by 
the  destruction  of  buildings  by  the  failure  to  so  furnish  such 
water  is  a  natural  and  proximate  consequence  of  such  breach  of 
the  undertaking."  This  opinion  is  based  upon  sound  reason,  and 
is  adopted  by  us.  It  is  conclusive  of  both  points  raised  as  to  the 
merits  of  the  controversy  by  the  demurrer.  Indeed,  it  could 
not  be  doubted  that,  if  the  city  buildings  were  destroyed  by  fire 
through  failure  of  the  defendant  to  furnish  water  for  their  pro- 
tection, as  provided  by  the  contract,  the  city  could  recover.  New 
Orleans  &  N.  E.  R.  Co.  v.  Meridian  Watenvorks  Co.,  72  Fed.  227. 
Besides,  the  complaint,  in  paragraphs  13  and  14,  alleges  that 
the  defendant's  failure  to  furnish  water  as  per  contract  was  the 
direct  and  sole  cause  of  the  loss,  and  this  is  admitted  by  the 
demurrer. 

Thus,  the  question  really  narrows  down  to  the  question 
whether  the  beneficiaries  of  a  contract,  who  furnish  the  con- 
sideration money  of  the  contract,  can  maintain  an  action  for 
damages  caused  by  its  breach.  The  case  of  Paducdh  Lumber 
Co.  V.  Paducah  Water  Siq^ply  Co.  is  exactly  in  point,  was  re- 
affirmed on  a  rehearing,  and  is  followed  by  Duncan  v.  Water  Co., 
in  the  same  volume,  making  three  decisions  altogether.  The 
decisions,  however  (twelve  in  number),  in  other  States  where  the 
question  has  been  presented,  are  the  other  way.  But  this  is  a 
case  of  the  first  impression  in  this  State,  and  decisions  in  other 
States  have  only  persuasive  authority.  They  have  only  the  con- 
sideration to  which  the  reasoning  therein  is  entitled.  They  are 
to  be  weighed,  not  counted.  We  should  adopt  that  line  which 
is  most  consonant  with  justice  and  the  "reason  of  the  thing." 

Did  the  people  of  Greensboro  have  just  cause  to  believe  that 
by  virtue  of  that  contract  they,  as  well  as  the  corporation,  were 
guaranteed  a  sufficient  quantity  of  water  to  protect  their  property 
from  fire ;  and  did  the  water  company  understand  it  was  agree- 
ing, for  the  valuable  considerations  named,  to  furnish  a  sufficient 
quantity  of  water  to  protect  private  as  well  as  public  property 
from  fire  ?  The  intent  is  to  be  dra^vn  from  the  instrument  itself, 
and  on  its  face  there  can  be  no  doubt  it  was  contracted  that  the 
water  supply  should  be  sufficient  to  protect  private  as  well  as 
public  property.     If  so,  it  follows  that  when,  by  breach  of  that 


LIMITS  OF  CONTRACTUAL  OBLIGATION.  889 

contract,  private  property  is  destroyed,  the  owner  thereof,  one 
of  the  beneficiaries  contemplated  by  the  contract,  is  the  party 
in  interest,  and  he,  and  he  alone,  can  maintain  an  action  for  his 
loss. 

As  is  said  by  Judge  Freeman,  the  learned  annotator  of  the 
American  State  Keports,  in  commenting  on  the  fact  {Britton  v. 
Waterworks  Co.  [Wis.],  29  Am.  St.  Rep.,  at  page  863),  that  the 
majority  of  decisions  so  far  rendered  were  adverse  to  the  posi- 
tion taken  in  the  Kentucky  case  above  cited,  and  approved  by 
us :  "  As  none  of  the  courts  have  fairly  faced  what  seems  to  be 
the  logical  result  of  these  decisions,  viz.,  that  the  injured  person 
is  left  without  any  remedy  at  all,  it  must  be  admitted  that  the 
subject  is  left  in  an  extremely  unsatisfactory  position.  It  seems 
to  be  universally  agreed,  and  on  the  soundest  reasoning,  that  the 
city  itself  is  not  liable  for  failing  to  protect  the  property  of  tax- 
payers from  fire,  unless  made  liable  by  express  statutory  provi- 
sions. Wright  V.  Augusta,  78  Ga.  241.  And  it  seems  equally 
clear  that  the  city  would  have  no  right  of  action  in  such  case 
in  behalf  of  the  taxpayer,  for  the  basis  of  all  the  [adverse] 
decisions  is  that  there  is  no  privity  of  contract  between  the 
taxpayers  and  the  water  companies.  If  the  contract  is  not  made 
for  the  benefit  of  the  taxpayers  in  such  a  sense  that  they  can  sue 
upon  it,  it  can  hardly  be  maintained  that  the  same  contract  is 
made  for  one  of  those  taxpayers  in  such  a  sense  that  the  city 
can  recover  damages  in  his  name.  ...  If,  then,  neither  the  tax- 
payer himself  nor  the  city  on  his  behalf  can  sue  the  company, 
the  conclusion  seems  to  be  that  the  loss  by  fire  in  these  cases  is 
regarded  by  the  law  as  damage  for  which  there  is  no  redress." 
This  is  a  complete  reductio  ad  absnrdum,  and  we  prefer  not  to 
concur  in  cases,  however  numerous,  —  there  are  probably  a  dozen 
scattered  through  half  a  dozen  States,  —  which  led  to  such  con- 
clusion. All  these  cases  (when  not  based  on  reference  to  the 
others)  rest  upon  the  narrow  technical  basis  that  a  citizen, 
because  not  a  privy  to  the  contract,  cannot  sue,  whereas  author- 
ities are  numerous  that  a  beneficiary  of  a  contract,  though  not 
a  party  or  privy,  may  maintain  an  action  for  its  breach.  7  Am. 
&  Eng.  Enc.  Law  (2d  ed.),  105-108.  Here  the  water  company 
contracted  with  the  city  to  furnish  certain  quantities  of  water 


840  DISCHARGE  OF  CONTRACT. 

for  the  protection  of  the  property  of  the  citizens  as  well  as  of  the 
city,  and  received  full  consideration,  a  large  part  of  which  comes 
in  the  shape  of  taxation,  paid  annually  by  those  citi2^ns.  On 
a  breach  of  the  contract,  whereby  the  property  of  a  citizen  is 
destroyed,  he,  as  a  beneficiary  of  the  contract,  is  enti€led  to  sue ; 
and  under  our  Code  requiring  the  party  in  interest  to  be  plaintiff 
he  is  the  only  one  who  can. 

Whether  there  was  a  breach  of  the  contract,  and  whether  it 
was  the  proximate  cause  of  the  loss,  regarded  as  matters  of  fact,, 
will  be  determined  by  tha/jury,  if,  when  t]ie  case  goes  back,  the 
defendant  shall  file  an  answer,  as  it  has  a  right  to  do  (Code,  §  272), 
raising  those  issues.  But  in  overruling  the  demurrer  to  the 
complaint  there  was  no  error.  As  was  said  by  the  Supreme 
Court  of  Kentucky,  when  afiirming,  on  a  petition  to  rehear,  the 
decision  in  the  Paducah  Case,  supra:  "The  water  company 
did  not  covenant  to  prevent  occurrence  of  fires,  nor  that  the 
quantity  of  water  agreed  to  be  furnished  would  be  a  certain  and 
effectual  protection  against  every  fire,  and  consequently  does  not 
in  any  sense  occupy  the  attitude  of  an  insurer ;  but  it  did  under- 
take to  perform  the  plain  and  simple  duty  of  keeping  water  up 
to  a  designated  height  in  the  standpipe,  and,  if  it  failed  or 
refused  to  comply  with  that  undertaking,  and  such  breach  was 
the  proximate  cause  of  destruction  of  the  plaintiff's  property, 
which  involves  issues  of  fact  for  determination  by  a  jury,  there 
exists  no  reason  for  its  escape  from  answering  in  damages  that 
would  not  equally  avail  in  case  of  any  other  breach  of  con- 
tract." 

Afl^med. 

Eaikcloth,  C.  J.,  and  Fubches,  J.,  dissent. 


(P.  522)  Waiver. 


^ 


KELLETT  v.   EOBIE. 
99  WISCONSIN,  303.— 1898. 


WiNSLOW,  J.  This  is  an  action  for  breach  of  promise  of  mar- 
riage, and  the  plaintiff  has  obtained  a  judgment  for  damages  fixed 
at  $3500.     The  contract  of  marriage  was  admitted,  but  the  de- 


BY  AGREEMENT.  841 

fendaat  claimed  that  there  was  a  subsequent  mutual  release. 
This  was  denied  by  the  plaintiff,  and  upon  this  issue  the  case 
was  tried. 

The  evidence  showed  that  the  parties  became  engaged  on 
August  30,  1890,  the  plaintiff  then  being  twenty  years  of  age; 
and  it  was  agreed  that  the  marriage  should  not  take  place  for 
three  years.  The  parties  were  farmers'  children,  and  lived  with 
their  parents  in  adjoining  towns  in  Winnebago  County,  about  a 
mile  and  a  half  from  each  other.  After  the  engagement,  the 
defendant  frequently  called  upon  the  plaintiff  until  December  17, 
1893,  at  which  time  the  defendant  claims  that  the  plaintiff  sug- 
gested to  him  that,  as  long  as  his  (defendant's)  people  were  op- 
posed to  the  match,  they  should  separate,  and  call  the  engagement 
off,  and  that  he  assented  to  this  proposition.  The  defendant  never 
called  on  the  plaintiff  after  this  time,  although  they  had  some  cor- 
respondence, which  is  in  the  record.  Soon  after  this  alleged  con- 
versation, the  defendant  commenced  to  call  upon  another  young 
lady  in  the  neighborhood,  and  continued  to  pay  attention  to  her 
without  objection  on  the  part  of  the  plaintiff,  until  he  was  mar- 
ried to  her  in  December,  1895.  The  plaintiff  denied  positively 
that  she  released  the  defendant  from  the  engagement.  In  the 
course  of  her  examination  as  a  party  under  section  4096,  Rev.  St. 
1878,  she  admitted  that  they  had  a  conversation  in  December,  1893, 
in  which  she  says,  "  I  told  him  if  he  did  not  want  to  marry  me,  of 
course  he  could  suit  himself;  but  he  said  he  was  marrying  me, 
not  his  people,  and  he  came  to  see  me  just  the  same."  The  evi- 
dence showed  that  the  defendant  was  worth  about  $6000,  com- 
posed of  his  interest  in  the  estates  of  his  father  and  grandfather, 
both  of  which  were  still  unsettled. 

Several  exceptions  to  rulings  upon  evidence  and  to  the  charge 
of  the  court  were  argued  by  the  appellant,  but,  as  we  do  not  think 
we  should  be  compelled  to  reverse  the  judgment  on  account  of 
them  alone,  we  shall  not  discuss  them,  but  proceed  to  the  main 
question,  namely,  whether  the  verdict  is  contrary  to  the  evidence. 

Upon  this  question,  after  careful  consideration  of  all  the  evi- 
dence, and  especially  of  the  letters  written  by  the  plaintiff  after 
the  alleged  release,  we  can  come  to  no  conclusion  except  that  the 
verdict  is   clearly  against  the  preponderance  of  the  evidence. 


842  DISCHARGE  OF  CONTRACT. 

These  letters  demonstrated  to  a  certainty  that  something  of  a 
serious  nature  had  interrupted  the  relations  of  the  parties  about 
the  time  that  the  defendant  alleges  the  release  took  place.  No 
explanation  as  to  what  this  serious  event  was  is  offered  except 
the  defendant's  explanation  of  a  release.  We  shall  not  give  the 
letters  in  full,  but  content  ourselves  with  some  extracts,  which 
seem  to  conclusively  establish  that  the  former  relationship  was 
broken  off,  and  that  marriage  was  no  longer  contemplated. 

In  a  letter  of  January  21,  1894,  she  says :  "  Fred :  If  you 
desire  a  change,  why  take  it,  and  end  the  matter  right  here.  As 
I  said  previously,  I  cannot  count  second.  I  am  glad  of  one  thing: 
if  we  do  separate  forever,  you  can  always  think  that  I  performed 
my  duty  by  you  from  the  very  first  to  the  last."  On  March  1, 
1894,  she  wrote  :  "  Fred  :  You  may  think  it  queer  on  my  part  in 
asking  you  to  come  and  see  me,  after  what  has  happened.  I  would 
never  do  so  if  it  were  not  absolutely  necessary,  Fred;  that  you 
know.  I  know  it  will  cause  hard  feelings,  but  I  cannot  help  it. 
You  must  know,  and  the  sooner  the  better.  So  let  me  see  you  as 
soon  as  possible.  If  I  have  done  wrong  in  writing,  please  forgive 
me,  Fred ;  it  is  for  your  and  my  welfare."  On  March  8,  1894, 
she  wrote  again:  "I  just  want  you  to  come  just  once,  and  risk 
everything  to  oblige  me.  Your  trouble  is  as  nothing  compared  to 
mine.  I  knew  you  were  in  town  Monday.  I  seen  your  horse, 
and  some  way  I  felt  you  were  there.  I  don't  feel  hard  toward 
you  one  bit,  Fred.  You  will  find  me  just  the  same.  I  am  not 
fickle ;  once  is  forever  with  me ;  so  don't  feel  bad  about  nothing. 
You  shall  never  suffer  through  me  again.  I  hope  the  day  may 
come  when  you  forget  that  you  ever  knew  me.  .  .  .  Now,  Fred, 
if  you  don't  want  to  come,  and  if  you  think  you  will  be  happier 
by  staying  away,  why  I  will  try  and  bear  it." 

When  the  plaintiff  said  to  the  defendant  in  her  letter  of  Jan- 
uary 21st,  "  If  you  desire  a  change,  take  it,  and  end  the  matter 
right  here,"  we  can  see  no  escape  from  the  conclusion  that  it  was 
an  offer  of  freedom  from  the  engagement;  and  when  it  further 
appears  that  the  defendant  acted  upon  this  or  a  similar  offer,  and 
without  objection  from  the  plaintiff,  but  with  her  knowledge, 
■courted  and  married  another  woman,  it  must  be  considered  that 
the  offer  was  accepted,  and  that  the  plaintiff  has  become  bound 


BY  BREACH.  843 

by  the  offer  and  its  acceptance.  We  are  unable  to  understand 
how,  in  the  face  of  this  evidence,  the  jury  coukl  have  found  that 
there  was  not  a  mutual  release  of  the  engagement. 

In  connection  with  this  unaccountable  verdict,  we  cannot  re- 
frain from  saying  that  the  damages  awarded  are  grossly  exces- 
sive, and  that  we  should  feel  obliged  to  reverse  upon  this  ground 
in  any  event.  The  defendant's  estate  amounted  to  about  $G000, 
and  there  are  no  circumstances  of  aggravation  in  the  case.  The 
defendant  is  now  married,  and  to  give  considerably  more  than  half 
of  his  property  as  damages  upon  the  facts  appearing  here,  even  if 
there  had  been  no  express  release,  we  regard  as  out  of  the  bounds 
of  reason.  The  damages  are  so  far  excessive  as  to  show  passion, 
if  not  perversity,  on  the  part  of  the  jury. 

By  the  Court.  —  Judgment  reversed,  and  action  remanded  for  a 
new  trial. 


{p.  555)     Renunciation  before  performance  due :  anticipa-     (p.  559) 

toi'y  breach. 

EOEHM  V.   HORST. 

178  UNITED  STATES,  1.  — 1900. 

Action  for  breach  of  four  contracts,  judgment  for  plaintiffs 
(84  Fed.  Rep.  565);  affirmed  by  Circuit  Court  of  Appeals  (91 
Fed.  Rep.  345). 

In  1893  plaintiffs  entered  into  these  four  contracts  with  de- 
fendant, by  the  terms  of  the  first  of  which  plaintiffs  agreed  to 
sell  and  defendant  to  buy  100  bales  of  hops  of  the  crop  of  1896, 
at  22  cents  a  pound,  to  be  shipped  in  specified  months  at  the  rate 
of  20  bales  a  month;  by  the  second,  100  bales  of  the  crop  of 
1896,  to  be  shipped  in  other  specified  months ;  by  the  third,  100 
bales  of  the  crops  of  1897,  to  be  shipped  in  specified  months  ;  by 
the  fourth,  100  bales  of  the  crop  of  1897,  to  be  shipped  in  other 
specified  months.  (Six  other  contracts  of  like  tenor  had  already 
been  performed;  the  total  of  the  ten  contracts  was  1000  bales.) 

In  October,  1896,  the  first  shipment  of  20  bales  was  duly  made 
under  the  first  contract,  but  defendant  declined  to  receive  the 


844  DISCHARGE  OF  CONTRACT. 

hops,  and  notified  plaintiffs  that  he  would  not  receive  any  more 
under  the  four  contracts.  In  January,  1897,  plaintiffs  began  this 
action  for  damages. 

At  the  time  of  defendant's  refusal,  plaintiffs  could  have  made 
subcontracts  for  forward  delivery  of  the  1896  hops  at  9  cents 
a  pound  and  for  the  1897  crop  at  11  cents  a  pound,  and  judg- 
ment was  given  for  the  difference  between  these  prices  and  the 
contract  price  of  22  cents  a  pound,  together  with  interest  on  the 
same  from  October  24,  1896. 

Mr.  Chief  Justice  Fuller  delivered  the  opinion  of  the  court : 

It  is  conceded  that  the  contracts  set  out  in  the  finding  of  facts 
were  four  of  ten  simultaneous  contracts,  for  100  bales  each,  cover- 
ing the  furnishings  of  1000  bales  of  hops  during  a  period  of  five 
years,  of  which  600  bales  had  been  delivered  and  paid  for.  If  the 
transaction  could  be  treated  as  amounting  to  a  single  contract  for 
1000  bales,  the  breach  alleged  would  have  occurred  while  the 
contract  was  in  the  course  of  performance ;  but  plaintiffs'  declara- 
tion or  statement  of  demand  averred  the  execution  of  the  four 
contracts,  "  two  for  the  purchase  and  sale  of  Pacific  coast  hops 
of  the  crop  of  1896,  and  two  for  the  purchase  and  sale  of  Pacific 
coast  hops  of  the  crop  of  1897,"  set  them  out  iyi  extenso,  and 
claimed  recovery  for  breach  thereof,  and  in  this  view  of  the  case, 
while  as  to  the  first  of  the  four  contracts,  the  time  to  commence 
performance  had  arrived,  and  the  October  shipment  had  been 
tendered  and  refused,  the  breach  as  to  the  other  three  contracts 
was  the  refusal  to  perform  before  the  time  for  performance 
had  arrived. 

The  first  contract  falls  within  the  rule  that  a  contract  may  be 
broken  by  the  renunciation  of  liability  under  it  in  the  course  of 
performance,  and  suit  may  be  immediately  instituted.  But  the 
other  three  contracts  involve  the  question  whether,  where  the 
contract  is  renounced  before  performance  is  due,  and  the  renuncia- 
tion goes  to  the  whole  contract,  and  is  absolute  and  unequivocal, 
the  injured  party  may  treat  the  breach  as  complete  and  bring  his 
action  at  once.  Defendant  repudiated  all  liability  for  hops  of  the 
crop  of  1896  and  of  the  crop  of  1897,  and  notified  plaintiffs  that 
he  should  make  (according  to  a  letter  of  his  attorney  in  the  record 
that  he  had  made)  arrangements  to  purchase  his  stock  of  other 


BY  BREACH.  845 

parties,  whereupon  plaintiffs  brought  suit.  The  question  is  there- 
fore presented,  in  respect  of  the  three  contracts,  whether  plaintiffs 
were  entitled  to  sue  at  once  or  were  obliged  to  wait  until  the  time 
came  for  the  first  month's  delivery  under  each  of  them. 

It  is  not  disputed  that  if  one  party  to  a  contract  has  destroyed 
the  subject-matter,  or  disabled  himself  so  as  to  make  performance 
impossible,  his  conduct  is  equivalent  to  a  breach  of  the  contract, 
although  the  time  for  performance  has  not  arrived ;  and  also  that 
if  a  contract  provides  for  a  series  of  acts,  and  actual  default 
is  made  in  the  performance  of  one  of  them,  accompanied  by 
a  refusal  to  perform  the  rest,  the  other  party  need  not  perform, 
but  may  treat  the  refusal  as  a  breach  of  the  entire  contract,  and 
recover  accordingly. 

And  the  doctrine  that  there  may  be  an  anticipatory  breach  of 
an  executory  contract  by  an  absolute  refusal  to  perform  it  has 
become  the  settled  law  of  England  as  applied  to  contracts  for 
services,  for  marriage,  and  for  the  manufacture  or  sale  of  goods. 
The  cases  are  extensively  commented  on  in  the  notes  to  Cutter 
V.  Powell,  2  Smith,  Lead.  Cas.  1212,  1220,  9th  edition  by  Richard 
Henn  Collins  and  Arbuthnot.  Some  of  these,  though  quite 
familiar,  may  well  be  referred  to. 

In  Hochster  v.  De  la  Tour  (2  El.  &  Bl.  678),  plaintiff,  in  April, 
1852,  had  agreed  to  serve  defendant,  and  defendant  had  under- 
taken to  employ  plaintiff,  as  courier,  for  three  months  from  June 
1st,  on  certain  terms.  On  the  11th  of  May,  defendant  wrote 
plaintiff  that  he  had  changed  his  mind,  and  declined  to  avail 
himself  of  plaintiff's  services.  Thereupon,  and  on  May  22d, 
plaintiff  brought  an  action  at  law  for  breach  of  contract  in  that 
defendant,  before  the  said  1st  of  Juue,  though  plaintiff  was 
always  ready  and  willing  to  perform,  refused  to  engage  plaintiff 
or  perform  his  promise,  and  then  wrongfully  exonerated  plaintiff 
from  the  performance  of  the  agreement,  to  his  damage.  And 
it  was  ruled  that  as  there  could  be  a  breach  of  contract  before  the 
time  fixed  for  performance,  a  positive  and  absolute  refusal  to 
carry  out  the  contract  prior  to  the  date  of  actual  default  amounted 
to  such  a  breach. 

In  the  course  of  the  argument,  Mr.  Justice  Crompton  ob- 
served : 


846  DISCHARGE  OF  CONTRACT. 

"  When  a  party  announces  his  intention  not  to  fulfill  the  contract,  the 
other  side  may  take  him  at  his  word  and  rescind  the  contract.  That 
word  '  rescind '  implies  that  both  parties  have  agreed  that  the  contract 
shall  be  at  an  end,  as  if  it  had  never  been.  But  I  am  inclined  to  think 
that  the  party  may  also  say :  '  Since  you  have  announced  that  you  will 
not  go  on  with  the  contract,  I  will  consent  that  it  shall  be  at  an  end  from 
this  time ;  but  I  will  hold  you  liable  for  the  damage  I  have  sustained ; 
and  I  will  proceed  to  make  that  damage  as  little  as  possible  by  making 
the  best  use  I  can  of  my  liberty.' " 

In  delivering  the  opinion  of  the  court  (Campbell,  Ch.  J.,  Cole- 
ridge, Erie,  and  Crompton,  JJ.),  Lord  Campbell,  after  pointing 
out  that  at  common  law  there  were  numerous  cases  in  which  an 
anticipatory  act,  such  as  an  act  rendering  the  contract  impossible 
of  performance,  or  disabling  the  party  from  performing  it,  would 
constitute  a  breach  giving  an  immediate  right  of  action,  laid  it 
down  that  a  positive  and  unqualified  refusal  by  one  party  to  carry 
out  the  contract  should  be  treated  as  belonging  to  the  same  cate- 
gory as  such  anticipatory  acts,  and  said  (p.  690) : 

"  But  it  is  surely  much  more  rational,  and  more  for  the  benefit  of  both 
parties,  that,  after  the  renunciation  of  the  agreement  by  the  defendant, 
the  plaintiff  should  be  at  liberty  to  consider  himself  absolved  from  any 
future  performance  of  it,  retaining  his  right  to  sue  for  any  damage  he 
has  suffered  from  the  breach  of  it.  Thus,  instead  of  remaining  idle  and 
laying  out  money  in  preparations  which  must  be  useless,  he  is  at  liberty 
to  seek  service  under  another  employer,  which  would  go  in  mitigation 
of  the  damages  to  which  he  would  otherwise  be  entitled  for  a  breach  of 
the  contract.  It  seems  strange  that  the  defendant,  after  renouncing  the 
contract  and  absolutely  declaring  that  he  will  never  act  under  it,  should 
be  permitted  to  object  that  faith  is  given  to  his  assertion,  and  that  an 
opportunity  is  not  left  to  him  of  changing  his  mind.  If  the  plaintiff 
is  barred  of  any  remedy  by  entering  into  an  engagement  inconsistent 
with  starting  as  a  courier  with  the  defendant  on  the  1st  of  June,  he  is 
prejudiced  by  putting  faith  in  the  defendant's  assertion ;  and  it  would 
be  more  consonant  with  principle  if  the  defendant  were  precluded  from 
saying  that  he  had  not  broken  the  contract  when  he  declared  that  he 
entirely  renounced  it.  Suppose  that  the  defendant,  at  the  time  of  his 
renunciation,  had  embarked  on  a  voyage  for  Australia,  so  as  to  render 
it  physically  impossible  for  him  to  employ  the  plaintiff  as  a  courier 
on  the  continent  of  Europe  in  the  months  of  June,  July,  and  August, 
1852;  according  to  decided  cases,  the  action  might  have  been  brought 
before  the  1st  of  June  ;  but  the  renunciation  may  have  been  founded  on 
other  facts,  to  be  given  in  evidence,  which  would  equally  have  rendered 
the  defendant's  performance  of  the  contract  impossible.     The  man  who 


BY  BREACH.  84T 

wrongfully  renounces  a  contract  into  which  he  has  deliberately  entered 
cannot  justly  complain  if  he  is  immediately  sued  for  a  compensation 
in  damages  by  the  man  whom  he  has  injured ;  and  it  seems  reasonable 
to  allow  an  option  to  the  injured  party,  either  to  sue  immediately,  or  to 
wait  till  the  time  comes  when  the  act  was  to  be  done,  still  holding 
it  as  prospectively  binding  for  the  exei-cise  of  this  option,  which  may 
be  advantageous  to  the  innocent  party,  and  cannot  be  prejudicial  to  the 
wrongdoer.  An  argument  against  the  action  before  the  1st  of  June 
is  urged  from  the  difficulty  of  calculating  the  damages;  but  this  argu- 
ment is  equally  strong  against  an  action  before  the  1st  of  September, 
when  the  three  months  would  expire.  In  either  case,  the  jury  in  assess- 
ing the  damages  would  be  justified  in  looking  to  all  that  had  happened, 
or  was  likely  to  happen,  to  increase  or  mitigate  the  loss  of  the  plaintiff 
down  to  the  day  of  trial.  We  do  not  find  any  decision  contrary  to  the 
view  we  are  taking  of  this  case." 

In  Frost  v.  Knight  (L.  R.  7  Exch.  Ill),  defendant  had  promised 
to  marry  plaintiff  so  soon  as  his  (defendant's)  father  should  die. 
While  his  father  was  yet  alive  he  absolutely  refused  to  marry 
plaintiff,  and  it  was  held  in  the  Exchequer  Chamber,  overruling 
the  decision  of  the  Court  of  Exchequer  (L.  R.  5  Exch.  322),  that 
for  this  breach  an  action  was  well  brought  during  the  father's 
lifetime.     Cockburn,  Ch.  J.,  said : 

"  The  law  with  reference  to  a  contract  to  be  performed  at  a  future 
time,  where  the  party  bound  to  performance  announces  prior  to  the  time 
his  intention  not  to  perform  it,  as  established  by  the  cases  of  Hochster 
V.  De  la  Tour,  2  El.  &  Bl.  678,  and  the  Danube  I-  B.  S.  Railway  §-  K. 
Harbour  Co.  v.  Xenos,  13  C.  B.  N.  S.  825,  on  the  one  hand,  and  Avery 
V.  Bowden,  5  El.  &  Bl.  714 ;  Reid  v.  Hoskins,  6  El.  &  Bl.  953 ;  and  Barrick 
V.  Buba,  2  C.  B.  N".  S.  563,  on  the  other,  may  be  thus  stated.  The 
promisee,  if  he  pleases,  may  treat  the  notice  of  intention  as  inoperative, 
and  await  the  time  when  the  contract  is  to  be  executed,  and  then  hold 
the  other  party  responsible  for  all  the  consequences  of  nonperformance; 
but  in  that  case  he  keeps  the  contract  alive  for  the  benefit  of  the  other 
party  as  well  as  his  own ;  he  remains  subject  to  all  his  own  obligations 
and  liabilities  under  it,  and  enables  the  other  party,  not  only  to  complete 
the  contract,  if  so  advised,  notwithstanding  his  previous  repudiation 
of  it,  but  also  to  take  advantage  of  any  supervening  circumstance  which 
would  justify  him  in  declining  to  complete  it.  On  the  other  hand,  the 
promisee  may,  if  he  thinks  proper,  treat  the  repudiation  of  the  other 
party  as  a  wrongful  putting  an  end  to  the  contract,  and  may  at  once 
bring  his  action  as  on  a  breach  of  it;  and  in  such  action  he  will  be 
entitled  to  such  damages  as  would  have  arisen  from  the  nonperformance 
of  the  contract  at  the  appointed  time,  subject,  however,  to  abatement 


848  DISCHARGE  OF  CONTRACT. 

in  respect  of  any  circumstances  which  may  have  afforded  him  the  means 
of  mitigating  his  loss." 

The  case  of  Danube  &  B.  JS.  Railway  &  K.  Harbour  Co.  v.  Xenos 
(11  C.  B.  N.  S.  152)  is  stated  in  the  headnotes  thus :  On  the  9th 
of  July,  A,  by  his  agent,  agreed  to  receive  certain  goods  of  B  on 
board  his  ship  to  be  carried  to  a  foreign  port,  —  the  shipment 
to  commence  on  the  1st  of  August.  On  the  21st  of  July  A  wrote 
to  B,  stating  that  he  did  not  hold  himself  responsible  for  the  con- 
tract, the  agent  having  no  authority  to  make  it ;  and  on  the  23d 
he  wrote  again  offering  a  substituted  contract,  but  still  repudiat- 
ing the  origiual  contract.  B,  by  his  attorneys,  gave  A  notice  that 
he  should  hold  him  bound  by  the  original  contract,  and  that,  if 
he  persisted  in  refusing  to  perform  it,  he  (B)  should  forthwith 
proceed  to  make  other  arrangements  for  forwarding  the  goods 
to  their  destination,  and  look  to  him  for  any  loss.  On  the  .1st  of 
August,  A  again  wrote  to  B,  stating  that  he  was  then  prepared 
to  receive  the  goods  on  board  his  ship,  making  no  allusion  to  the 
origiual  contract.  B  had,  however,  in  the  meantime  entered  into 
a  negotiation  with  one  S  for  the  conveyance  of  the  goods  by 
another  ship,  which  negotiation  ended  in  a  contract  for  that 
purpose  with  S  on  the  2d  of  August.  B  thereupon  sued  A  for 
refusing  to  receive  the  goods  pursuant  to  his  contract;  and  A 
brought  a  cross  action  against  B  for  refusing  to  ship.  Upon 
a  special  case  stating  these  facts :  Held,  that  it  was  competent  to 
B  to  treat  A's  renunciation  as  a  breach  of  the  contract ;  and  that 
the  fact  of  such  renunciation  afforded  a  good  answer  to  the  cross 
action  of  A,  and  sustaiued  B's  plea  that  before  breach  A  dis- 
charged him  from  the  performance  of  the  agreement. 

Earle,  Ch.  J.,  said  (p.  175)  : 

"In  Cort  v.  Ambergate,  N.  ^  B.  Sf  E.  Junction  R.  Co.  (17  Q.  B.  127), 
it  was  held  that,  upon  the  company  giving  notice  to  Mr.  Cort  that  they 
would  not  receive  any  more  of  his  chairs,  he  might  abstain  from  manu- 
facturing them  and  sue  the  company  for  the  breach  of  contract  without 
tendering  the  goods  for  their  acceptance.  So,  in  Hochster  v.  De  la  Tour 
(El.  &  Bl.  678),  it  was  held  that  the  courier  whose  sei*vices  were  engaged 
for  a  period  to  commence  from  a  future  day,  being  told  before  that  day 
that  they  would  not  be  accepted,  was  at  liberty  to  treat  that  as  a  com- 
plete breach,  and  to  hire  himself  to  another  party.  And  the  boundary 
is  equally  well  ascertained  on  the  other  side.     Thus,  in  Avery  v.  Bowden 


BY  BREACH.  849 

<5  El.  &  Bl.  714,  6  El.  &  Bl.  953),  where  the  agent  of  the  charterer 
intimated  to  the  captain  that,  in  consequence  of  the  breaking  out  of  the 
war,  he  would  be  unable  to  furnish  him  with  a  cargo,  and  wished  the 
captain  to  sail  away,  and  the  latter  did  not  do  so,  it  was  not  to  fall 
"within  the  principle  already  adverted  to,  and  not  to  amount  to  a  breach 
or  renunciation  of  the  contract.  But  where  there  is  an  explicit  declara- 
tion by  the  one  party  of  his  intention  not  to  perform  the  contract  on  his 
part,  which  is  accepted  by  the  other  as  a  breach  of  the  contract,  that 
beyond  all  doubt  affords  a  cause  of  action." 

The  case  was  heard  on  error  in  the  Exchequer  Chamber  before 
Cockburn,  Ch.  J.,  Pollock,  C.  B.,  Wightman,  J.,  Crompton,  J., 
Channell,  B.,  and  Wilde,  B. ;  and  the  judgment  of  the  Common 
Pleas  was  unanimously  affirmed.     13  C.  B.  N,  S.  825. 

In  Johnstone  v.  Milling  (L.  R.  16  Q.  B.  Div.  467)  Lord  Esher, 
Master  of  the  Rolls,  puts  the  principle  thus :  • 

"  When  one  party  assumes  to  renounce  the  contract,  that  is,  by  antici- 
pation refuses  to  perform  it,  he  thereby,  so  far  as  he  is  concerned,  declares 
his  intention  then  and  there  to  rescind  the  contract.  Such  a  renunciation 
does  not,  of  course,  amount  to  a  rescission  of  the  contract,  because  one 
party  to  a  contract  cannot  by  himself  rescind  it,  but  by  wrongfully  mak- 
ing such  a  renunciation  of  the  contract  he  entitles  the  other  party,  if  he 
pleases,  to  agree  to  the  contract  being  put  an  end  to,  subject  to  the  reten- 
tion by  him  of  his  right  to  bring  an  action  in  respect  of  such  wrongful  re- 
scission. The  other  party  may  adopt  such  renunciation  of  the  contract 
by  so  acting  upon  it  as  in  effect  to  declare  that  he  too  treats  the  contract 
as  at  an  end,  except  for  the  purpose  of  bringing  an  action  upon  it  for  the 
damages  sustained  by  him  in  consequence  of  such  renunciation." 

Lord  Justice  Bowen  said  (p.  472)  : 

"  We  have,  therefore,  to  consider  upon  what  principles  and  under  what 
circumstances  it  must  be  held  that  a  promisee,  who  finds  himself  con- 
fronted with  a  declaration  of  intention  by  the  promisor  not  to  carry  out 
the  contract  when  the  time  for  performance  arrives,  may  treat  the  con- 
tract as  broken,  and  sue  for  the  breach  thereof.  It  would  seem  on  princi- 
ple that  the  declaration  of  such  intention  by  the  promi89r  is  not  in  itself 
and  unless  acted  on  by  the  promisee  a  breach  of  the  contract ;  and  that 
it  only  becomes  a  breach  when  it  is  converted  by  force  of  what  follows 
it  into  a  wrongful  renunciation  of  the  contract.  Its  real  operation  ap- 
pears to  be  to  give  the  promisee  the  right  of  electing  either  to  treat  the 
declaration  as  brutum  fulmen,  and,  holding  fast  to  the  contract,  to  wait 
till  the  time  for  its  performance  has  arrived,  or  to  act  upon  it  and  treat 
it  as  a  final  assertion  by  the  promisor  that  he  is  no  longer  bound  by  the 
contract,  and  a  wrongful  renunciation  of  the  contractual  relation  into 
III 


850  DISCHARGE  OF  CONTRACT. 

which  he  has  entered.  But  such  declaration  only  becomes  a  wrongful 
act  if  the  promisee  elects  to  treat  it  as  such.  If  he  does  so  elect,  it  be- 
comes a  bi'each  of  contract,  and  he  can  recover  upon  it  as  such." 

The  doctrine  which  thus  obtains  in  England  has  been  almost 
universally  accepted  by  the  courts  of  this  country,  although  the 
precise  point  has  not  been  ruled  by  this  court. 

In  Smooths  Case  (15  Wall.  36,  48)  Mr.  Justice  Miller  observed  t 

"  In  the  case  of  Phillpotts  v.  Evatis  (5  Mees.  &  W.  475)  the  defendant, 
who  had  agreed  to  receive  and  pay  for  wheat,  notified  the  plaintiff,  be- 
fore the  time  of  delivery,  that  he  would  not  receive  it.  The  plaintiff 
tendered  the  wheat  at  the  proper  time,  and  the  only  question  raised  was,. 
whether  the  measure  of  damages  should  be  governed  by  the  price  of  the 
wheat  at  the  time  of  the  notice  or  at  the  time  of  the  tender.  Baron 
Parke  said :  '  I  think  no  action  would  have  lain  for  the  breach  of  the  con- 
tract at  the  time  of  the  notice,  but  that  plaintiff  was  bound  to  wait  until 
the  time  of  delivery  to  see  whether  the  defendant  would  then  receive  it. 
The  defendant  might  have  chosen  to  take  it  and  would  have  been  guilty 
of  no  breach  of  contract.  His  contract  was  not  broken  by  his  previous 
declaration  that  he  would  not  accept.'  And  though  some  of  the  judges 
in  the  subsequent  case  of  Hochster  v.  De  la  Tour  (2  El.  &  Bl.  678)  disap- 
prove very  properly  of  the  extreme  ground  taken  by  Baron  Parke,  they 
all  agree  that  the  refusal  to  accept,  on  the  part  of  the  defendant,  in  such 
case,  must  be  absolute  and  unequivocal,  and  must  have  been  acted  on  by 
the  plaintiff." 

In  Lovell  v.  St.  Louis  Mut.  L.  Ins.  Co.  (Ill  U.  S.  264)  a  life  in- 
surance company  had  terminated  its  business  and  transferred  its 
assets  and  policies  to  another  company,  and  the  court  held  that 
this  in  itself  authorized  the  insured  to  treat  the  contract  as  at  an 
end,  and  to  sue  to  recover  back  the  premiums  already  paid,  al- 
though the  time  for  the  performance  of  the  obligation  of  the  in- 
surance company,  to  wit,  the  death  of  the  insured,  had  not  arrived. 
Mr.  Justice  Bradley,  delivering  the  opinion  of  the  court,  said : 

"  Our  third  conclusion  is  that,  as  the  old  company  totally  abandoned 
the  performance  of  its  contract  with  the  complainant  by  transferring  all 
its  assets  and  obligations  to  the  new  company,  and  as  the  contract  is  exec- 
utory in  its  nature,  the  complainant  had  a  right  to  consider  it  as  deter- 
mined by  the  act  of  the  company,  and  to  demand  what  was  justly  due  to 
him  in  that  exigency.  Of  this  we  think  there  can  be  no  doubt.  Where 
one  party  to  an  executory  contract  prevents  the  performance  of  it,  or  puts 
it  out  of  his  own  power  to  perform  it,  the  other  party  may  regard  it  as 
terminated  and  demand  whatever  damage  he  has  sustained  thereby." 


BY  BREACH.  861 

In  Dinghy  v.  Oler  (117  U.  S.  490,  29  L.  ed.  984)  it  was  held 
that  the  case  did  not  come  within  the  rule  laid  down  in  Hochster 
V.  De  la  Tour,  but  within  Avery  v.  Boivden  and  Johnstone  v. 
Milling,  since,  in  the  view  entertained  by  the  court,  there  was  not 
a  renunciation  of  the  contract  by  a  total  refusal  to  perform. 

So  in  Cleveland  Rolling  Mill  v.  Rhodes  (121  U.  S.  255,  264), 
involving  a  contract  for  the  delivery  of  iron  ore,  the  court  said : 

"  The  necessary  conclusion  is  that  the  defendant  was  justified  in 
refusing  to  accept  any  of  the  iron  shipped  in  1881 ;  and  whether  the 
notice  previously  given  by  the  defendant  to  the  plaintiff,  that  it  would 
not  accept  under  the  contract  any  iron  made  after  December  31,  1880, 
might  have  been  treated  by  the  plaintiffs  as  a  renunciation  and  a  breach 
of  the  contract,  need  not  be  considered,  because  the  plaintiffs  did  not  act 
upon  it  as  such." 

In  Anvil  Min.  Go.  v.  Humble  (153  U.  S.  540)  performance  had 
been  commenced,  but  completion  was  prevented  by  defendant,  and 
Mr.  Justice  Brewer,  speaking  for  the  court,  said : 

"  Whenever  one  party  thereto  is  guilty  of  such  a  breach  a.s  is  her© 
attributed  to  the  defendant  the  other  party  is  at  liberty  to  treat  the 
contract  as  broken  and  desist  from  any  further  effort  on  his  part  to  per- 
form ;  in  other  words,  he  may  abandon  it,  and  recover  as  damages  the 
profits  which  he  would  have  received  through  full  performance.  Such 
an  abandonment  is  not  technically  a  rescission  of  the  contract,  but  is 
merely  an  acceptance  of  the  situation  which  the  wrongdoing  of  the  other 
party  has  brought  about." 

In  Pierce  v.  Tennessee  Coal,  I.  t&  R.  Co.  (173  U.  S.  1)  it  was 
held  that  on  discharge  from  a  contract  of  employment  the  party 
discharged  might  elect  to  treat  the  contract  as  absolutely  and 
finally  broken,  and  in  an  action  recover  the  full  value  of  the  con- 
tract to  him  at  the  time  of  the  breach,  including  all  that  he 
would  have  received  in  the  future  as  well  as  in  the  past,  deduct- 
ing any  sum  that  he  might  have  earned  or  that  he  might  there- 
after earn  ;   and  Mr.  Justice  Gray  said : 

"The  plaintiff  was  not  bound  to  wait  to  see  if  the  defendant  would 
change  its  decision  and  take  him  back  into  its  service;  or  to  resort  to 
successive  actions  for  damages  from  time  to  time ;  or  to  leave  the  whole 
of  his  damages  to  be  recovered  by  his  personal  representatives  after  his 
death.  But  he  had  the  right  to  elect  to  treat  the  contract  as  absolutely 
and  finally  broken  by  the  defendant ;  to  maintain  this  action,  once  for 
all,  as  for  a  total  breach  of  the  entire  contract." 


852  DISCHARGE  OF  CONTRACT. 

In  Hancock  v.  Neio  York  L.  Ins.  Co.  (11  Fed.  Cas.  402),  Hochster 
V,  De  la  Tour  was  followed  by  Bond,  J.,  in  the  circuit  court  for 
the  eastern  district  of  Virginia ;  and  in  Grau  v.  Mc  Vicker  (8  Biss. 
13,  Fed.  Cas.  No.  5708),  Drummond,  J.,  fully  approved  of  the 
principles  decided  in  that  case,  and  remarked :  "  It  seems  to  me 
that  it  is  the  better  rule  to  hold  that  the  party  who  has  refused 
to  perform  his  contract  is  liable  at  once  to  an  action,  and  that 
whatever  arises  afterwards,  or  may  arise  in  consequence  of  the 
time  not  having  come  or  not  having  expired,  should  be  consid- 
ered in  estimating  the  damages." 

Again,  in  Dingley  v.  Oler  (11  Fed.  Kep.  372),  Lowell,  J.,  applied 
the  rule  in  the  circuit  court  for  the  district  of  Maine,  and  after 
citing  Hochster  v.  De  la  Tour,  Frost  v.  Knight,  and  other  cases, 
said :  "  These  cases  seem  to  me  to  be  founded  in  good  sense,  and 
to  rest  on  strong  grounds  of  convenience,  however  difficult  it  may 
be  to  reconcile  them  with  the  strictest  logic."  And  see  Foss- 
Schneider  Brewing  Co  v.  Bullock,  16  U.  S.  App.  311,  59  Fed.  Rep. 
83,  8  C.  C.  A.  14 ;  Edward  Hines  Lumber  Co.  v.  Alley,  43  U.  S. 
App.  169,  73  Fed.  Rep.  603, 19  C.  C.  A.  599  ;  Marks  v.  Van  Eeghen, 
m  U.  S.  App.  149,  85  Fed.  Rep.  853,  30  C.  C.  A.  208. 

The  great  weight  of  authority  in  the  state  courts  is  to  the  same 
•effect  as  will  appear  by  reference  to  the  cases  cited  in  the 
margin.^ 

On  the  other  hand,  in  Greenway  v.  Gaither  (Taney,  227,  Fed. 
Cas.  No.  5788),  Mr.  Chief  Justice  Taney,  sitting  on  circuit  in 
Maryland,  declined  to  apply  the  rule  in  that  particular  case. 
The  cause  was  tried  in  November,  1851,  and  more  than  two  years 


1  Fox  V.  Kitton,  19  HI.  518  ;  Radish  v.  Young,  108  111.  170,  4.3  Am.  Rep. 
548  ;  John  A.  Eoebling's  Sons'  Co.  v.  Lock-Stitch  Fence  Co.,  130  111.  660,  22 
N.  E.  518  ;  Lake  Shore  and  M.  S.  B.  Co.  v.  Bichards,  152  111.  59,  30  L.  R.  A. 
33,  38  N.  E.  773  ;  Burtis  v.  Thompson,  42  N.  Y.  246,  1  Am.  Rep.  516  ;  Wind- 
muller  v.  Pope,  107  N.  Y.  647,  14  N.  E.  436  ;  Mountjoy  v.  Metzger,  9  Phila. 
10  ;  Zuck  V.  McClure,  98  Pa.  541 ;  Hocking  v.  Hamilton,  158  Pa.  107,  27  Atl. 
836  ;  Dugan  v.  Anderson,  36  Md.  567,  11  Am.  Rep.  509 ;  Hosmer  v.  Wilson, 
7  Mich.  294,  74  Am.  Dec.  716 ;  Piatt  v.  Brand,  26  Mich.  173  ;  Crabtree  v. 
Messersmith,  19  Iowa,  179 ;  McCormick  v.  Basal,  46  Iowa.  235  ;  Kurtz  v. 
Frank,  76  Ind.  594,  40  Am.  Rep.  275  ;  Cohh  v.  Hall,  33  Vt.  233  ;  Davis  v. 
Grand  Bapids  School  Furniture  Co.,  41  W.  Va.  717, 24  S.  E.  630  ;  and  other 
cases  cited  in  the  text-books  and  encyclopaedias. 


BY  BREACH.  868 

after,  at  November  term,  1853,  application  was  made  to  the  chief 
justice  to  seal  a  bill  of  exceptions.  Hochster  v.  De  la  Tour  was 
decided  in  June,  1853,  and  the  decision  of  the  circuit  court  had 
apparently  been  contrary  to  the  rule  laid  down  in  that  case.  The 
chief  justice  refused  to  seal  the  bill,  chiefly  on  the  ground  that 
under  the  circumstances  the  application  came  too  late,  but  also  on 
the  ground  that  there  was  no  error,  as  the  rule  was  only  appli- 
cable to  contracts  of  the  special  character  involved  in  that  case, 
and  the  chief  justice  said  as  to  the  contract  in  hand,  by  which 
defendant  engaged  to  pay  certain  sums  of  money  on  certain  days : 
"  It  has  never  been  supposed  that  notice  to  the  holder  of  a 
bond,  or  a  promissory  note,  or  bill  of  exchange,  that  the  party 
would  not  (from  any  cause)  comply  with  the  contract,  would  give 
to  the  holder  an  immediate  cause  of  action  upon  which  he  might 
sue  before  the  time  of  payment  arrived." 

The  rule  is  disapproved  in  Daniels  v.  Newton  (114  Mass.  530) 
and  in  Stanford  v.  McGill  (6  N.  D.  536,  38  L.  R.  A.  760,  72  N.  W. 
938)  on  elaborate  consideration.^  The  opinion  of  Judge  Wells  in 
Daniels  v.  Newton  is  generally  regarded  as  containing  all  that 
could  be  said  in  opposition  to  the  decision  of  Hochster  v.  De  la 
Tour,  and  one  of  the  propositions  on  which  the  opinion  rests  is 
that  the  adoption  of  the  rule  in  the  instance  of  ordinary  contracts 
would  necessitate  its  adoption  in  the  case  of  commercial  paper. 
But  we  are  unable  to  assent  to  that  view.  In  the  case  of  an 
ordinary  money  contract,  such  as  a  promissory  note,  or  a  bond, 
the  consideration  has  passed ;  there  are  no  mutual  obligations ; 
and  cases  of  that  sort  do  not  fall  within  the  reason  of  the  rule. 

In  Nichols  v.  Scranton  Steel  Co.  (137  N.  Y.  487),  Mr.  Justice 
Peckham,  then  a  member  of  the  court  of  appeals  of  New  York, 
thus  expresses  the  distinction : 

"  It  is  not  intimated  that  in  the  bald  case  of  a  party  bound  to  pay  a 
promissory  note  which  rests  in  the  hands  of  the  payee,  but  which  is  not 
yet  due,  such  note  can  be  made  due  by  any  notice  of  the  maker  that  he 
does  not  intend  to  pay  it  when  it  matures.  We  decide  siniply  this  case 
where  there  are  material  provisions  and  obligations  interdependent.  In 
such  case,  and  where  one  party  is  bound,  from  time  to  time,  as  expressed, 
to  deliver  part  of  an  aggregate  and  specified  amount  of  property  to 

1  See  also  Carstens  v.  McDonald,  38  Neb.  868. 


854  DISCHARGE  OF  CONTRACT. 

another,  who  is  to  pay  for  each  parcel  delivered  at  a  certain  time  and  in 
a  certain  way,  a  refusal  to  be  further  bound  by  the  terms  of  the  contract 
or  to  accept  further  deliveries,  and  a  refusal  to  give  the  notes  already 
demandable  for  a  portion  of  the  property  that  has  been  delivered,  and  a 
refusal  to  give  any  more  notes  at  any  time  or  for  any  piu-pose  in  the 
future,  or  to  pay  moneys  at  any  time,  which  are  eventually  to  be  paid 
under  the  contract,  all  this  constitutes  a  breach  of  the  contract  as  a 
whole,  and  gives  a  present  right  of  action  against. the  party  so  refusing 
to  recover  damages  which  the  other  may  sustain  by  reason  of  this 
refusal." 

We  think  it  obvious  that  both  as  to  renunciation  after  com- 
mencement of  performance  and  renunciation  before  the  time  for 
performance  has  arrived,  money  contracts,  pure  and  simple,  stand 
on  a  different  footing  from  executory  contracts  for  the  purchase 
and  sale  of  goods. 

The  other  proposition  on  which  the  case  of  Daniels  v.  Neioton 
was  rested  is  that  until  the  time  for  performance  arrives  neither 
contracting  party  can  suffer  any  injury  which  can  form  a  ground 
of  damages.  Wells,  J.,  said :  "  An  executory  contract  ordinarily 
confers  no  title  or  interest  in  the  subject-matter  of  the  agreement. 
Until  the  time  arrives  when  by  the  terms  of  the  agreement  he 
is  or  might  be  entitled  to  its  performance,  he  can  suffer  no  injury 
or  deprivation  which  can  form  a  ground  of  damages.  There  is 
neither  violation  of  right,  nor  loss  upon  which  to  found  an 
action." 

But  thei-e  are  many  cases  in  which,  before  the  time  fixed  for 
performance,  one  of  the  contracting  parties  may  do  that  which 
amounts  to  a  breach  and  furnishes  a  ground  of  damages.  It  has 
always  been  the  law  that  where  a  party  deliberately  incapaci- 
tates himself  or  renders  performance  of  his  contract  impossible, 
his  act  amounts  to  an  injury  to  the  other  party,  which  gives  the 
other  party  a  cause  of  action  for  breach  of  contract;  yet  this- 
would  seem  to  be  inconsistent  with  the  reasoning  in  Daniels  v. 
Newton,  though  it  is  not  there  in  terms  decided  "that  an  abso- 
lute refusal  to  perform  a  contract,  after  the  time  and  under  the 
conditions  in  which  plaintiff  is  entitled  to  require  performance, 
is  not  a  breach  of  the  contract,  even  although  the  contract  is  by 
its  terms  to  continue  in  the  future."  Parker  v.  Russell,  133 
Mass.  74. 


BY  BREACH.  865 

In  truth,  the  opinion  goes  upon  a  distinction  between  eases  of 
renunciation  before  the  arrival  of  the  time  of  performance  and 
those  of  renunciation  of  unmatured  obligations  of  a  contract 
■while  it  is  in  course  of  performance,  and  it  is  said  that  before 
the  argument  on  the  ground  of  convenience  and  mutual  advan- 
tage to  the  parties  can  properly  have  weight,  "the  point  to  be 
reached  must  first  be  shown  to  be  consistent  with  logical  deduc- 
tions from  the  strictly  legal  aspects  of  the  case." 

We  think  that  there  can  be  no  controlling  distinction  on  this 
point  between  the  two  classes  of  cases,  and  that  it  is  proper  to 
consider  the  reasonableness  of  the  conclusion  that  the  absolute 
renunciation  of  particular  contracts  constitutes  such  a  breach  as 
to  justify  immediate  action  and  recovery  therefor.  The  parties 
to  a  contract  which  is  wholly  executory  have  a  right  to  the 
maintenance  of  the  contractual  relations  up  to  the  time  for  per- 
formance, as  well  as  to  a  performance  of  the  contract  when  due. 
If  it  appear  that  the  party  who  makes  an  absolute  refusal  intends 
thereby  to  put  an  end  to  the  contract  so  far  as  performance  is 
concerned,  and  that  the  other  party  must  accept  this  position, 
why  should  there  not  be  speedy  action  and  settlement  in  regard 
to  the  rights  of  the  parties  ?  Why  should  a  locus  pceniteyitice  be 
awarded  to  the  party  whose  wrongful  action  has  placed  the  other 
at  such  disadvantage?  What  reasonable  distinction  per  se  is 
there  between  liability  for  a  refusal  to  perform  future  acts  to  be 
done  under  a  contract  in  course  of  performance  and  liability  for 
a  refusal  to  perform  the  whole  contract  made  before  the  time  for 
commencement  of  performance  ? 

As  Lord  Chief  Justice  Cockburn  observed  in  Frost  v.  Knight, 
the  promisee  has  the  right  to  insist  on  the  contract  as  subsisting 
and  effective  before  the  arrival  of  the  time  for  its  performance, 
and  its  unimpaired  and  unimpeached  efficacy  may  be  essential  to 
his  interests,  dealing  as  he  may  with  rights  acquired  under  it  in 
various  ways  for  his  benefit  and  advantage.  And  of  all  such 
advantage,  the  repudiation  of  the  contract  by  the  other  party, 
and  the  announcement  that  it  never  will  be  fulfilled,  must  of 
course  deprive  him.  While  by  acting  on  such  repudiation  and 
the  taking  of  timely  measures,  the  promisee  may  in  many  cases 
avert,  or,  at  all  events,  materially  lessen,  the  injurious  effects 


866  DISCHARGE  OF  CONTRACT. 

which  ■would  otherwise  flow  from  the  nonfulfillment  of  the 
contract. 

During  the  argument  of  Cort  v.  AmbergcUe  Railway  Co.  (17  Q.  B. 
127),  Erie,  J.,  made  this  suggestion :  "  Suppose  the  contract  was 
that  plaintiff  should  send  a  ship  to  a  certain  port  for  cargo,  and 
defendant  should  there  load  one  on  board ;  but  defendant  wrote 
word  that  he  could  not  furnish  a  cargo ;  must  the  ship  be  sent 
to  return  empty  ? "  And  if  it  was  not  necessary  for  the  ship 
owner  to  send  his  ship,  it  is  not  perceived  why  he  should  be 
compelled  to  wait  until  the  time  fixed  for  the  loading  of  the  ship 
at  the  remote  port  before  bringing  suit  upon  the  contract. 

If  in  this  case  these  ten  hop  contracts  had  been  written  into 
one  contract  for  the  supply  of  hops  for  five  years  in  installments, 
then  when  the  default  happened  in  October,  1896,  it  cannot  be 
denied  that  an  immediate  action  could  have  been  brought  in 
which  damages  could  have  been  recovered  in  advance  for  the 
breach  of  the  agreement  to  deliver  during  the  two  remaining 
years.  But  treating  the  four  outstanding  contracts  as  separate 
contracts,  why  is  it  not  equally  reasonable  that  an  unqualified 
and  positive  refusal  to  perform  them  constitutes  such  a  breach 
that  damages  could  be  recovered  in  an  immediate  action  ?  Why 
should  plaintiff  be  compelled  to  bring  four  suits  instead  of  one  ? 
For  the  reasons  above  stated,  and  having  reference  to  the  state  of 
the  authorities  on  the  subject,  our  conclusion  is  that  the  rule  laid 
down  in  Hochster  v.  De  la  Tour  is  a  reasonable  and  proper  rule 
to  be  applied  to  this  case  and  in  many  others  rising  out  of  the 
transactions  of  commerce  of  the  present  day. 

As  to  the  question  of  damages,  if  the  action  is  not  premature, 
the  rule  is  applicable  that  plaintiff  is  entitled  to  compensation 
based,  as  far  as  possible,  on  the  ascertainment  of  what  he  would 
have  suffered  by  the  continued  breach  of  the  other  party  down  to 
the  time  of  complete  performance,  less  any  abatement  by  reason  of 
circumstances  of  which  he  ought  reasonably  to  have  availed  him- 
iivilf.  If  a  vendor  is  to  manufacture  goods,  and  during  the  proc- 
ess of  manufacture  the  contract  is  repudiated,  he  is  not  bound 
to  complete  the  manufacture,  and  estimate  his  damages  by  the 
difference  between  the  market  price  and  the  contract  price,  but 
the  measure  of  damage  is  the  difference  between  the  contract 


BY  BREACH.  857 

price  and  the  cost  of  performance.  Hinckley  v.  Pittsburg  Besse- 
mer Steel  Co.,  121  U.  S.  264.  Even  if  in  such  cases  the  manu- 
facturer actually  obtains  his  profits  before  the  time  fixed  for 
performance,  and  recovers  on  a  basis  of  cost  which  might  have 
been  increased  or  diminished  by  subsequent  events,  the  party 
who  broke  the  contract  before  the  time  for  complete  performance 
cannot  complain,  for  he  took  the  risk  involved  in  such  anticipa- 
tion. If  the  vendor  has  to  buy  instead  of  to  manufacture,  the 
same  principle  prevails,  and  he  may  show  what  was  the  value  of 
the  contract  by  showing  for  what  price  he  could  have  made  sub- 
contracts, just  as  the  cost  of  manufacture  in  the  case  of  a  manu- 
facturer may  be  shown.  Although  he  may  receive  his  money 
earlier  in  this  way,  and  may  gain,  or  lose,  by  the  estimation  of 
his  damage  in  advance  of  the  time  for  performance,  still,  as  we 
have  seen,  he  has  the  right  to  accept  the  situation  tendered  him^ 
and  the  other  party  cannot  complain. 

In  this  case  plaintiffs  showed  at  what  prices  they  could  have 
made  sub-contracts  for  forward  deliveries  according  to  the  con- 
tracts in  suit,  and  the  difference  between  the  prices  fixed  by  the 
contracts  sued  on  and  those  was  correctly  allowed. 

Judgment  affirmed.*- 


(P.  561)  Renunciation  in  course  of  performance.  (p.  572) 

CONNOLLY  V.  SULLIVAN. 

173  MASSACHUSETTS,  1.  — 1899. 

Contract,  to  recover  a  balance  alleged  to  be  due  plaintiff  for  work 
and  labor  in  excavating  a  lot  for  defendant.  There  was  an  ex- 
press contract  under  which  plaintiff  agreed  to  do  the  work  for 
$750.  After  the  work  was  partly  done  defendant  directed 
plaintiff  to  stop.  The  plaintiff  (who  was  losing  largely  under 
his  contract)  did  not  object  to  stopping  work  and  acquiesced  in 
the  direction.  The  work  then  done  was  fairly  worth  $1200; 
to  complete  it  was  worth  $925.     Defendant  had  paid  plaintiff 

1  See  for  an  extended  argument  to  the  contrary  Stanford  v.  McOill,  6  N. 
Dak.  536. 


868  DISCHARGE  OF  CONTRACT. 

^250.  The  worth  of  the  work  done  if  measured  by  the  contract 
price  was  $425.  The  auditor  found  that  if  plaintiff  was  pre- 
vented by  defendant  from  completing  the  contract  he  was 
entitled  to  $950  ($1200  less  $250  paid);  if  he  stopped  volunta- 
rily with  defendant's  consent  he  was  entitled  to  $175  ($425  less 
$250  paid).  At  the  trial  the  judge  directed  a  verdict  for  $950. 
Defendant  alleged  exceptions. 

Morton,  J.  The  exceptions  in  this  case  were  not  only  to  the 
refusal  of  the  court  to  give  the  rulings  which  were  requested, 
but  to  the  ruling  by  which  the  jury  were  directed  to  return  a  ver- 
dict for  the  plaintiff,  irrespective  of  the  contract  price,  for  a  sum 
which  the  auditor  had  found  was  the  fair  market  value  of  all  the 
work  and  labor  performed  and  furnished,  less  what  the  defendant 
had  paid  on  account ;  that  is,  as  we  understand  the  exceptions, 
the  court  ruled,  in  effect,  as  matter  of  law,  against  the  objection 
of  the  defendant,  that,  on  the  auditor's  report,  the  plaintiff  was 
entitled  to  recover  the  amount  for  which  the  jury  were  directed  to 
return  a  verdict,  without  regard  to  the  contract  price.  The  audi- 
tor's report  was  the  only  evidence  in  the  case.  It  not  only  stated 
the  general  conclusions  to  which  the  auditor  came,  but  it  stated 
particular  facts  and  circumstances  relating  to  those  conclusions, 
and  we  think  that  the  defendant  was  entitled  to  go  to  the  jury,  if 
he  so  desired,  on  the  question  whether,  upon  the  auditor's  report, 
the  plaintiff  was  prevented  by  the  defendant  from  going  on  with 
the  contract,  or  whether  it  was  terminated  with  his  consent, 
manifested  in  such  a  manner  that  the  defendant  was  justified  in 
acting  upon  it.  Peaslee  v.  Boss,  143  Mass.  275;  Emerson  v.  Patch, 
129  Mass.  299 ;  Marlayid  v.  Stanwood,  101  Mass.  470,  478. 

If  the  former  was  the  case,  then  the  plaintiff  would  be  entitled 
to  recover,  independently  of  the  contract  price,  the  value  of  the 
labor  and  materials  furnished,  and  of  which  the  defendant  had 
had  the  benefit;  and  the  contract  price  would  be  important  or 
admissible  only  so  far  as  it  might  tend  to  throw  light,  if  at  all,  on 
the  value  of  the  labor  and  materials  actually  furnished.  Fitz- 
gerald V.  Allen,  128  Mass.  232. 

If  the  latter  was  the  case,  then  we  think  that  the  plaintiff's 
right  of  recovery  would  be  limited  by  the  contract  price,  and  the 
amount  recoverable  would  depend  on  the  ratio  of  the  value  of  the 


BY  BREACH.  859 

labor  and  material  actually  furnished  to  what  should  be  found  to 
be  the  total  cost  of  the  work  when  completed  according  to  the 
contract.  See  Veazie  v.  Hosmer,  11  Gray,  396 ;  Atkins  v.  Barri- 
■stable,  97  Mass.  428;  Hayioard  v.  Leonard,  7  Pick.  181;  Koon 
V.  Greenman,  7  Wend.  121.  In  other  words,  in  that  event  we 
think  that  the  rule  adopted  by  the  auditor  would  be  substantially 
correct. 

Exceptions  sustained.^ 


(P.  584)  Divisible  promises.  (p.  594) 

GERLI  V.  POIDEBARD  SILK  MFG.  CO. 

57  NEW  JERSEY  LAW,  432.— 1894. 

Action  on  a  contract  by  Paul  Gerli  against  the  Poidebard 
•Silk  Manufacturing  Company.  From  the  judgment  both  paities 
•assign  error. 

Dixox,  J.  On  March  28,  1893,  C.  &  E.  Gerli,  Fratelli  &  Co. 
entered  into  a  contract  to  sell  and  deliver  in  New  York  to  the 
Poidebard  Silk  Manufacturing  Company  thirty  bales  of  extra 
Piva  new  silk,  deliverable,  ten  bales  July  20th  to  25th,  ten  bales 
August  15th,  and  ten  bales  September  1st  to  10th,  each  install- 
ment to  be  paid  for  sixty  days  after  delivery  at  $5.90  per  pound. 
In  consequence  of  the  lateness  of  the  new  crop,  it  was  impossible 
for  the  sellers  to  make  delivery  of  the  first  ten  bales  within  the 
time  specified,  and  on  July  27th  the  biiyer  extended  the  time  for 
such  delivery  until  August  1st.  On  that  date,  the  impossibility 
still  continuing,  the  buyer  notified  the  sellers  that  it  canceled  the 
contract  because  of  the  default,  and  would  decline  to  receive  any 

1  In  Wellston  Coal  Co.  v.  Franklin  Paper  Co.,  67  Oh.  St.  182,  it  is  held 
that  "the  general  rule  is,  that  where  full  performance  of  a  contract  has 
been  prevented  by  the  wrongful  act  of  the  defendant,  the  plaintiff  has  the 
right  either  to  sue  for  damages,  or  he  may  disregard  the  contract  and  sue  as 
npon  a  quantum  meruit  for  what  he  has  performed,"  distinguishing  DooUUle 
V.  McCullnuffh  (12  Oh.  St.  360)  upon  the  ground  that  in  that  case  the  wrong- 
ful termination  of  the  contract  by  the  defendant  worked  a  benefit  to  the 
plaintiff  and  that  in  such  cases  the  special  rule  is  that  plaintiff  should  be 
confined  to  the  contract  in  seeking  a  recovery.  It  is  believed  that  this  special 
qualification  is  peculiar  to  Ohio.    See  also  Alie  v.  Nadean,  post,  p.  809. 


860  DISCHARGE  OF  CONTRACT. 

of  the  merchandise  ordered.  On  August  15th  the  new  crop  of 
silk  had  not  yet  arrived  in  New  York,  but  it  arrived  before 
September  10th.  Under  these  circumstances,  one  of  the  mem- 
bers of  the  selling  firm  assigned  the  firm's  rights  in  the  contract 
to  Paul  Gerli,  the  plaintiff,  and  thereupon  he  brought  this  suit 
against  the  buyer  to  recover  damages  arising  from  the  refusal  to 
accept  the  installments  of  August  15th  and  September  1st  to 
10th.  At  the  trial  the  justice  denied  the  right  to  damages  for 
the  installment  of  August  15th,  and  directed  a  recovery  of  the 
damages  as  to  the  installment  of  September  1st  to  10th.  On 
exceptions  taken  at  the  trial,  each  party  has  assigned  error.  The 
errors  assigned  by  the  purchaser  will  first  be  considered. 

1.  That  the  claim  for  damages  was  assignable,  so  as  to  author- 
ize the  assignee  to  sue  thereon  in  his  own  name,  is  clear  on  the 
words  of  the  supplement  to  the  practice  act,  approved  March  4^ 
1890  (P.  L.  1890,  p.  24).  It  was  "a.  chose  in  action  arising  on 
contract."  Such  a  chose  in  action  belonging  to  a  partnership 
may  be  transferred  by  a  single  member  of  the  firm.  Story^ 
Part.  §  101. 

2.  The  contract  was  fully  proved  within  the  statute  of  frauds. 
Evidence  introduced  in  behalf  of  the  defendant  showed  that  its 
general  manager  had  written  and  signed  a  memorandum  of  the 
order  given  for  the  goods,  in  which  were  stated  all  the  terms  of 
the  proposed  contract,  and  that  thereupon  the  agent  of  the  sellers 
had  sent  to  the  buyer  a  written  acceptance  of  the  order,  duly 
signed.     Such  proof  was  sufficient.     Browne,  St.  Frauds,  §  346. 

3.  The  other  exception  pressed  by  the  defendant  below  is  that 
the  trial  justice  denied  the  right  of  the  buyer  to  rescind  the  con- 
tract on  the  nondelivery  of  the  first  installment  of  silk.  The 
general  rule  on  this  subject  was  thus  laid  down  by  this  court  in 
Blackburn  v.  Reilly,  47  N".  J.  Law,  290.  "  In  contracts  for  the 
sale  of  goods,  to  be  executed  by  a  series  of  deliveries  and  pay- 
ments, defaults  of  either  party  with  reference  to  one  or  more  of 
the  stipulated  acts  will  not  ordinarily  discharge  the  other  party 
from  his  obligation,  unless  the  conduct  of  the  party  in  default  be 
such  as  to  evince  an  intention  to  abandon  the  contract,  or  a 
design  no  longer  to  be  bound  by  its  terms."  In  the  case  cited 
this  rule  was  enforced  against  the  buyer.     In  Trotter  v.  Heckscher 


BY  BREACH.  861 

(40  N.  J.  Eq.  612)  this  court,  and  in  Otis  v.  Adayns,  (56  N.  J. 
Law,  38)  the  suj)reme  court  enforced  it  against  the  seller. 

That  the  conduct  of  the  vendors  in  the  present  case  did  not 
evince  an  intention  to  abandon  the  contract,  or  not  to  be  bound 
by  its  terms,  appears  beyond  dispute.  They  failed  to  deliver  the 
July  installment  because  it  was  impossible  to  do  so,  offered  to 
deliver  other  silk  which  they  considered  equally  valuable, 
expressed  their  willingness  to  come  to  an  equitable  arrangement 
for  their  default,  and,  on  the  first  intimation  of  a  purpose  on  the 
part  of  the  vendee  to  rescind  the  contract,  they  protested  against 
the  right  of  rescission,  and  insisted  that  they  should  be  permitted 
to  make  the  subsequent  deliveries.  They  showed  a  design  the 
very  opposite  of  repudiation. 

Nor  do  we  find  anything  in  this  contract  or  the  circumstances 
of  the  parties  from  which  it  can  reasonably  be  inferred  that  the 
parties  intended  the  delivery  of  each  installment  of  silk  to  be  a 
condition  precedent  to  the  continuing  obligation  of  the  contract. 
So  far  as  appears,  the  usefidness  to  the  buyer  of  any  installment 
•  did  not  at  all  depend  upon  the  prompt  delivery  of  prior  install- 
ments, and  full  indemnity  for  every  default  could  be  secured  by 
action  based  thereon.  So  that,  under  the  rule  before  declared,  it 
would  seem  that  the  attempt  to  rescind  was  illegal. 

The  defendant,  however,  insists  that  the  rule  is  not  applicable 
to  the  present  case,  because  the  seller's  fault  consisted  in  failing 
to  do  the  first  thing  required  to  be  done  in  performance  of  the 
contract ;  and  Norrington  v.  Wright  (115  U.  S.  188)  is  cited  as  an 
authority  for  this  distinction. 

On  principle,  I  do  not  see  that,  for  such  a  purpose,  the  first  act 
to  be  done  stands  upon  a  different  footing  from  subsequent  acts. 
A  default  in  that  does  not  make  it  more  certain  than  do  other 
defaults  that  the  party  aggrieved  cannot  get  exactly  what  he  con- 
tracted for;  for  that  default,  as  well  as  for  others,  he  may  be 
compensated  by  suit;  and  by  that  default,  as  readily  as  by  others, 
he  may  obtain  an  unconscionable  advantage,  if  he  is  entitled  to 
rescind  or  retain  the  bargain  as  self-interest  may  dictate.  As 
evidence  of  repudiation  or  abandonment,  nonperformance  of  the 
first  thing  required  to  be  done  may  be  more  persuasive  than  if 
the  promisor  had  partially  carried  out  his  contract,  but,  as  a  basis 


862  DISCHARGE  OF  CONTRACT. 

on  wliicli  a  right  of  rescission  is  to  be  supported,  it  cannot, 
merely  because  it  is  first  in  order  of  time,  have  any  greater  impor- 
tance than  later  defaults. 

In  Norrington  v.  Wright,  ubi  supra,  the  plaintiff  had  contracted 
to  ship  from  Europe  to  the  defendant  in  Philadelphia  one  thousand 
tons  of  rails  in  each  of  the  months  of  February,  March,  April,  May, 
and  June ;  in  February  he  had  shipped  four  hundred  tons,  which 
the  defendant  had  received  and  paid  for,  not  knowing  that  less 
than  the  required  quantity  had  been  shipped ;  in  March  the 
plaintiff  had  shipped  885  tons ;  and  the  defendant,  on  learning 
of  these  deficiencies,  declared  the  contract  terminated.  The 
court  held  that  he  was  justified  in  doing  so.  I  am  not  sure  that 
I  perceive  definitely  the  principle  on  which  this  decision  was 
rested.  But  the  case  seems  now  to  be  cited  for  the  following 
paragraph  in  the  opinion  of  the  court :  "  The  seller  is  bound  to 
deliver  the  quantity  stipulated,  and  has  no  right  ...  to  com- 
pel the  buyer  to  accejDt  a  less  quantity;  .  .  .  and,  when  the 
goods  are  to  be  shipped  in  certain  proportions  monthly,  the  sell- 
er's failure  to  ship  the  required  quantity  in  the  first  month  gives 
the  buyer  the  same  right  to  rescind  the  whole  contract  that 
he  would  have  had  if  it  had  been  agreed  that  all  the  goods 
should  be  delivered  at  once."  I  cannot  but  think  that  there  is 
here  some  confusion  of  thought.  If  a  contract  of  sale  requires 
the  delivery  of  all  the  goods  at  once,  and  the  seller  tenders  only 
part  at  the  time  specified,  certainly  the  buyer  may  refuse  to 
accept  the  part ;  but  it  is  scarcely  accurate  to  say  his  refusal  is 
based  upon  a  rescission  of  the  contract.  He  has  simply  refused 
to  do  what  he  never  agreed  to  do.  But  if  the  goods  are  to  be 
delivered  in  installments  at  different  times,  and  the  seller  tenders 
one  installment  on  the  day  specified,  then,  if  the  buyer  refuses 
to  accept  it,  plainly  his  refusal  must  rest  upon  a  different  foun- 
dation. He  had  agreed  to  accept  such  a  tender,  and  his  refusal 
can  be  justified  only  on  the  idea  that  he  has  become  released 
from  that  agreement.  That  is  to  say,  with  reference  to  the  point 
we  are  now  considering,  it  must  appear  that  his  agreement  to 
accept  the  installment  tendered  was  dependent  on  the  due  per- 
formance by  the  seller  of  another  promise,  which  he  had  failed  to 
perform.     We  are  thus  brought  to  the  real  question  in  all  bar- 


BY  BREACH.  868 

gains  of  this  nature,  whether,  on  the  proper  construction  of  the 
contract,  the  performance  of  any  particular  stipulation  by  one 
party  is  a  condition  precedent  to  the  continuance  of  obligation 
upon  the  other  party  ;  and  logically  this  must  be  the  question  as 
well  with  regard  to  the  first  stipulation  as  the  subsequent  ones. 

On  this  question  this  court  adopted  the  general  rule  that  when 
the  seller  has  agreed  to  deliver  the  goods  sold  in  installments, 
and  the  buyer  has  agreed  to  pay  the  price  in  installments  which 
are  proportioned  to  and  payable  on  the  delivery  of  each  install- 
ment of  goods,  then  default  by  either  party  with  reference  to  any 
one  installment  will  not  ordinarily  entitle  the  other  party  to 
abrogate  the  contract.  We  were  led  to  the  adoption  of  this  rule 
because  it  seemed  to  be  supported  by  the  greater  strength  of 
judicial  authority,  and  to  be  most  likely  to  promote  justice.  We 
see  no  sufficient  reason  for  abandoning  it.  The  rule  governs  the 
case  in  hand,  and  maintains  the  right  of  the  plaintiff  to  recover 
damages  for  the  defendant's  refusal  to  accept  the  third  install- 
ment of  silk.  Therefore,  as  against  the  defendant,  the  judgment 
is  not  erroneous. 

The  plaintiff  below  assigns  error  upon  the  exclusion  of  his 
claim  for  damages  because  of  the  refusal  to  accept  the  install- 
ment deliverable  August  loth.  In  this  there  was  no  substantial 
error.  Conceding  that  the  defendant's  repudiation  of  the  whole 
contract  before  August  15th  absolved  the  sellers  from  the  duty 
of  tendering  an  installment  on  that  date,  and  gave  them  an  im- 
mediate right  of  action  against  the  defendant  for  a  breach  of 
contract,  nevertheless,  when  it  appeared,  as  it  did  on  the  trial, 
that  by  no  possibility  could  the  sellers  have  made  tender  of  the 
silk  due  August  15th,  because  the  silk  did  not  arrive  in  New 
York  until  a  later  day,  it  became  evident  that  as  to  that  install- 
ment the  sellers  suffered  no  loss  by  the  breach. 

There  are  other  assignments  of  error  in  the  record,  but,  as 
counsel  did  not  notice  them  in  argument,  we  assume  that  they 
are  all  involved  in  the  matters  above  decided,  or  are  waived. 
The  judgment  should  be  affirmed.^ 

1 A  failure  to  pay  an  installment  is  not  such  a  breach  of  the  entire  con- 
tract as  to  authorize  the  other  party  to  abandon  the  contract  and  recover 
profits  which  he  would  have  made,  although  he  may  abandon  the  contract 


564  DISCHARGE  OF  CONTRACT. 

(P.  627.)  Accord  and  satisfaction  :  Compromise. 

NASSOIY  V.  TOMLINSON. 

148  NEW  YORK,  326.  — 1896. 

Action  by  J.  Felix  Nassoiy  against  David  H.  Tomlinson  and 
others.  From  a  judgment  in  favor  of  plaintiff  (75  Hun,  613), 
defendants  appeal. 

The  plaintiff  sued  to  recover  the  sum  of  $1200,  which  he 
claimed  as  a  balance  due  him  from  the  defendants  for  commis- 
sions on  the  sale  of  real  estate  owned  by  them,  upon  the  agreed 
basis  of  five  per  cent  on  the  purchase  price,  which  was  $30,000. 
The  defendants  claimed  that  the  agreement  was  that  they  should 
pay  the  plaintiff  whatever  they  thought  was  right,  and  that  the 
debt  had  been  discharged  by  an  accord  and  satisfaction. 

Vann,  J.  On  the  6th  of  April,  1887,  the  plaintiff  sold  the 
property  of  the  defendants,  under  an  agreement  that  he  was  to 
receive  compensation  for  his  services  in  making  the  sale,  but  there 
was  a  difference  between  them  as  to  the  amount.  The  sale  was 
not  completed  until  about  June  20,  1887,  on  which  day  Mr. 
Chauncey,  who  represented  the  defendants  in  all  their  dealings 
with  the  plaintiff,  wrote  to  him  as  follows :  "  I  heard  to-day  from 
Mr.  Griffith  that  the  sale  to  Weston  was  completed  on  Saturday. 
I  send  you  a  check  for  three  hundred  dollars  (1  per  cent  on 
$30,000),  your  commission  on  the  sale.  Please  sign,  and  return 
the  inclosed  voucher."  There  was  a  check  for  $300  inclosed, 
payable  to  the  order  of  the  plaintiff,  and  also  an  unsigned  receipt, 
in  these  words :  "  Suspension  Bridge,  New  York,  June  — ,  1887. 
Received  of  the  Tomlinson  estate  three  hundred  dollars,  in  full 
for  commissions  for  sale  to  J.  A.  Weston  of  66-acre  lot.  $300." 
Under  date  of  June  23,  1887,  the  plaintiff  wrote  to  Mr.  Chauncey, 
saying:  "I  don't  know  what  you  mean  by  sending  me  a  check 
for  $300.  I  want  my  five  per  cent  commission  on  the  $30,000." 
No  reply  was  made  to  this  letter,  although  one  was  requested, 

and  recover  for  what  he  has  performed.  fVharton  v.  Winch,  140,  N.  Y. 
287;  Keeler  v.  Clifford,  165  111.  544;  Beatty  v.  Howe  Lumber  Co., 
(Minn.)  79  N.  W.  1013. 


BY  BREACH  :  REMEDIES.  806 

and,  during  the  latter  part  of  July  or  the  first  of  August  follow- 
ing, the  plaintiff,  who  had  in  the  meantime  retained  both  check 
and  voucher,  called  on  Mr.  Chauncey,  in  the  city  of  New  York, 
and,  as  he  testified  on  the  trial,  asked  him  what  he  meant  by 
sending  a  check  for  "  $300  commission  for  selling  the  farm.  I  said 
that  I  wanted  my  five  per  cent  commission,  as  the  understanding 
was  between  us.  He  said  he  wouldn't  give  one  cent  more,  and  I 
left  him.  ...  I  knew  there  was  a  dispute  between  us,  I  claim- 
ing $1500,  and  he  claiming  that  I  was  only  entitled  to  three 
hundred  dollars,  and  that  his  check  paid  that;  and,  with  the 
knowledge  of  that  condition  of  affairs,  I  kept  the  check  from 
July,  1887,  to  January,  1888,  and  then  indorsed  it,  and  drew  the 
money,  and  sent  him  a  receipt  on  account."  The  plaintiff  never 
returned  the  blank  voucher  sent  to  him  with  the  check,  but  in 
January,  1888,  he  indorsed  the  check,  and  drew  the  money  on  it, 
and  then,  under  date  of  January  19, 1888,  wrote  to  Mr.  Chauncey, 
stating  that  he  inclosed  a  receipt  for  $300,  as  part  payment  for  his 
services,  and  that  he  still  claimed  he  was  entitled  to  five  per  cent 
commission,  and  insisted  on  being  paid  at  that  rate.  The  receipt 
inclosed  was  for  $300,  "  in  part  payment  for  commission."  On  the 
24th  of  January,  1888,  Mr.  Chauncey  wrote  to  the  plaintiff,  ac- 
knowledging receipt  of  the  letter  and  voucher,  and  stating  that  he 
should  "  consider  this  payment  in  full  for  all  commissions."  The 
plaintiff  did  not  return  or  offer  to  return  the  money  so  paid  him. 

When  the  plaintiff  rested,  as  well  as  at  the  close  of  the  evi- 
dence, the  defendants  asked  the  court  to  direct  a  verdict  in  their 
favor,  on  the  ground  that,  upon  the  foregoing  facts,  which  were 
not  disputed,  the  plaintiff  was  not  entitled  to  recover,  but  the 
motions  were  denied,  and  the  defendants  excepted. 

Two  questions  of  fact  were  submitted  to  the  jury :  (1)  Whether 
there  was  an  agreement  to  pay  plaintiff  at  the  rate  of  five  per 
cent ;  (2)  whether  the  plaintiff  agreed  to  accept  the  three  hun- 
dred dollars  "  in  place  of  his  claim  for  five  per  cent  commission." 
The  jury  were  instructed  to  find  for  the  plaintiff  if  they  thought 
that  the  agreement  to  pay  at  that  rate  was  made,  and  that  the 
agreement  to  accept  was  not  made;  otherwise,  for  the  defendants. 
They  rendered  a  verdict  in  favor  of  the  plaintiff  for  $1200.  The 
judgment  entered  on  the  verdict  was  affirmed  by  the  general  term 


866  DISCHARGE  OF  CONTRACT. 

upon  its  opinion  written  on  a  former  appeal,  but  then  the  record 
did  not  contain  the  proposed  receipt  in  full.  Nassoiy  v.  Tomlin- 
son,  65  Hun,  491-493. 

The  question  presented  by  this  appeal  is  whether  the  undis- 
puted evidence  so  conclusively  established  an  accord  and  satisfac- 
tion as  to  leave  no  question  of  fact  for  the  jury  upon  that  subject. 
An  accord  and  satisfaction  requires  a  new  agreement  and  the  per- 
formance thereof.  Jaffray  v.  Davis,  124  N.  Y.  164.  It  must  be 
an  executed  contract,  founded  upon  a  new  consideration,  although 
an  agreement  to  accept  an  independent  executory  contract  has 
been  held  sufficient.  Kromer  v.  Heim,  75  N.  Y.  574 ;  Morehouse 
V.  Bank,  98  N.  Y.  503 ;  2  Pars.  Cant.  (7th  ed.),  817,  820.  If 
the  claim  is  liquidated,  the  mere  acceptance  of  a  part,  with  the 
promise  to  discharge  the  whole,  is  not  enough,  for  there  is  no 
new  consideration.  Eyaii  v.  Wai'd,  48  N.  Y.  204.  If  the  claim 
is  unliquidated,  the  acceptance  of  a  part  and  an  agreement  to 
cancel  the  entire  debt  furnishes  a  new  consideration,  which  is 
found  in  the  compromise.  A  demand  is  not  liquidated,  even  if 
it  appears  that  something  is  due,  unless  it  appears  how  much  is 
due ;  and  when  it  is  admitted  that  one  of  two  specific  sums  is  due, 
but  there  is  a  genuine  dispute  as  to  which  is  the  proper  amount, 
the  demand  is  regarded  as  unliquidated  within  the  meaning 
of  that  term  as  applied  to  the  subject  of  accord  and  satisfaction. 
Such  is  the  case  before  us,  as  appears  from  the  testimony  of  the 
plaintiff,  already  quoted.  He  claimed  that  the  defendants  owed 
him  the  sum  of  $1500,  under  an  agreement  to  pay  him  at  one 
rate,  while  the  defendants  claimed  that  they  owed  him  but  $300, 
under  an  agreement  to  pay  him  at  another  rate.  The  verdict  of 
the  jury  upon  this  issue  neither  removed  from  the  case  the  fact 
that  a  dispute  had  existed,  nor  affected  its  force,  as  otherwise  the 
compromise  of  a  disputed  claim  could  never  be  made  the  basis  of 
a  valid  settlement. 

We  come,  therefore,  to  the  question  whether  there  was  an 
acceptance  by  the  plaintiff  of  an  offer  by  the  defendants  to  pay 
the  sum  they  conceded  to  be  due  in  full  satisfaction  of  the  sum  he 
claimed  to  be  due.  In  order  to  determine  this  question,  the  letter 
of  June  20,  1887,  with  the  check  and  receipt  inclosed  therewith, 
should  be  construed  together,  so  as  to  see  whether  the  offer  was 


BY  BREACH:  REMEDIES.  867 

made  upon  a  specified  oondition.  When  thus  construed,  we  find 
the  defendants  saying  to  the  plaintiff,  in  substance :  "  Here  is  a 
check  for  $300  to  pay  your  commission  on  the  sale.  Sign  and 
return  the  inclosed  voucher,  in  full  of  your  commissions."  As 
reflecting  the  intention  of  the  parties,  it  is  the  same,  iu  effect,  as 
if  the  check  had  been  written  "  in  full,"  as  was  the  case  in  Rey- 
nolds V.  Lumber  Co.,  85  Hun,  470.  The  plaintiff  understood  the 
condition,  as  his  testimony  shows,  and  he  never  signed  or  re- 
turned the  voucher,  and  did  not  use  the  check  for  nearly  seven 
months.  In  the  meantime  he  had  an  interview  with  the  agent 
of  the  defendants,  and  learned  that  they  still  adhered  to  their 
position  of  refusing  to  pay  any  more  than  the  check  sent  "in 
full."  After  hesitating  for  five  months  longer,  he  used  the  check, 
and  sent  the  defendants  a  receipt  on  account,  writing  them  that 
he  claimed  a  balance.  This  declaration  was  ex  post  facto,  and 
could  have  no  effect  unless  acquiesced  in  by  the  defendants ;  but 
they  promptly  disclaimed,  and  insisted  that  their  debt  was  paid. 
We  think  that  the  undisputed  evidence  shows  conclusively  that 
the  offer  was  made  in  settlement  of  the  claim,  and  that  the  plain- 
tiff so  understood  it,  when,  by  using  the  check,  he  accepted  the^ 
offer.  The  written  evidence,  the  personal  interview,  and  the  acta 
of  the  plaintiff  permit  no  other  conclusion.  The  circumstances, 
do  not  admit  of  different  inferences,  or  present  any  question  of 
fact,  for  the  letter  and  receipt  can  have  but  one  interpretation. 

The  plaintiff  cannot  be  permitted  to  assert  that  he  did  not 
understand  that  a  sura  of  money  offered  "  in  full "  was  not,  when 
accepted,  a  payment  in  full.  As  was  said  in  Hills  v.  Sommer, 
53  Hun,  392,  394,  he  was  "bound  either  to  reject"  the  check, 
"  or,  by  accepting  it,  to  accede  to  the  defendant's  terms."  The 
money  tendered  belonged  to  them,  and  they  had  the  right  to  say 
on  what  condition  it  should  be  received.  "  Always  the  manner 
of  the  tender  and  of  the  payment  shall  be  directed  by  him  that 
maketh  the  tender  or  payment,  and  not  by  him  that  accepteth  it." 
Pinnel's  Case,  5  Coke,  117.  The  plaintiff  could  only  accept  the 
money  as  it  was  offered,  which  was  in  satisfaction  of  his  demand. 
He  could  not  accept  the  benefit,  and  reject  the  condition ;  for,  if 
he  accepted  at  all,  it  was  cum  onere.  When  he  indorsed  and  col- 
lected the  check  referred  to  in  the  letter  asking  him  to  sign  the 


868  DISCHARGE  OF  CONTRACT. 

inclosed  receipt  in  full,  it  was  the  same,  in  legal  effect,  as  if  lie 
had  signed  and  returned  the  receipt,  because  acceptance  of  the 
check  was  a  conclusive  election  to  be  bound  by  the  condition 
upon  which  the  check  was  offered.  The  use  of  the  check  was 
ipso  facto  an  acceptance  of  the  condition.  The  minds  of  the  par- 
ties then  met  so  as  to  constitute  an  accord ;  and  as  was  said  by 
this  court  in  Fuller  v.  Kemp  (138  N.  Y.  231),  "  the  acceptance  of 
the  money  involved  the  acceptance  of  the  condition,  and  the  law 
will  not  permit  any  other  inference  from  the  transaction." 

We  cannot  distinguish  the  case  in  hand  from  the  case  last 
cited,  where  a  check  for  ^400  was  mailed  with  a  letter  stating 
that  it  was  sent  as  payment  in  full  of  an  unliquidated  demand 
for  $670.  The  creditor  accepted  the  check,  and  used  it,  but 
"  again  sent  his  bill  to  the  defendant,  charging  $670  for  his 
services,  and  crediting  upon  it  $400  received  by  check."  The 
debtor  answered,  calling  attention  to  the  condition  upon  which 
he  had  sent  the  check,  and  requesting  the  creditor  "  either  to 
ieep  the  money  upon  the  condition  named,  or  return  it  to  him 
lay  first  mail " ;  but  no  reply  was  made,  and  the  money  was  not 
returned.  Upon  these  facts,  the  court  held  that  "  when  a  debtor 
•offers  a  certain  sum  of  money  in  full  satisfaction  of  an  unliqui- 
dated demand,  and  the  creditor  accepts  and  retains  the  money, 
his  claim  is  canceled,  and  no  protest,  declaration,  or  denial  on 
iis  part,  so  long  as  the  condition  is  insisted  upon  by  the  debtor, 
can  vary  the  result."  The  principle  that  controlled  that  case 
must  also  control  this,  and  the  judgment  appealed  from  should 
therefore  be  reversed,  and  a  new  trial  granted,  with  costs  to  abide 
the  event. 

All  concur,  except  Haight,  J.,  not  sitting. 

Judgment  reversed.^ 

1  Accord :  Connecticut  River  Lumber  Co.  v.  Brown,  68  U.  S.  239.  Contra : 
Tompkins  v.  Hill,  145  Mass.  379. 


BY  BREACH:  REMEDIES.  869 

(P.  627)  Accord  and  satisfaction.  (p.  629) 

FLYNN  V.  HURLOCK. 

194  PENNSYLVANIA  STATE,  462.  — 1900. 

Assumpsit  for  work  done  and  material  furnished  defendants. 
Plaintiff  had  sent  a  bill  for  $3990.50,  and  afterwards  called  and 
requested  payment.  Defendants  offered  to  pay  it  if  plaintiif 
would  receipt  "  in  full  of  all  demands."  Plaintiff  at  first  refused, 
but  subsequently  accepted  the  money  and  signed  the  receipt, 
stating,  however,  as  he  did  so,  that  he  waived  no  right  to  re- 
cover for  other  claims. 

The  court  entered  a  compulsory  nonsuit. 

Plaintiff  appeals. 

Per  Curiam.  While  we  do  not  think  there  is  any  merit  in 
the  several  assignments  of  error  submitted  on  behalf  of  the  ap- 
pellant, and  while  it  is  certainly  true  that  a  receipt  is  open  to 
explanation,  and  is  not  necessarily  conclusive  in  itself,  we  are 
very  clear  that,  upon  the  testimony  in  this  case,  the  receipt 
"  in  full  of  all  demands,"  given  by  the  plaintiff  to  the  defendants 
when  the  final  payment  was  made,  precludes  him  from  any 
further  recovery.  He  gave  this  receipt  because  the  defendants 
refused  to  pay  any  more  money  without  it.  He  must  be  assumed 
to  have  received  the  money  upon  the  express  condition  that  it 
was  in  full  of  all  demands.  He  signed  it  with  his  eyes  open, 
without  any  fraud,  artifice,  mistake,  or  imposition  practiced 
upon  him,  and  he  is  consequently  bound  by  it.     The  assignments 

of  error  are  all  dismissed. 

Judgment  affirmed. 


(P.  631)  Discharge  by  judgment.  (p.  635) 

ALLEN  V.  COLLIERY  ENGINEER'S  CO. 

46  ATLANTIC  REPORTER  (PA.),  899.-1900. 

Action  by  William  D.  Allen  against  the  Colliery  Engineer's 
Company  for  wages  under  a  contract  of  employment.  From  a 
judgment  in  favor  of  defendant  on  a  demurrer  to  the  surrebutter, 
plaintiff  appeals.     Reversed. 


870  DISCHARGE  OF  CONTRACT. 

Fell,  J.  The  judgment  appealed  from  was  entered  on  a 
demurrer  to  a  surrebutter.  We  are  asked,  however,  to  determine 
the  right  of  the  plaintiff  to  recover  without  regard  to  the  techni- 
cal questions  raised  by  the  pleadings.  The  facts  alleged  are  that 
the  plaintiff  was  employed  by  the  defendant  as  a  manager  of  a 
branch  of  its  business  for  one  year,  beginning  January  12,  1898, 
at  a  salary  of  $75  per  week.  On  July  2,  1898,  he  was  discharged 
without  cause.  On  July  18th,  he  sued  the  defendant  for  two 
weeks'  salary  in  the  district  court  of  the  city  of  Brooklyn,  N.  Y., 
and  recovered  a  judgment  therefor,  which  has  been  paid.  This 
action  was  brought  after  the  expiration  of  the  time  for  which  the 
plaintiff  was  employed  to  recover  the  salary  for  the  balance  of 
the  year.  The  defendant  pleaded  the  recovery  of  the  judgment  in 
New  York  in  bar.  It  is  conceded  that  while  the  plaintiff  was  in 
the  employ  of  the  defendant  he  could  have  maintained  a  separate 
action  for  each  week's  salary  as  it  became  due;  but  it  is  con- 
tended that  after  his  discharge  his  only  remedy  was  an  action 
for  damages  for  the  breach  of  the  contract,  and  that,  as  there  can 
be  but  one  recovery  on  that  ground,  he  is  concluded  by  the  action 
brought  in  New  York. 

The  generally  recognized  rule  is  that  an  employe  for  a  fixed 
period,  who  has  been  wrongfully  discharged,  may  either  treat  the 
contract  as  existing,  and  sue  for  his  salary  as  it  becomes  due,  not 
on  a  quantum  meruit,  but  by  virtue  of  the  special  contract,  his 
readiness  to  serve  being  considered  as  equivalent  to  actual  ser- 
vice, or  he  may  sue  for  the  breach  of  contract  at  once  or  at  the 
end  of  the  contract  period,  but  for  the  breach  he  can  have  but 
one  action.  2  Smith,  Lead.  Cas.  38,  note  to  Cutter  v.  Poioell; 
7  Am.  Law.  Reg.  (N.  S.)  148,  note  to  Huntington  v.  Railroad  Co. 
Our  cases  are  in  entire  harmony  with  this  rule.  In  Algeo  v. 
Algeo  (10  Serg.  &  R.  235),  it  was  held  that,  where  the  perform- 
ance of  services  had  been  prevented  by  the  discharge  of  the  em- 
ploye, he  must  declare  on  the  special  agreement,  and  could  not 
recover  on  the  implied  promise,  as  the  law  would  infer  a  promise 
from  the  acts  of  the  plaintiff  only,  and  not  from  the  acts  of  pre- 
vention by  the  defendant.  In  Telephone  Co.  v.  Root  (Pa.  Sup.) 
4  Atl.  828,  the  plaintiff  sued  during  the  contract  period  on  an 
agreement  which,  as  in  this  case,  was  severable  because  the  con- 


BY  BREACH:  REMEDIES.  871 

sideration  was  apportioned.  In  the  opinion  in  Kirk  v.  Hartman 
(63  Pa.  St,  97),  it  was  said  by  Sharswood,  J.,  that  a  servant  dis- 
missed without  cause  before  the  expiration  of  a  definite  period 
of  employment  could  maintain  an  action  of  debt  on  the  special 
agreement. 

It  follows  that  if  the  recovery  in  the  New  York  court  was  for 
the  installments  of  salary  then  due,  as  alleged  in  the  declaration 
in  this  case,  the  plaintiff  may  maintain  his  action ;  if  it  was  for 
damages  for  the  breach  of  the  contract  as  averred  in  the  plea 
filed,  he  is  concluded  by  it.  There  is  nothing  in  the  record 
before  us  which  throws  any  light  upon  this  question,  and  the 
case  must  go  back  for  decision  in  the  common  pleas. 

The  judgment  is  reversed,  with  a  procedendo. 


(P.  631)  Discharge  by  judgment.  (p.  635) 

ALIE  V.  NADEAU. 

93  MAINE,  282.— 1899. 

This  was  an  action  by  the  plaintiff  to  recover  wages  for  the 
last  two  months  of  a  period  of  six  months,  under  an  agreement 
entered  into  November  9,  1897,  wherein  defendant  agreed  to 
employ  plaintiff  for  six  months  at  wages  of  $10  per  week, 
payable  weekly. 

After  keeping  plaintiff  in  his  employ  about  two  months,  or 
to  January  15,  1898,  defendant  discharged  him  without  cause. 
March  12,  1898,  the  plaintiff  brought  suit  to  recover  the  wages 
due  him  up  to  that  time,  and  on  trial  a  jury  found  for  the 
plaintiff  on  all  the  issues,  and  rendered  judgment  for  the 
wages  due  up  to  March  12,  1898.  This  judgment  has  been  satis- 
fied. 

The  present  suit  was  brought  at  the  expiration  of  the  six- 
months  period  to  recover  the  balance  of  wages  due  after  March 
12,  1898.  The  jury  rendered  a  verdict  for  the  plaintiff,  and  the 
defendant  took  exceptions  to  the  refusal  of  the  court  to  nonsuit 
the  plaintiff,  and  also  upon  the  court's  refusing  to  make  certain 
rulings  requested  by  defendant,  which  appear  in  the  opinion. 


872  DISCHARGE  OF  CONTRACT. 

Savage,  J.  The  plaintiff  brings  this  action  to  recover 
damages  for  the  breach  of  a  contract  of  service,  whereby  the 
plaintiff  alleges  that  he  agreed  to  enter  and  remain  in  the  employ- 
ment of  the  defendant  for  the  period  of  six  months  from  the  9th 
day  of  November,  1897,  and  that  the  defendant  agreed  to  hire 
the  plaintiff  for  the  same  period,  and  to  pay  him  for  his  labor 
the  sum  of  $10  per  week.  The  plaintiff  further  alleges  that  he 
entered  upon  the  performance  of  the  contract  upon  his  part,  and 
continued  to  work  until  January  15,  1898,  upon  which  day  he 
was  discharged  by  the  defendant,  without  lawful  cause. 

The  case  shows  that  the  plaintiff  was  paid  all  wages  due  him 
up  to  the  time  of  his  discharge.  On  March  12, 1898,  the  plaintiff 
commenced  an  action  against  the  defendant  for  damages,  alleging 
the  same  breach  of  the  same  contract  as  is  alleged  here,  and 
claiming  damages  to  the  date  of  his  writ.  In  that  action  he 
ultimately  recovered  judgment  in  damages  for  an  amount  equal 
to  the  weekly  wages  agreed  upon  from  January  15,  1898,  to 
March  12,  1898. 

This  action  was  commenced  November  23,  1898,  and  the  plain- 
tiff now  claims  to  recover  damages  from  March  12,  1898,  to  May 
9,  1898,  the  remainder  of  the  period  covered  by  the  contract.  At 
the  close  of  the  testimony,  the  defendant's  counsel  requested  the 
presiding  justice  to  instruct  the  jury  that  the  judgment  in  the 
former  action  was  a  bar  to  recovery  in  this  suit.  To  a  refusal  to 
give  this  instruction  the  defendant  excepted. 

We  think  the  requested  instruction  should  have  been  given. 
Here  is  a  single  and  indivisible  contract,  a  hiring  for  the  period 
of  six  months.  When  the  defendant  discharged  the  plaintiff,  he 
broke  the  contract.  He  broke  it  altogether.  But  there  was  only 
one  breach.  The  plaintiff  urges  that,  while  the  contract  was 
entire,  the  performance  was  divisible ;  that  each  week's  work 
constituted  a  performance  so  far,  and  that  the  defendant  was  in 
default  each  week  he  failed  to  continue  plaintiff  in  his  employ- 
ment. Hence  the  plaintiff  claims  that  an  action  will  lie  for  each 
default.  A  little  examination  will  show  that  this  position  can- 
not be  sustained. 

The  contract  of  the  defendant  may  be  viewed  in  a  twofold 
aspect.     In  the  first  place,  he  agreed  to  continue  the  plaintiff  in 


BY  BREACH:  REMEDIES.  87S 

his  employment  for  a  period  of  six  months.  That  contract  was 
entire  and  indivisible.  There  was  a  single  breach  of  that  part  of 
the  contract.  He  also  agreed,  we  will  assume,  to  pay  the  plain- 
tiff weekly.  Performance  of  that  part  of  the  contract  by  the 
defendant  was  divisible,  and  the  plaintiff  might  have  maintained 
an  action  for  wages  for  services  performed  on  each  failure  of  the 
defendant  to  pay  as  he  agreed.  To  this  effect  are  most  of  the 
cases  cited  by  the  plaintiff  from  our  own  decisions.  But  such  is 
not  this  case.  After  the  plaintiff  was  discharged,  he  performed  no 
more  service,  and  was  entitled  no  longer  to  wages  as  such,  for  the 
contract  was  at  an  end.  The  damage  was  the  loss  of  his  contract 
right  to  earn  wages.  He  was  entitled  to  recover  all  the  damages 
he  sustained  by  the  breach,  both  present  and  prospective,  and  for 
such  a  breach  but  one  action  can  be  maintained.  Sutherland  v, 
Wyer,  67  Me.  64.  The  plaintiff  brought  an  action  for  breach  of 
contract,  and  recovered  judgment  for  damages.  It  is  to  be  pre- 
sumed that  he  recovered  all  he  was  entitled  to  receive  for  that 
breach.  We  think  the  principles  stated  in  Sutherland  v.  Wyer, 
sxipra,  are  decisive  upon  this  point.  See,  also,  Miller  v.  Goddard, 
34  Me.  102 ;  Colburn  v.  Woodworth,  31  Barb.  381 ;  Olmstead  v. 
Bach,  78  Md.  132 ;  James  v.  Allen  Co.,  44  Ohio  St.  226,  and 
cases  cited ;  2  Sedgw.  Dam.   (8th  ed.),  §  366. 

But  the  plaintiff  contends  that  the  rule  should  not  apply  here, 
because  in  his  first  writ  he  claimed  damages  only  to  May  12, 
1898.  If  this  contention  is  sound,  it  follows  that  any  litigant 
may  sever  an  indivisible  contract,  and  become  entitled  to  main- 
tain several  actions  as  for  several  breaches  of  it,  simply  by  limit- 
ing his  claim  for  damages  in  his  earlier  actions  to  less  than  full 
damages.  We  think  this  cannot  be  done.  As  we  have  already 
suggested,  the  law  presumes  that  the  plaintiff  alleged  and  recov- 
ered in  his  first  action  all  the  damages  that  he  sustained. 

Exceptions  sustained. 

(P.  649)  Destruction  of  subject-matter.  (p.  653) 

ANGUS  V.  SCULLY. 

57  NORTHEASTERN  REPORTER  (Mass.)  674.  — 1900. 
Action  by  one  Angus  and  others  against  one  Scully  to  recover 


^74  DISCHARGE  OF  CONTRACT. 

for  services  performed  in  moving  a  building.  From  a  judgment 
m  favor  of  plaintiffs,  defendant  excepts.     Exceptions  overruled. 

Hammoxd,  J.  The  contract  was  that  the  plaintiffs  should 
move  a  large  building  belonging  to  the  defendants  from  a  lot  on 
Third  Street  to  a  lot  on  First  Street,  and  also  change  the  location 
of  two  other  buildings,  of  which  one  was  on  the  First  Street  lot, 
and  one  on  the  Third  Street  lot ;  and  the  defendant  was  to  pay 
the  $840.  In  accordance  with  the  agreement,  the  plaintiffs 
began  the  work.  "They  first  moved  the  house  on  the  Third 
Street  lot,  and  then  began  to  move  the  large  building  from  the 
Third  Street  lot  across  certain  open  lots  toward  the  lot  on  First 
Street.  When  said  last-named  building  had  been  moved  about 
half  the  distance  to  said  lot  on  First  Street  it  was  entirely  con- 
sumed by  fire  at  some  time  during  the  night,  and  thereupon,  with 
the  assent  of  the  defendant,  no  further  work  was  done  in  moving 
either  of  the  other  buildings." 

In  this  action  the  plaintiffs  seek  to  recover  the  fair  value  of 
the  services  rendered  by  them  in  the  work  done  down  to  the  time 
of  the  fire.  The  court  refused  to  rule  as  requested  by  the  defend- 
ant, that  the  plaintiffs  could  not  recover,  and  submitted  the  case 
to  the  jury  upon  instructions  which  would  authorize  them  to  find 
for  the  plaintiffs  if  they  were  satisfied  that  the  fire  was  not  attribu- 
table to  any  negligence  of  the  plaintiffs.  We  see  no  error  in  the 
rulings  under  which  the  case  thus  went  to  the  jury.  Clearly,  one 
of  the  implied  conditions  of  the  contract  was  that  the  building 
should  continue  to  exist.  Upon  the  destruction  of  the  building, 
the  work  could  not  be  completed  according  to  the  contract. 

Authorities  differ  as  to  the  rights  of  the  parties  in  such  a  case, 
but  so  far  as  respects  this  commonwealth  the  rule  is  well  settled. 
As  stated  by  Knowlton,  J.,  in  Butterfield  v.  Byron  (153  Mass.  517, 
523)  "the  principle  seems  to  be  that  when,  under  an  implied  con- 
tract, the  parties  are  to  be  excused  from  performance  if  a  certain 
event  happens,,  and  by  reason  of  the  happening  of  the  event  it 
becomes  impossible  to  do  that  which  was  contemplated  by  the 
contract,  there  is  an  implied  assumpsit  for  what  has  properly 
been  done  by  either  of  them ;  the  lew  dealing  with  it  as  done  at 
the  request  of  the  other,  and  creating  a  liability  to  pay  for  its 
value,  to  be  determined  by  the  price  stipulated  in  the  contract,  or 


BY  IMPOSSIBILITY.  875 

in  some  other  way  if  the  contract  price  cannot  be  made  applica- 
ble." Stated  more  narrowly,  and  with  particular  reference  to  the 
circumstances  of  this  case,  the  rule  may  be  said  to  be  that  where 
one  is  to  make  repairs  or  do  any  other  work  on  the  house  of  an- 
other under  a  special  contract,  and  his  contract  becomes  impos- 
sible of  performance  on  account  of  the  destruction  of  the  house 
without  any  fault  on  his  part,  then  he  may  recover  for  what  he 
has  done.  This  case  comes  clearly  within  this  rule.  Lord  v. 
Wheeler,  1  Gray,  282 ;  Butterfield  v.  Byron,  uhi  supra,  and  cases 

therein  cited.  tti        ..•  ,  j  i 
Exceptions  overruled.* 

(p.  649)  Destruction  of  subject-^matter.  (p.  653) 

SIEGEL,  COOPER  &  CO.  v.   THE  EATON  &  PRINCE  CO. 

165  ILLINOIS,  550.  — 1897. 

Action  by  the  Eaton  &  Prince  Company  against  Siegel,  Cooper 
&  Co.  There  was  a  judgment  for  plaintiff,  which  was  affirmed  by 
the  appellate  court  (60  111.  App.  639),  and  defendant  appeals. 

This  is  an  action  by  appellee  against  appellant,  to  recover 
money  due  appellee  under  a  contract  to  construct  an  elevator  in  a 
building  belonging  to  appellant,  which  was  destroyed  during  the 
progress  of  the  work.  The  whole  contract  price  was  $2500,  pay- 
able as  the  work  progressed,  as  follows :  "  One-half  when  engine 
is  on  foundation,  and  final  payment  to  be  due  and  payable  when 
the  elevator  is  put  up  in  good  running  order."  The  first  count 
of  the  declaration,  which  is  in  assumpsit,  sets  up  the  con- 
tract, and  alleges  that  the  engine  mentioned  therein  was  on  the 
foundation  prior  to  the  fire,  and  claimed  a  right  to  recover 
$1250  by  the  terms  of  the  contract.  The  second  count  also  set 
up  the  contract,  and  alleged  the  performance  of  work  and  furnish- 
ing materials  by  plaintiff,  of  the  value  of  $2000,  when,  without 
its  fault,  the  building  was  destroyed.  The  plea  is  the  general 
issue.     The  cause  was  tried  on  the  following  stipulation : 

1  In  Hysell  v.  Sterling  Coal  &  Mfg.  Co.  (W.  Va.),  33  S.  E.  Rep.  95,  the 
plaintiff  contracted  to  put  a  tin  roof  on  a  house  at  §5  per  square,  and  when 
the  work  was  nearly  completed  the  house  was  burned.  It  was  held  that 
plaintiff  could  recover  in  quantum  meruit  for  the  work  done. 


876  DISCHARGE  OF  CONTRACT. 

"  It  is  hereby  stipulated  and  agreed  that  the  plaintiff  and 
defendants  entered  into  the  contract  on  the  first  day  of  June,  1891 ; 
that  under  the  said  contract,  the  plaintiff  on  the  first  day  of  August, 
1891,  had  the  engine  mentioned  therein  on  its  foundation,  but  not 
leveled  nor  fastened  to  said  foundation,  and  had  prepared  material 
and  done  labor  under  said  contract  to  the  total  value  of  $1390 ;. 
that  neither  the  cabs,  the  cage,  nor  the  cable  for  same  was  on. 
said  premises  at  the  time  the  premises  of  Siegel,  Cooper  &  Co. 
were  destroyed  by  fire ;  that  the  engine  had  been  placed  on  the- 
foundation  as  aforesaid  about  six  o'clock  on  Saturday  afternoon,. 
August  1,  1891 ;  that  fire  destroyed  the  premises  of  Siegel, 
Cooper  &  Co.,  in  which  said  elevator  and  machinery  therefor 
under  said  contract  was  to  be  placed,  and  broke  out  about  7.30 
o'clock  on  Monday  morning,  August  3,  1891 ;  that  all  work  to  h& 
done  under  the  contract  had  not  been  performed  when  th& 
premises  were  destroyed  by  fire ;  that  the  premises  were  destroyed 
by  fire  without  the  fault  of  either  party  to  the  contract,  and 
nothing  had  been  paid  to  the  Eaton  &  Prince  Co.  by  Siegel,. 
Cooper  &  Co.  under  or  upon  said  contract ;  that  defendant  had. 
the  hatchways  ready  for  the  elevator  work  on  July  10,  1891,  and 
plaintiff  had  the  uninterrupted  use  of  the  hatchways  on  and 
after  said  date.  It  is  further  stipulated  that  the  jury  in  this 
case  shall  be  waived  and  the  same  submitted  to  the  court  for  trial, 
without  a  jury." 

The  plaintiff  recovered  judgment  for  $1390,  the  full  value  of 
material  furnished  and  labor  done.  That  judgment  has  been. 
affirmed  by  the  appellate  court. 

The  trial  court  held  the  following  propositions  in  the  decision 
of  the  case : 

"  The  court  holds,  as  a  matter  of  law,  that  if  the  plaintiff  made 
and  entered  into  the  contract  in  evidence  with  the  defendant,  for 
the  construction  of  an  elevator  and  appurtenances  as  set  forth  in 
said  contract;  that  work  under  said  contract  had  so  far  pro- 
gressed that  the  engine  thereof  had  been  placed  upon  its  founda- 
tion ;  and  that  afterwards,  and  without  fault  on  the  part  of  the 
plaintiff,  the  building  in  which  said  elevator,  with  its  appurte- 
nances, etc.,  was  to  be  placed  or  constructed,  was  on  or  about 
August    1,   1891,   destroyed    by   fire,  —  then    the   plaintiff  was- 


BY  IMPOSSIBIUTY.  877 

excused  from  further  compliance  with  said  con  act,  and  is 
entitled  to  recover  of  and  from  the  defendant  the  sum  of  $1250, 
with  interest  thereon  at  the  rate  of  five  per  cent  per  annum,  from 
said  August  1,  1891." 

"  And  the  court  further  holds  that  if  the  plaintiff  set  about  the 
performance  of  said  contract,  and  prepared  material  and  machin- 
ery in  accordance  with  the  terms  of  said  contract,  and  delivered 
a  part  thereof  to  the  building  in  which  said  elevator  and  its 
appurtenances  was  to  be  constructed  or  built,  and  that  afterwards, 
and  on  or  about  the  first  day  of  August,  1891,  the  said  building  in 
which  said  elevator  was  being  constructed  was  destroyed  by  fire, 
without  the  fault  of  the  plaintiff,  then,  as  a  matter  of  law,  the 
plaintiff  is  entitled  to  recover  of  and  from  the  defendant  the  full 
value,  to  be  determined  by  the  evidence  or  stipulation  of  the 
parties,  of  all  work  done  and  material  prepared  and  delivered  to 
said  building,  pursuant  to  said  contract,  prior  to  the  happening  of 
the  fire." 

Wilkin,  J.  It  is  insisted  that  the  court  erred  in  holding  these 
propositions,  and  in  refusing  counter  propositions  asked  by  the 
appellant,  its  contention  being  that  the  contract  is  an  entire 
one,  and  the  building  in  which  the  elevator  was  to  be  placed 
having  been  destroyed  by  fire  before  the  time  for  final  pay- 
ment, without  any  fault  of  either  party,  no  recovery  for  the  work 
done  or  materials  furnished  could  be  had.  As  will  be  seen  from 
plaintiff's  declaration,  it  proceeds  on  two  theories :  First,  that  the 
contract  was  not  an  entire  one,  so  far  as  the  payments  were  con- 
cerned ;  and,  second,  even  if  it  was,  under  the  law  it  was  entitled 
to  recover  the  value  of  the  work  done  and  materials  furnished  prior 
to  the  destruction  of  the  building.  The  judgment  is  upon  this 
last  theory,  and  is  based  upon  the  law  as  stated  in  the  second  of 
the  above  propositions.  The  theory  upon  which  this  proposition 
is  based  is  that,  under  the  contract  requiring  the  elevator  to  be 
placed  in  a  particular  building,  it  was  the  duty  of  defendant  to 
furnish  and  provide  that  building,  and  therefore  it  is  liable,  even 
though  the  destruction  was  without  its  fault.  The  rule  of  law, 
as  we  understand  it,  is  otherwise.  Thus,  in  Add.  Cont.,  p.  401, 
it  is  said  :  "  Where  a  man  contracts  to  expend  materials  and  labor 
on  buildings  belonging  to  and  in  the  occupation  of  the  employer, 


878  DISCHARGE  OF  CONTRACT. 

to  be  paid  for  on  completion  of  the  whole,  and  before  completion 
fhe  buildings  are  destroyed  by  accidental  lire,  the  contractor  is 
excused  from  completing  the  work,  but  is  not  entitled  to  any 
compensation  for  the  work  already  done,  which  perished  without 
any  default  of  the  employer."  This  doctrine  is  sustained  by 
Brumby  v.  Smith,  3  Ala.  123 ;  Lord  v.  Wheeler,  1  Gray,  282 ;  Guillen 
V,  Toudy,  5  Wkly.  Notes  Cas.  528.  The  rule  seems  to  be  adduced 
from  the  case  of  Appleby  v.  Myers,  L.  R.  2  C.  P.  651.  In  that 
case  the  action  was  to  recover  for  a  part  j)erf ormance  of  a  contract 
to  furnish  and  attach  to  a  building  of  the  defendant  certain 
machinery,  to  be  paid  for  upon  the  completion  of  the  work.  The 
premises,  together  with  part  of  plaintiff's  materials,  were 
destroyed  by  fire  before  the  contract  was  completed.  It  was  held 
that  there  was  no  right  of  action,  the  court  saying :  "  We  think 
when,  as  in  the  present  case,  the  premises  are  destroyed  without 
fault  on  either  side,  it  is  a  misfortune  equally  affecting  both 
parties,  excusing  both  from  further  performance  of  the  contract, 
by  giving  a  cause  of  action  to  neither."     See  Bish.  Cont.  §  588. 

It  is  insisted  by  counsel  for  appellee  —  and  the  decision  of  the 
appellate  court  is  in  conformity  with  that  contention  —  that  a 
different  rule  is  announced  in  Cleary  v.  Sohier,  120  Mass.  210,  and 
Rawson  v.  Clark,  70  111.  656.  We  do  not  so  understand  either 
of  these  cases.  The  Massachusetts  case  was  upon  an  oral  contract 
to  lath  and  plaster  a  certain  building  at  a  certain  price  per  square 
yard.  "  No  agreement  was  made  and  nothing  tvas  said,  as  to  terms 
or  times  of  payment,  but  only  that  the  work  was  to  be  done  for 
forty  cents  per  yard."  A  certain  part  of  the  work  being  done, 
the  building  was  destroyed,  without  the  fault  of  either  party. 
The  amount  claimed  by  plaintiff  was  $474,  the  reasonable  value 
of  the  work  done.  All  that  is  said  by  the  court  in  the  decision  of 
the  case  is :  "  The  building  having  been  destroyed  by  fire  without 
the  fault  of  the  plaintiff,  so  that  he  could  not  complete  his  con- 
tract, he  may  recover  under  a  count  for  work  done  and  materials 
furnished ; "  citing  Lord  v.  Wheeler,  supra,  and  Wells  v.  Calnan, 
107  Mass.  514.  This  in  no  way  conflicts  with  Appleby  v.  Myers, 
supra,  for  it  was  said  in  that  case :  "  It  is  quite  true  that  materials 
worked  by  one  into  the  property  of  another  become  a  part  of  that 
property.     This  is  equally  true,  whether  it  be  fixed  or  movable 


BY  IMPOSSIBILITY.  879 

property.  Bricks  built  into  a  wall  become  part  of  the  house. 
Thread  stitched  into  a  coat  which  is  under  repair,  or  planks  and 
nails  and  pitch  worked  into  a  ship  under  repair,  become  part  of  the 
coat  or  the  ship ;  and  therefore,  generally,  and  in  the  absence  of 
something  to  show  a  contrary  intention,  the  bricklayer  or  tailor  or 
shipwright  is  to  be  paid  for  the  work  and  materials  he  has  done 
and  provided,  although  the  whole  work  is  not  complete.  It  is  not 
material  whether  in  such  case  the  noncompletion  is  because  the  ship- 
wright did  not  choose  to  go  on  with  the  work  (as  was  the  case  in 
Roberts  v.  Havelock,  3  Barn.  &  Adol.  404),  or  because,  in  consequence 
of  a  fire,  he  could  not  go  on  with  it  (as  in  3fenetone  v.  Athawes,  3 
Burrows,  1592).  But,  though  this  is  the  prima  facie  contract 
between  those  who  enter  into  contracts  for  doing  work  and  supply- 
ing materials,  there  is  nothing  to  render  it  illegal  or  absurd  in  the 
workman  to  agree  to  complete  the  whole,  and  to  be  paid  when  the 
whole  is  complete,  and  not  till  then ;  and  we  think  the  plaintiffs 
in  the  present  case  had  entered  into  such  a  contract." 

The  case  of  Eawson  v.  Clark  has  no  bearing  whatever  upon  the 
case.  There  the  plaintiff  agreed  to  "  manufacture  and  place  in 
the  building  "  certain  iron  work,  for  a  certain  price,  85  per  cent 
of  which  was  to  be  paid  on  the  certificate  of  the  architect  as  the 
work  progressed,  and  the  balance,  15  per  cent,  when  the  work 
was  completed.  The  suit  was  for  the  iron  work  which  had  been 
manufactured.  The  evidence  showed  that  the  price  agreed  upon 
for  manufacturing  the  iron  was  $206,  and  for  putting  it  up  about 
$75.  Upon  the  completion  of  the  manufacturing  of  the  iron,  and 
the  delivery  of  a  small  portion  of  it,  the  defendant  notified  the 
plaintiff  that  the  building  was  not  ready  for  the  work,  and 
directed  him  to  send  no  more  until  it  should  be  ready,  promising 
to  notify  him  when  that  time  arrived.  A  week  later  the  building 
was  destroyed  by  fire.  The  time  required  to  put  up  the  work 
would  have  been  about  two  days  ;  so  that  it  clearly  appeared  in 
that  case  that  the  plaintiff  was  prevented  from  completing  the 
work,  not  by  the  destruction  of  the  building  by  fire,  but  because 
the  defendant  did  not  have  it  ready  for  the  work  when  plaintiff 
offered  to  complete  it,  and  hence  we  said :  "  Appellees  were  in  no 
way  in  default.  They  were  ready  and  offered  to  fully  perform 
within  the  time  limited,  but  were  prevented  by  appellant.     The 


880  DISCHARGE  OF  CONTRACT. 

reason  of  their  not  entirely  completing  their  contract,  by  placing 
the  iron  work  in  the  building,  was  the  default  of  the  defendant, 
in  not  having  a  building  provided  for  the  purpose."  This,  cer- 
tainly, does  not  mean  that  they  were  in  default  in  not  having  a 
building  because  it  was  finally  destroyed  by  fire,  but  because  the 
building  "  was  not  then  ready  for  the  work,"  etc. 

We  think  the  law  is  that  where  a  contract  is  entered  into  with 
reference  to  the  existence  of  a  particular  thing,  and  that  thing 
is  destroyed  before  the  time  for  the  performance  of  the  contract, 
■without  the  fault  of  either  party,  both  parties  are  excused  from 
performing  the  contract,  but  neither  is  entitled  to  recover  any- 
thing for  a  part  performance  thereof. 

It  remains,  however,  to  be  determined  whether  this  contract  is 
an  entire  contract  within  that  rule.  It  will  be  seen  that  by  its 
terms  payment  was  to  be  ^ade,  not  upon  the  completion  of  the 
work,  but  "as  the  work  progresses,  as  follows:  One-half  when 
the  engine  is  on  foundation,  and  final  payment  to  be  due  and 
payable  when  the  elevator  is  put  up  in  good  running  order ; " 
thus  clearly  providing  for  payment  by  installments.  Counsel 
insist,  however,  that  this  does  not  destroy  the  entirety  of  the 
contract,  because  they  say  the  $1250  was  a  mere  arbitrary  sum, 
fixed  without  reference  to  the  value  of  the  work  done  at  the 
time  designated  for  its  payment;  and  that  the  phrase  "when 
the  engine  is  on  foundation"  merely  named  an  arbitrary  time 
at  which  a  partial  payment  should  be  made,  without  reference  to 
the  value  of  the  work  and  material  furnished  at  that  time ;  and 
that  the  payment  of  the  installment  in  that  manner  was  merely 
for  the  convenience  of  the  contractor,  and  as  an  evidence  of  the 
good  faith  of  Siegel,  Cooper  &  Co.  in  completing  its  part  of  the 
contract  by  making  the  payment.  If  all  this  were  time,  we  are 
unable  to  see  why  the  contract  is  not  severable,  so  far  as  the  pay- 
ments are  concerned.  But  we  do  not  think  the  contract  is  fairly 
susceptible  of  that  construction.  The  $1250  is  not  a  mere  arbi- 
trary sum,  fixed  without  reference  to  the  value  of  the  work  done 
at  the  time  of  paying  the  installment.  Payment  was  to  be  made 
as  the  work  progressed,  one-half  when  the  engine  was  on  the 
foundation.  The  parties  here  fixed  the  sum,  by  agreement,  which 
should  be  paid  when  the  work  had  progressed  thus  far,  and  pre- 


BY  IMPOSSIBILITY.  881 

smnably  with  reference  to  the  value  of  the  material  and  labor 
then  placed  in  the  defendant's  building.  That  it  served  the  con- 
venience of  the  contractor,  and  evidenced  the  good  faith  of  the 
employer,  in  no  way  affects  the  case. 

Parsons,  in  his  work  on  Contracts  (6th  ed.,  vol.  2,  §  517), 
speaking  of  the  entirety  of  contracts,  says :  "  If  the  part  to  be 
performed  by  one  party  consists  of  several  distinct  and  separate 
items,  and  the  price  to  be  paid  by  the  other  is  apportioned  to 
each  item  to  be  performed,  or  is  left  to  be  implied  by  law,  such  a 
contract  will  generally  be  held  to  be  severable  ;  and  the  same  rule 
holds  where  the  price  to  be  paid  is  clearly  and  distinctly  appor- 
tioned to  different  parts  of  what  is  to  be  performed,  although  the 
latter  is  in  its  nature  single  and  entire."  See  note  C  to  the  same 
section. 

In  Schwartz  v.  Saunders  (46  111.  18),  Saunders  made  a  contract 
with  Schwartz  to  do  the  carpenter  work,  and  furnish  the  material 
therefor  on  a  brick  building  being  erected,  to  be  paid  for  as  the 
work  progressed,  upon  estimates  to  be  furnished  by  the  architect. 
The  building  was  blown  down,  after  an  estimate  of  certain  car- 
penter work,  and  before  the  contract  was  completed ;  and  it  was 
held  that  the  contractor,  under  such  circumstances,  was  justified 
in  abandoning  the  contract,  and  entitled  to  a  mechanic's  lien  for 
the  work  done.  It  was  contended  there,  as  here,  that  the  de- 
struction of  the  building  absolved  both  parties,  and  protected  the 
defendant  from  any  action  for  the  work  done,  the  case  of  Appleby 
V.  Myers,  supra,  being  relied  upon  to  support  the  contention,  but 
it  was  said  of  the  Appleby  Case :  "  This  case  we  have  examined, 
and,  from  the  statement  of  it,  it  would  appear  the  contract  was 
unlike  the  one  between  these  parties,  which  provides,  in  terms, 
that  85  per  cent  of  the  work  estimated  by  the  architect  should 
be  paid  as  the  work  progressed,  whilst,  in  the  case  cited,  no  pay- 
ment was  to  be  made  until  the  work  was  completed,  and,  as  it  was 
not  completed,  the  mechanic  could  not  recover  for  the  work  he 
had  done."  It  is  true  that  there  are  distinguishing  features 
between  that  case  and  this,  prominent  among  which  is  the  fact 
that  there  the  defendant  had  positively  refused  to  pay  the  archi- 
tect's estimate  of  the  work  done  before  the  destruction  of  the 
building,  and  afterwards  refused  to  pay  the  same,  insisting  that, 


882  DISCHARGE  OF  CONTRACT. 

to  entitle  him  to  pay  therefor,  he  was  bound  to  replace  the  work 
destroyed  without  any  compensation,  and  the  plaintiff's  right  to 
abandon  the  work  was  placed  partly  upon  the  refusal  to  pay  and 
the  unjust  demand,  as  well  as  the  destruction  of  the  building. 
But  the  case  does  not  hold  that  where,  by  the  terms  of  a  contract 
of  this  character,  payment  is  to  be  made  as  the  work  progresses, 
the  doctrine  announced  in  Appleby  v.  Myers  has  no  application. 

We  think  the  appellate  court  properly  ruled  that  plaintiff 
was  entitled  to  recover  under  the  first  count  of  the  declaration,, 
but  we  are  unable  to  find  authority  or  satisfactory  reason  upon 
which  to  sustain  the  second.  The  language  "  payment  to  be  made 
as  the  work  progresses  "  cannot,  we  think,  be  considered  to  mean 
more  than  that  the  $1250  should  be  paid  as  stated;  that  is, 
it  cannot  be  construed  to  mean  that  the  payments,  after  the 
engine  was  on  foundation,  should  be  made  as  the  work  pro- 
gressed, it  being  expressly  stated,  "  Final  payment  to  be  due  and 
payable  when  the  elevator  is  put  up  in  good  running  order,"  — 
that  is,  when  the  work  was  complete.  Therefore,  on  a  proper 
construction  of  the  contract,  the  second  proposition  should  have 
been  refused.  There  was,  however,  no  error  in  the  judgment  of 
the  trial  court,  because  under  the  first  proposition,  which,  as  we 
have  seen,  was  properly  held,  the  plaintiff  was  entitled  to  recover 
the  $1250,  with  5  per  cent  interest  thereon  from  August  1,  1891, 
to  the  date  of  the  judgment,  July  5,  1895,  which  amounted  to 
considerable  more  than  the    $1390  recovered.      The  judgment 

below  will  be  affirmed. 

Judgment  affirmed. 

Phillips  and  Cabtwbight,  JJ.,  dissenting. 


INDEX. 


Absolute    promises    and    concurrent 

conditions,  363  n.,  576-684. 
Acceptance,  7-75,  703-725. 

by  conduct,  10-14. 

by  letter,  29-36,  41-46. 

by  statement  of  quantity  desired, 
50-54. 

by  telegraph,  46^8. 

communicated  when  made  as  indi- 
cated by  offeror,  29-36. 

contract  springs  from,  7-9. 

makes  offer  irrevocable,  50-54. 

mental  determination  not  sufiBcient, 
9. 

must  be  absolute,  74-75. 

must    be    by  ascertained    person, 
62-71. 

must  be  communicated,  9,  21-29. 

must  be  in  manner  prescribed  by 
offeror,  38-41. 

must  be  unconditional,  74-76. 

of  continuing  offer,  60-64. 

of  guaranty,  29  n.,  706. 

offer  may  be  revoked  before,  49-60. 

riteution  of  goods  as,  24-25. 
Accord    and    satisfaction,   442,   529, 

627-631,  864-869. 
Acknowledgment  of  right  of  action 
after  barred  by  statute  of  limita- 
tions, 635-638. 
Act  of  God,  643,  651. 
Acts,  oifer  by,  10-14. 
Ade(juacy  of  consideration,  138-199, 

213. 
Administrator, 

assigniueiit  of  fees  of,  462  n. 

of  joint  promisor  not  to  be  joined 
in  action,  496. 

performance  by,  479-485. 

special   promise   under  statute  of 
frauds,  111-113. 


Advertisement     distinguished    from 

offer,  71. 
Affection,  see  Good  consideration. 
Agent, 
doctrine   applied    in    contract  for 

benefit  of  third  parly,  428  n. 
infant's,  appointment  of,  218-219. 
signature   to   memorandum  under 
statute  of  frauds,  103-104. 
Agreement,  obligation   arising  from, 

6n. 
Aliens,  capacity  of,  216-217. 
Alteration  of  instrument,  677,  660— 

666. 
Ambiguity,  latent  and  patent,  506. 
Appropriation  of  chattel  to  buyer  is 

delivery,  130. 
Arbitration,     when     agreement    for 

illegal,  351-353. 
Architect's   certificate,   as  condition 

precedent,  542-643. 
Arrest,  impossibility  of  performance 

by,  047-049. 
Assignment,  438-485. 
by  act  of  parties,  438-467. 
by  death,  479-485,  553. 
by  marriage,  478-479. 
by    operation    of    law,    441,    468- 

485. 
by  statute,  469-460. 
conflicting  assignees,  458  n. 
in  equity,  446  n.,  452-468. 
notice  to  debtor,  457-468. 
of  executor's  fees,  452  n. 
of  future  interests,  452-466. 
of  insurance,  462. 
of  insurance  policy,  3.3.3-337. 
of  interest  in  lands,  468-478. 
of  lease,  440. 
of  liabilities,  4.38-441. 
of  officer's  salary,  462  n. 


883 


884 


INDEX. 


Assignment  —  continued. 
of  partnership  liabilities,  420-421, 

435  u.,  440. 
of  parts  of  entire  contract,  456. 
of  pension,  452  n. 
of  rights,  371,  442-467. 
of  rights  at  common  law,  442-452. 
of  salaries  of  public  officers,  347  n. 
when   a.ssignee  cannot  .sue  in  his 
own  name,  443-446,  452,  466-456, 
when  assignee  may  sue  in  his  own 
name,  459-460. 
Attestation,  deed  established  by  at- 
testing witness,  501  n. 
Attorney,    infant's,  appointment  of, 

218-219. 
Attornment,  470-472. 
Auction, 
memorandum     under    statute     of 

frauds,  100-102. 
offer  and  acceptance,  49-50. 
Avoidance  and  illegality,  comparative 
effect  of,  383-389, 

Bailment,  consideration  in  mandatum, 

168-174. 
Bankruptcy, 

discharge  by,  669-686. 

impairing  obligation  of  contracts, 

674-687. 
ro    bar   to    action    for   breach    of 

warranty  of  title,  669-673. 
levival    of    agreement    barred  by, 
208-210,  211 . 
Benefit,   contract  for  third  party's, 

420-437. 
Bets,  see  Wagers. 
Bill  of  exchange,  character  of,  464. 

see  also  Negotiable  instrument. 
Bill  of  lading,  negotiability  of,  460- 

467. 
Blacks  tone,  criticism  of  his  classifica- 
tion of  contracts,  1. 
Bond, 
effect  of  illegality  on,  395-398. 
joint  and  several,  492-494,  496. 
Breach  of  contract,  555-638,  843-873, 
by    creating    impossibility    before 

perfonnance  due,  560-661, 
by    creating    impossibility    during 

performance,  574,  575. 
by  failure  of  performance,  576-611. 


Breach  of  contract  —  continued. 
by  renunciation  before  performance 

due,  358,  55.5-559,  574  n.,  843, 
by  renunciation  in  course  of  per- 
formance, 561-574,  857, 
inducing  as  tort,  416-419, 
interest  payable  as  damages  after, 

76. 
of  entire  contract,  563, 
of  divisible  contracts,  584-594,  859. 
of  contract  of  marriage,  357-359, 

485  n. 
remedies,  611-638,  644,  658  n. 
see  also  Condition,  "Warranty. 
Breach  of  statute,  contracts  in,  315- 

337. 
Building  contract,  542-543,  641-645. 
Business    circulars,   how    construed, 
67-71. 

Capacity  of  parties,  see  Parties. 
Caveat  emptor,  285-288,  307  n.,  599. 
Certainty,  see  Uncertainty. 
Certificate  of  architect  as  condition 

precedent,  542-543. 
Certificate  of  deposit,  negotiability  of, 

536-541, 
Champerty    and   maintenance,    864- 

356. 
Charter,  a  contract,  699  n. 
Check,  payment  by,  34-35. 
Child,  see  Infant,  Parent  and  child. 
Choses  in  action,  see  Assignability, 

Negotiable  instrument. 
Circulars   of    information   and   offer 

distinguished,  67-71. 
Citizenship  of   parties,   see  Political 

status.  Expatriation, 
Civil  law, 
revocation  of  offer  in,  57, 
rule  as  to  impossibility  of  perform- 
ance, 652, 
rule  as  to  obligation  of  successor 

after  death,  482. 
Classification  of  contracts,  1,  2, 
Cohabitation, 

as  consideration,  357-359, 
bond  given  for,  395-398. 
Collateral  promises,  see  Warranty, 
Commercial    agency,    misrepresent* 

tion  to,  280-282. 
Common  carriers,  see  Tickets. 


INDEX. 


885 


Communication, 

of  acceptance,  21-35. 

of  offer,  14-20. 

of  revocation,  57-62. 

see  also  Letter,  Telegraph. 
Composition  with  creditors, 

bars  action  by  creditor,  628. 

consideration  for  promise,  195-199. 
Compromise, 

as  consideration,  140,  164-167. 

bars  right  to  sue,  630. 

of  tort,  349. 
Concealment,  see  Non-disclosure. 
Concurrent  conditions  and  absolute 

promises,  353  n.,  576-684. 
Condition, 

concurrent,  353  n.,  576-584. 

implied  to  relieve  against  impossi- 
bility of  performance,  651-653. 

in  acceptance  is  rejection  of  offer, 
74-75. 

precedent,  353 n.,  542-543,  576. 

sale  upon,  534. 

subsequent,  609-611. 

warranty  distinguished  from,  353  n., 
586,  594-596,  598-603,  609-611. 
Conduct, 

acceptance  by,  10-14. 

false  representation  by,  288. 

offer  by,  10-14. 
Confidence,  relation  of,  see  Uberrima 

fides. 
Consent,  238-314,  406. 

prevented  by  duress,  308-311. 

by  fraud,  282-307. 

by  mistake,  238-264. 

by  misrepresentation,  265-282. 

by  undue  influence,  311-314,  406. 

see  also  Parties,  capacity  of. 
Consequential  damages,  see  Profits. 
Consideration,  133-214,  732-762. 

what  constitutes,  134,  144. 

necessary  to  every  simple  contract, 
133-138. 

non-technical   construction  of   the 
term,  280. 

adequacy  of,  138-199,  213,  732. 

compromise  as,  140,  164,  165-167. 

contingency  distinguished  from,360. 

entire,  380-381. 

expense  incurred  by  promisee  for  his 
own  benefit  (at  request),  141-143. 


Consideration  —  continued. 
failure  of.  576-611. 
for  exchange  of  unequal  sums  of 

money,  138-140,  213-214. 
for  guaranty,  163. 
for  infant's  ratification  after  ma- 
jority, 211. 
for  payment  of   smaller  sum  for 

larger,  87-88,  138-141,  187,  750. 
for  performance  of    existing  con- 
tract, 174-187,  738-750. 
for  performance   of    official  duty, 

176-177. 
for  release,  626. 
for  revival  of    barred  agreement, 

208-213. 
for  revival  of  agreement  by  bank- 
rupt, 208-210,  211. 
for  revival  of  agreement  by  married 

woman    after    coverture    ended, 

211. 
for  subscriptions,  35-38,  756-762. 
for  substituted  agreement,  177-196, 

434,  524,  527. 
for    substituted    non-usurious    for 

usurious  agreement,  211. 
for  subsequent  promise  to  pay  for 

voluntary  services,  199-208. 
for  voluntarily  doing  what  another 

was  bound  to  do,  206-208. 
forbearance  as,  110,  162-164. 
good,  141,  146,  150-151. 
immoral,  357-359,  395-398. 
impossible,  152-156. 
in  composition  with  creditors,  196- 

199. 
in  mandatum,  168-174. 
in  memorandum  under  statute  ol 

frauds,  95,  539. 
joint  or  several,  498. 
legal  obligation  as,   134-138,  147, 

174-199. 
legality  of,  199,  316-411. 
moral  obligation  as,  135-138,  140, 

146,  201-205,  210-213. 
motive  distinguished  from,  138-141, 

150-151. 
moved  by  previous  request,   201, 

205-206. 
must   move   from    promisee,   162, 

420-437,  809-840. 
must  not  be  past,  141,  199-214. 


886 


INDEX. 


Consideration  —  continued. 

obscure,  167-174. 

parol  evidence  to  vary  expressed, 
431-432. 

reality  of,  150-199. 

seal  as  importing,  54-57,  83-86,  88, 
395-396. 

uncertain,  1G7-1G2,  736. 

valuable,  151,  152-174,  754. 

vfhen   independent  in  promise  to 
answer  for  third  party,  112-113. 

writing  doi's  not  import,  88, 133-134. 
Constitution. 

impairing  obligations  by  provision 
in,  695. 

prohibition  upon  leorfslation  impair- 
ing obligation,  674-701. 
Construction,  266-268,  511-521. 

general  rules,  266-268,  511-516. 

common  import  of  words,  678. 

meaning  varied  by  trade  usage,  608- 
610. 

of  "  about,"  "  more  or  less,"  587. 

of  alleged  renunciation,  558. 

of  application  for  life  insurance, 
278. 

of  condition  as  concurrent,  580. 

of  "  joint  "  or  "several,"  496-497. 

of  marine  insurance  policy,  266-268, 
511-515. 

of  offer,  67-71. 

of  "satisfactory,"  552-653. 

of  specifications  and  building  con- 
tract, 641-645. 

of  "team,"  607. 

of  "  void  "  in  insurance  policy,  532- 
533. 

time  as  of  essence  of  contract,  69, 
615-517,  585. 

whether    intestate's    contract  sur- 
vives, 483. 
Constructive  contract,  see  Quasi  con- 
tract. 
Contingency  and  consideration  distin- 
guished, 360. 
Contingent    demand    and    discharge 

from  bankjuptcy,  670. 
Contingent  interest,   assignment  of, 

462-456. 
Contract, 

defined,  687. 

classificntion,  1,  2,  379. 


Contract  —  continued. 
existing  law  enters  into,  689,  691. 
agreement  to  quiet  competition  for 

public,  347  n. 
see  also  Obligation,  Quasi  contract. 
Contribution  between  joint  promisors, 

489. 
Corporations, 

chatter  n  contract,  699  n. 
contract  to  influence,  347  n. 
contractual  capacity  of,  222-223,371. 
fraud  in  prospectus,  ^05. 
Correspondence,  offer  and  acceptance 

by,  29-35. 
Covenants, 
affecting  freehold  interests,  assign- 
ment of,  472-478. 
affecting  leasehold  interests,  assign- 
ment of,  468-472. 
impossibility    of    performance    of, 

641-647. 
in  warranty  deed  distinct,  670. 
running  with  the  land,  469,  472-478. 
Credit,  letter  of,  see  Letter  of  credit. 
Creditors, 
composition  with,  195-199,  628. 
foreign,   statute  impairing  obliga- 
tion to?  683-686. 
Crime, 
agreement  to  commit,  338-339. 
agreement  to  stifle  prosecution  of, 
348-351. 
Crops,  sale  within  statute  of  fraads, 

123-124. 
Custom,  evidence  of,  508-610. 

Damages  for  breach  of  contract, 

general  rule,  449-451,  611-613. 

after  part  performance,  522-623. 

as  set  off,  612-613. 

duty  to  mitigate,  180-181,  449-461, 
572-574,  613  n. 

inadequacy  of  action  for,  613-824. 

liquidated,  370,  665. 

lost  profits  as,  566-667,  603-607, 
611  n.  2. 

of  warranty  in  sale,  608. 

penalty  or  liquidated,  517-621. 

recoupment  for  deviation  from  con- 
tract, 642,  644. 

where  vendee  refuses  to  accept,  566, 
664-568. 


INDEX. 


887 


Death, 
assignment  of  obligation  by,  479- 

485,  653. 
impossibility    of    performance  by, 

640,  651,  655. 
lapse  of  offer  by,  36-38. 
of  joint  promisee,  492  n. 
of  joint  promisor,  489  n. 
Debt,  dischai^e. 
by  accord  and  satisfaction,   627- 

631. 
by  judgment,  631-635. 
by  lapse  of  time,  635-638. 
by  release,  626-626. 
of  another's,  200-208,  412-415. 
Deceit,  innocent  representations  and 

action  for,  269,  273  n.,  301  n. 
Decision,  impairment  of  obligation  by 

judicial,  674  n. 
Deed, 

as  contract,  696-699. 

assignment  of  obligations  following, 

472-476. 
covenants  distinct  in,  670. 
delivery  of,  90-92. 
estoppel  by,  697. 

gratuitous  undertaking  by,  83-86. 
merger  of  previous  contract  in,  669- 

660. 
proof  of,  501  n. 
see  also  Seal. 
Default  of  another,  promise  to  answer 

for,  113-118. 
Delict,  see  Tort. 
Delivery, 

of  chattel,  appropriation  to  buyer 

is,  l.SO. 
of  deed,  90-92. 
of  gift,  essential,  626. 
Destroyed  instrument,  666-669. 
Destroyed    subject-matter,    impossi- 
bility of  performance,  641,  646- 
647,  019-055,  873-882. 
Disability,  impossibility  of  perform- 
ance from,  655-658. 
Discharge  of  contract,  622-701. 
by  agreement,  622-535. 
by  alteration   or   loss  of  writing, 

660-669. 
by  bankruptcy,  208,  210-211,  669- 

686. 
by  breach,  555-638,  700-701. 


Discharge  of  contract  —  continued. 
by  breach  before  performance  due, 

358,  656-561,  674  u.,  843. 
by  failure  of  performance,  576-611. 
by    impairment  of    obligation    by 

statute,  674-701. 
by  impossibility  created  by  party, 

560,  561,  574,  575. 
by    impossibility    not    created    by 

party,  639-658. 
by  merger,  659-060. 
by  operation  of  law,  659-701. 
by  performance,  536-654. 
by  performance   to  satisfaction  of 

promisee,  546-554. 
by  provision  for,  531-535. 
by  renunciation,  666-659,  661-674. 
by  statute,  674-690. 
by  substantial  performance,   542- 

564. 
by  substituted  agreement,  624-530. 
by  tender,  641-542. 
by  waiver,  522-524,  840. 
when  contract  made  for  benefit  of 
third  party,  428-430. 
Discharge  of  rij?ht  of  action,  626-638. 
by  accord  and  satisfaction,  627-631. 
by  judgment,  631-636,  869. 
by  lapse  of  time,  635-638, 
by  release,  625-626. 
Divisible,  see  Indivisible. 
Divorce,  illegal  agreement  for,  361. 
Document,  proof  of,  500-602, 666-M9. 
Drunkenness,  incapacity  by,  228-232. 
refraining  from,  as  consideration, 
143-146. 
Duress  of  goods,  174-176. 
to  person,  308-311,  788-795. 

Enemy,  contracts  with  alien,  216-217. 
Entire  consideration,  380-381. 
Entire  contract,  breach  of,  663. 
Equitable  estoppel,  224  n. 
Equity, 
assignment  in,  446  n.,  462-468. 
distinction  abolished  between  ac- 
tions at  law  and  suits  in,  459- 
460. 
will  give  relief  when  mistake  not 

mutual,  26.3-264. 
see  also   Injunction,   Specific   per- 
fonnance. 


888 


INDEX. 


Estate,  privity  of,  469-472. 
Estoppel,  as  remedy  for  misrepresen- 
tation, 281. 
by  conduct,  224  n.,  568  n. 
by  deed,  697. 
Evidence, 
in  relation  to  contract,  500-510. 
explanation  of  terms,  504-510. 
of  consideration,  seal  as  presump- 
tion, 83-86. 
of  fact  of  agreement,  502-603. 
of  lost  or  destroyed  instruments, 

666-669. 
of  terms  of  contract,  503-510. 
of  usage,  508-510. 
proof  of  document,  500-502,  666- 

669. 
see  also  Parol  evidence. 
Exchange  of  unequal  sums  of  money, 
consideration  in,    138-140,   213- 
214. 
Executor, 

assignment  of  fees  of,  462  n. 

of  joint  promisor  not  to  be  joined 

in  action,  496. 
performance  by,  479-485 
special  promise  of,  under  statute  of 
frauds,  111-113. 
Existence  of  subject-matter,  mistake 

as  to,  247-262. 
Expatriation,  contract  for,  154-165. 
Expense  incurred  by  promisee  for  his 
own  benefit  at  request,  as  con- 
sideration, 141-143. 
Express  contract,  Blackstone's  defi- 
nition, 1. 

Fact,  fraud  must  be  representation 

of,  288-298. 
Failure  of  consideration,  576-611. 
False  representation,  effect  of  knowl- 
edge   of    its   falsity   by    maker, 

269-273,  298-302. 
Fire  insurance, 
assignability  of  policy  at  law,  444- 

445. 
non-disclosure  of  material  fact  by 

insured,  273-274,  277. 
Forbearance    as   consideration,    110, 

162-164. 
Foreign  creditors,  statute  discharging 

obligation  to,  683-686. 


Foreign  enemy,  capacity  to  contract 

with,  215-217. 
Form,  requirements  of,  76-132. 

under  statute  of  frauds,  92-110. 
Formation  of  contract,  7-411. 
Franchi.se  a  contract,  699  n. 
Fraud,  282-307,  778-788, 
agreement  to  commit,  339  n. 
difference  between  law  and  equity 

in  relief  for,  269,  273  n. 
distinguished  from  forgery,  238-243. 
distinguislied  from   misrepresenta- 
tion, 265. 
in  alteration  of  document,  660-666. 
non-disclosure    of    latent    defects, 

285-288. 
representation  distinguished   from 

expression  of  intention,  292-295, 

297-298. 
representation    distinguished  from 

non-disclosure,  282-288,  296-297. 
representation   distinguished  from 

opinion,  297-298. 
representation    must    actually   de- 
ceive, 297,  306-307. 
representation  must  be  intended  for 

injured  party,  281-282,  303-306. 
representation  must  be  of  fact,  288- 

298. 
representation  must   be   material, 

294. 
representation  must  be  with  knowl- 
edge of  falsity  or  without  belief 

in  its  truth,  298-302. 
Frauds,  statute  of,  92-132,  721-732. 
affects    only   executory    contracts, 

100  n. 
affects  only  remedy,  92-100. 
agreement    not    to    be    performed 

within  a  year,  120-123,  721. 
annual    crops    within    seventeenth 

section,  124-127. 
delivery  and  acceptance  in  sale  of 

goods,  130. 
form  required  is  evidentiary,  92- 

100. 
fourth  section,  110-123. 
"goods,  wares,  and  merchandise" 

include  all  personal  property,  132. 
memorandum,  after  action  brought^ 

99-100. 

auctioneer's  book,  100-102. 


INDEX. 


889 


Frauds,  statute  of  —  continued. 

consideration  expressed,  96,  539. 

may  consist  of  separate  writings, 
68 ;  connection  of  documents, 
101-102. 

must  show  conditions  of  contract, 
101. 

signature  by  party  to  be  charged 
suflBcient,  102-108, 110  n. ;  where 
placed,  103  ;  by  agent,  103-104  ; 
by  auctioneer,  101 ;  with  lead 
pencil,  108-110. 

when  may  be  made,  92-100. 

object,  96. 

promise  of  executor  or  adminis- 
trator, 110-113. 

promise  to  answer  for  debt  of  an- 
other, 110-118,  146,  482-435. 

sale  of  goods  distinguished  from 
contract  for  services,  127-131. 

sale  of  lands,  60,  118-120. 

seventeenth  section,  123-132. 

to  be  pleaded,  09,  100  n.,  147,  420. 

whether  growing  timber  is  within 
the  fourth  section,  124-127. 
Fructus  industriales  and  fructus  natu- 

rales,  123-127. 
Future  interests,  assignment  of,  452- 

456. 
Futures  and  options,  326-332,  383- 
389. 

Gambling,  see  Wagers. 
Gift, 

delivery  necessary,  626. 

distinguished  from  promise  to  give, 
151. 
God,  act  of,  643,  651. 
Good  consideration,  141, 146, 150-151. 
Goods,  import  in  statute  of  frauds, 

132. 
Grant,  as  contract,  696-699. 
Gratuitous  undertakings,  and  obscure 
consideration,  167-174. 

later  promise  to  pay  for,  199-208. 

may  be  contracted  by  deed,  83-86. 

misfeasance  in,  107-174. 

no  recovery  for  services  in,  14-15. 

performing  another's  legal  obliga- 
tion, 206-208. 
Guaranty, 

acceritance  of,  29  n.,  706-709. 


Guaranty  —  continued. 
distinguished    from    indori>ement, 

536-641. 
statute    of    frauds   and,   110-118, 

146,  432-435. 
sufficient  consideration  for,  168. 

Husband    and    Wife,   see   Marriage, 
Married  women. 

Identity, 
of  party,  mistake  as  to,  243-246. 
of  subject-matter,   mistake  as  to, 

246-247. 
Ignorance, 
of  offered  act,  14-15. 
of  offered  promise,  14,  62-67. 
of  offered  terms,  15-20. 
Illegality  of  contract,  315-411, 796-808. 
nature  of,  315-372. 
against  public  policy,  340-372. 
champerty  and  maintenance,  354- 

356. 
effect  of,  373-411,  802. 
effect  of  avoidance  and,  383-389. 
effect  on  bond  given,  396-398. 
effect  on  note  given,  399-401. 
effect  of,  when  parties  in  pari  de- 
licto, 390-391,  402-411. 
for  "  futures   and  options,"   325- 

332,  383-389,  796. 
for  immoral  act,  367-359,  396-898. 
for  insurance  where  no  insurable 

interest,  333-337. 
for  usury,  663. 
in  breach  of  statute,  316-337,  378- 

380,  390-396,  407-411. 
in  restraint  of  trade,  262-378,  380- 

383. 
injuring  public  service,  340-347. 
injuring  State  in  relation  to  another 

State,  216-217,  391-395. 
intention  of  parties  in,  390-306,  806. 
locus  poenitentiae,  391,  402-411. 
pleading  of,  319. 

tending  to  pervert  justice,  348-363. 
to  affect    freedom  or   security  of 

marriage,  359-361,  402-407,  801. 
to  arbitrate  for  determination  of  & 

right,  351-353,  799. 
to  commit  indictable  offense  or  tort, 

338-339. 


890 


INDEX. 


Illegality  of  contract  —  continued. 
to  stifle  criminal  proceedings,  348- 

351. 
to  violate  common  law,  338-372. 
to  violate  law,  154. 
to  violate  Sunday  laws,  318-323. 
wagers,  324-337,  383-391,  407-411. 
when  divisible,  373-376. 
when   indivisible,    320,    346,    376- 

383. 
Immoral  consideration,  367-359,  395- 

398. 
Impairment  of  obligation  of  contract 

by  judicial  decision,  674  n. 
Impairment  of  obligation  of  contract 

by  statute,  76-81,  674-701. 
contracts  with  the  State,  696-701. 
corporation  charter,  669  n. 
executed  and  executory  contracts, 

697. 
exemption  from  taxation,  699  n. 
franchise,  699  n. 
judgment,  76-81,  696. 
statutes  imposing  new  conditions, 

76-81,686-690. 
statutes  discharging  the  obligation, 

674-690. 
statutes  impairing  the  remedy,  677, 

690-695. 
Implied  contract, 
what  is,  1-4,  379. 
by  law,  see  Quasi  contract. 
Implied  warranty,  see  Warranty. 
Impossibility, 

breach  before  performance  by  party 

creating,  560-561. 
breach  during  performance  by  party 

creating,  574-576. 
by  act  of  God,  643,  651. 
by  arrest  for  crime,  647-649. 
by  death,  640,  651,  655. 
by  destruction   of  subject-matter, 

641,  645-647,  040-655,  873-882. 
by  law,  640,  645-649. 
by  sickness,  655-668. 
by  latent  defect  hi  soil,  641,  643. 
by  weather,  639-641. 
condition  implied  to  relieve  from, 

651-653. 
discharge  by,  639-658. 
makes  consideration  unreal,    162- 

156. 


Impossibility  —  continued. 
of  performing  covenant  in  lease, 

645-647. 
proximate  cause  of,  647-649. 
Indemnity,  whether  within  the  stat- 
ute of  frauds,  113-118. 
Independent  promises  and  concurrent 

conditions,  353  n.,  576-584. 
Indivisible  contract, 
action  and  judgment  upon  part  of, 

631-632,  869-873. 
and  failure  of  consideration,  584- 

594.. 
illegality  in,  320,  346,  376-383. 
payment  indivisible  when  it  is  to  be 
within  reasonable  time,  102. 
Inducement, 
by  stranger  to  break  contract,  416- 

419. 
in  fraud,  representation  must  be, 
297. 
Infants, 
capacity  to  contract,  218-221. 
consideration    for    ratification    of 
agreement  by,  211. 
Injunction   for    breach    of  contract, 

370,  619-624. 
Innocent  misrepresentation, 
and  action  for  deceit,  269,  273  n., 

298-302. 
equity  grants  relief  against,  268-278. 
in  insurance,  274  n. 
Insanity, 
incapacity  by,  224-227. 
lapse  of  offer  by,  38  n. 
Insolvency,  see  Banlcruptcy. 
Insurance  contracts, 
acceptance  of  offer,  21-24,  29-36. 
arbitration  in,  351-353. 
are  uberrimge  fides,  270-280. 
assignment  of,  333-337,  452. 
construction  of,  266-268,  278,  611- 

515,  532-533. 
provision    for    discharge  of,    531- 

534. 
wagering,  333-337. 
Intention, 
effect  of,  in  illegal  agreements,  390- 

395,  805-808. 
how  ascertained,  see  Construction, 
of  party,  mistake  by  the  other  as  to, 
262-264. 


INDEX. 


891 


Intention  —  continued. 
of  offeror,  71-73. 

representation  distinguished  from 
statement  of,  292-295,  297-298. 
Interpretation,  see  Construction,  Evi- 
dence. 
Interest  payable  as  damages  after  ma- 
turity, 76. 
Interference  with  contract  by  stran- 
ger, 416-419, 
Intoxication,  see  Drunkenness. 
Invitation  and  offer  distinguished,  67- 
71. 

Jest,  offer  and  acceptance  in,  71-73. 
Joint  obligations,  486-499. 
— joint  and  several, 

bond, 492-494,  496. 

promisors,  492-496. 

note,  494-496. 

bow  determined,  496-499. 
— joint  or  several 

promisees,  496-499. 
— joint  promisee, 

non-joiuder  of,  491. 

release  by  one,  492  n. 
— joint  promises,  486-492. 

revival  after  barred  by  statute  of 
limitations,  489  n. 
— joint  promisor,  486-489. 

contribution  by,  489. 

death  of,  489  u. 

judgment  against  one,  489  n.,  494- 
495. 

non-joinder  of,  486-487. 

release  of  one,  522-524. 

release  to  one,  488. 
Judicial  decision,  impairment  of  obli- 
gation by,  674  n. 
Judgment, 

as  contract,  76-81,  696. 

against  one  joint  promisor,  489  n., 
494-496. 

discharge  of    right  of    action  by, 
(i;j  1-635,  869-873. 
Justice,  agreement  tending   to   per- 
vert, 348-353. 

Knowledge, 

of  falsity,  see  Innocent  misrepresen- 
tation, 
of  offer,  see  Ignorance. 


Labor  and  services,  se«  Services. 
Lading,  bill  of,  see  Bill  of  lading. 
Land,  assignment  of  obligations  with, 
468-478. 
specific  performance  of  contract  to 

convey,  614. 
statute  of  frauds  and  sale  of,  llft- 

120. 
see  also  Deed,  I^ase. 
Lapse  of  offer, 
by  death,  35-38. 

by  failure  to  accept  in  manner  pre- 
scribed, 38-41. 
by  insanity,  38  u. 
by  time,  41-48,  74-75. 
Lapse  of  time,  discharge  of  right  of 

action  by,  636-638. 
Latent  ambiguity,  605. 
Latent  defect  in  chattel,  286-288. 

in  soil,  641,  643. 
Law,   as    existing,   enters  into  con- 
tract, 689,  691. 
assignment  by  operation,  441,  468- 

485. 
discharge  of  contract  by  operation 

of,  659-673. 
distinction  abolished  between  suits 
in  equity  and  actions  at,  ibH^- 
460. 
fraud  in  representation  of,  288-292. 
Lead  pencil,  signature  by,  108-109. 
Lease,  assignment  of,  440,  408-472. 
impossibility  of  performing  cov^ 
nant  in,  645-647. 
Legal  impossibility,  645-649. 
Legal    obligation    as    consideration, 

134-138. 
Legality  of  contract,  see  Illegality. 
Legislation,  contracts  to  procure,  340- 

346,  .347  n. 
Letter,  offer  and  acceptance  by,  2©- 

36,  41-46,  710-717. 
Letter  of  credit,  lapse  by  death  of 

writer,  38. 
Liabilities,   a.ssignment    of,  420-421, 

435  n.,  4.38-441,  448  n. 
Life  insurance,  non-disclosure  of  ma- 
terial fact  by  insured,  276-280. 
wagering  policy,  .3.3^J-337. 
Limitations,  statute  of,  discharge  of 
right  of  action  by,  636-«38. 
Impairing  obligation  by,  681.  692  n. 


892 


INDEX. 


Limitations,  statute  of  —  co7itinued. 
revival   of  agreement    barred    by, 

211  ;  of  joint  promises,  489  n. 
Liquidated    damages,    370,   617-521, 

655. 
Liquor,    illegality    of    sale,  378-380, 

391-395. 
Lobbying  contracts,  340-347. 
Locus  pcenitentise,  391,  402-411,  557, 

674. 
Lost  instrument,  663,  666-669. 
Love  and  affection  as  consideration, 

see  Good  consideration. 
Lunacy,  see  Insanity. 

Mail,  contract  by,  see  Letter. 
Maintenance,  354-366. 
Mandatum,  consideration  in,  168-174. 
Margins,  sales  on,  325-332,  383-389. 
Marine    insurance,    construction    of 
policy,  511-615. 
non-disclosure    of    material    fact, 
274  n. 
Marriage,  breach  of  promise  of,  357- 
369,  485  n.,  661. 
illegality    of    agreements  affecting 
freedom  and  security  of,  359-361, 
402-407,  801. 
mock,  72-73. 
Married  women, 
contractual  capacity  of,  233-237. 
consideration  for  revival  of  agree- 
ment after  coverture  ended,  211. 
liability   of  husband  for  previous 
debts  of  wife,  478-479. 
Memorandum  under  statute  of  frauds, 
see  Frauds,  statute  of,  memoran- 
dum. 
Mercantile  agency,   see   Commercial 

agency. 
Merger  as  discharge  of  contract,  659- 

660,  662. 
Misdemeanor,  agreement  to  commit, 
338-339. 
agreement  to  stifle  prosecution  for, 
348-361. 
Misfeasance,  liability  for,  in  gratui- 
tous undertakings,  167-174. 
Misrepresentation,  266-282. 
distinguished  from  fraud,  265. 
effects  of,  268-280. 
estoppel  as  remedy  for,  280-281. 


Misrepresentation  —  continued. 
in  contracts  uberrimae  fides,  273-280. 
terms  distinguished  from  represen- 
tations, 265-268. 
to  commercial  agency,  280-282. 
Mistake,  238-264,  762-778. 
as  to  identity  of  party,  243-246. 
as  to   identity    of    subject-matter, 

246-247. 
by  party  as  to  intention  of  other 
party,  known  to  that  other,  262- 
264. 
as  to  nature  or  existence  of  con- 
tract, 238-243,  264. 
as  to  price,  261-262. 
as  to  subject-matter,  246-264. 
as  to  value,  249-252,  256-261. 
mutual,  72-73. 

performance  with  slight,  545  n. 
when  equity  will  relieve  in  other 
than  mutual,  263-264. 
Mock-marriage,  72-73. 
Modification  of  contract,  177-196. 
Moral    obligation    as    consideration, 
136-138,  140,  146,  201-205,  210- 
213. 
Mortgages  are  goods  under  the  statute 
of  frauds,  131-132. 
statute  extending  period  of  redemp- 
tion as  impairing  obligation  of, 
690  n. 
Motive  distinguished  from  considera- 
tion, 160-151. 
inducing    acceptance     immaterial, 
62-67. 
Mutual  mistake,  246-262,  762-778. 
when  equity  will  correct  other  than, 
263-264. 
Mutual    subscriptions,   consideration 

for,  35-38,  199  n. 
Mutuality   does    not   require    signa- 
ture of   both  parties  to  memo- 
randum under  statute  of  frauds, 
105-109. 
essential,  26-29,  49,  62,  59. 

Necessaries,     infant's    contract    for, 

219  n.,  220-221. 
Negligence   of   maker   of   negotiable 

paper,  243  n. 
Negotiable  instrument, 
general  rules  as  to,  401,  460-467. 


INDEX. 


893 


H^egotiable  instrument  —  continued. 
bill  of  lading  as,  460-467. 
certificate  of  deposit  as,  536-641. 
fraud  distinguished  from  forgery  in 

inception  of,  238-243. 
must  be  for  the  payment  of  money, 

637. 
must   be   payable   to  order  or  to 

bearer,  199,  446. 
payment  by,  34-35,  636-641,  660- 

664. 
see  also  Promissory  note. 
Negotiations  distinguished  from  offer, 

67-71. 
Non-disclosure, 

by  silence  or  concealment,  284  n., 

296-297,  778. 
of  material  fact  in  insurance,  273- 

280. 
distinguished  from  representation, 
282-288. 
Non-joinder,  see  Joint  obligations. 
Note,  see  Promissory  note. 
Notice, 

of  assignment,  457-468. 
of  limitations  in  tickets,  15-20. 
of  revocation,  57-62. 
Novation,  436,  442-444, 

Obligation, 

explained,  675,  687,  691. 
arising  from  trust,  147-150. 
legal,  as  consideration,  134-138. 
limits  of  contractual,  412-437. 
moral,   as  consideration,    135-138, 

140,  146,  201-205,  210-213. 
source  of,  1-6,  78-79. 
statute  impairing,  80-81,  674-701. 
Ofier,  ;-75,  703-721. 
by  conduct,  10-14. 
by  letter,  29-35,  41-46,  715. 
by  telegraph,  46-48,  715. 
communication   of    revocation   of, 

57-62. 
continuing,  62. 
contract  springs   from   acceptance 

of,  7-9.    . 
distinguished  from  advertisement, 

71. 
distinguished  from  invitation,  67- 

71. 
irrevocable  by  acceptance,  50-54. 


Offer  —  continued. 
is  rejected  by  conditional  aooept- 

ance,  74-76. 
lapses  by  death,  36-38. 
lapses  by  failure  to  accept  in  man- 
ner prescribed,  38-41. 
lapses  by  time,  74-76. 
made  when  communicated,  14-20. 
may  be  revoked  before  acceptance, 

49-50. 
must  refer  to  creation  of  legal  reli^ 

tions,  71-73. 
need  not  be  made  to  ascertained 

person,  62-71. 
of  reward,  acceptance  of,  62-67,718. 
revocation  of,  49-62. 
under  seal  irrevocable,  54-67. 
Officer,  see  Public  officer. 
Operation  of  contract,  412-400. 
Opinion,  representation  distinguished 

from,  297-298. 
Option, 
to  buy  goods,  50-54. 
to  buy  land,  57-62. 
Options,  futures  and,  325-332,  38S- 
389. 

Par  delictum,  328,  390-391,  402-411. 
Parent  and  child,  contract  not  im- 
plied for  services,  1-6. 
Parol  evidence, 

by  stranger  to  vary  contract,  603  n. 

cannot  vary  written  contract,  67- 
71. 

to  connect  documents,  101-102,  602. 

to  explain  terms,  504-607. 

to  identify  iwrson,  607  n. 

to  show  intention,  488. 

to  show  situation  of  parties,  03. 

to  show  supplementary  or  collateral 
terms.  503-504,  616-617. 

to  show  written  contract  was  not  in 
effect,  602-603. 

to   vary    consideration    expressed, 
43l432. 

to  vary  time  of  performance,  616. 
Part  payment,  see  I'aymeut  of  smaller 

sums. 
Parties, 

assignment  by  act  of,  438-467. 

capacity  of  aliens,  216-217. 

corporations,  222-22.1.  .^71. 


894 


INDEX. 


Parties  —  continued. 

drunken  persons,  228-232. 

infants,  218-221. 

lunatics,  224-227. 

married  women,  233-237. 

contract  implies  two,  89. 

joint  and  several  promisors,  492-496. 

joint  or  several  promisees,  496-499. 

joint  promisees,  490-492. 

joint  promisors,  486-489. 

mistake  as  to  identity  of,  243-246. 

privity  between,  243-246,  412-437, 
469-472. 
Partnership,  assignment  of  liabilities, 

420-421,  435  n.,  440. 
Past  consideration  no  consideration, 

141,  199-214. 
Patent  ambiguity,  605. 
Patent  defect,  286. 
Payment, 

by   negotiable  paper,   34-36,  536- 
541,  660-664. 

indivisible  when  to  be  within  reason- 
able time,  102. 

of    another's    debt,    110-118,    146, 
206-208,  412-415. 

of  smaller  sum  for  larger,  87-88, 
1.38-141,  187-199,  213-214. 
Penalty, 

and    liquidated     damages    distin- 
guished, 370,  517-621. 

contract  as  affected  by  statutory, 
315-318. 
Pencil,  signature  by,  108-109. 
Pension,  assignment  of,  452  n. 
Performance, 

by  assignee,  448  n. 

by  executor  or  administrator,  479- 
485. 

discharge  by,  536-554. 

discharge  by  impossibility  of,  639- 
658. 

failure  of,  576-611. 

not  within  a  year  under  statute  of 
frauds,  120-123. 

of  existing  contract  as  considera- 
tion, 174-187,  738-750. 

of  public  duty  as  consideration,  176- 
177. 

substantia],  542-554. 

to   satisfaction  of  promisee,   646- 
654. 


Personal  property, 
equivalent  to  goods,  wares,  and  mer- 
chandise under  statute  of  frauds^ 
132. 
specific    performance    of    contract 
relating  to,  613-619. 
Personal  services,  see  Services. 
Political  status,  154-155,  215-217. 
Possibilities,  assignment  of,  452-456. 
Possibility  of  performance,  see  Impos- 
sibility. 
Presumption  of  consideration,  seal  as 
affording,  54-57,  83-86,  88,  395- 
398. 
Price, 

mistake  as  to,  261-262. 
wagers  on,  325-332,  383-389. 
Priority  among  conflicting  assignees, 

458  n. 
Privity, 
of  contract,  243-246,  412-437,  469^ 

472. 
of  estate,  469-472. 
Profits,  damages  include  lost,  566-567, 

603-607,  611  n.  2. 
Promise  distinguished  from  expression 

of  intention,  292-295,  297-298. 
Promisee,   must  consideration  more 

from,  152,  420-437,  809--840. 
Promissory  note, 
alteration  of,  660-666. 
character  of,  464. 
effect  of  illegality  on,  399-401. 
effect  of  fraudulent  and  forged,  dia- 

tinguished,  238-243. 
failure  of  consideration,  35-38. 
joint  and  several,  494-495. 
lost  or  destroyed,  666-669. 
must  be  payable  to  bearer  or  to 

order,  199,  446. 
payment  by,  538-540. 
under  seal  not  negotiable,  83. 
Proof,  see  Evidence. 
Proximate  cause  of  impossibility  of 

performance,  647-649. 
Public  officer, 
assignment  of  salary,  347  n.,  452  n. 
contract  to  influence,  340-347. 
how  far  relation  is  contractual,  693- 

695. 
performance  of  duty  as  considera- 
tion, 176-177. 


INDEX. 


895 


Public  policy,  agreements  against, 
agreements  affecting  marriage,  369- 

361,  402-407. 
agreement  for  expatriation,    154- 

155. 
arbitration,  351-353. 
champerty  and  maintenance,  354- 

356. 
injury  of  public  service,  340-347. 
injury  of  State  in  relation  to  another 

State,  215-217,  391-395. 
immoral  agreements,  357-359. 
restraint  of  trade,  362-378,  380-383. 
stifling  criminal  proceedings,  348- 

361. 
Public  service,  agreements  injurious 

to,  340-347. 
Public  works, 

agreement  to  quiet  competition  for, 

347  n. 
assignment  of  contracts  for,  441. 

Qualified  acceptance,  see  Conditional 

acceptance. 
Quality, 
mistake  as  to,  249-252,  256-261. 
warranty  of,  696-597,  699,  601. 
Quantity, 
acceptance  by  statement  of  desired, 

60-54. 
may  be  determined  after  contract 

is  made,  70. 
Quantum  meruit,  160,  666-568,  670, 

572  n.,  674. 
Quasi  contract, 
defined,  2. 
distinguished,  379. 
cases  referred  to,  6  n. 
contract  for  benefit  of  third  party, 

425,  429  n. 
contract  of  infant  for  necessaries, 

220-221. 
contract  of  lunatic  for  necessaries, 

224-227. 
contribution  as,  489-490. 
judgment  is,  76-81. 
succeeding    corporation     contract 

that  is  ultra  vires,  222-223. 

Railways,  see  Tickets. 
Ratification    equivalent    to   previous 
authority,  206-207. 


Reality  of  consent,  see  Consent. 
Reality  of  consideration,  160-199. 
Reasonable    time,    payment   within, 
not  divisible  at  payor's  option, 
102. 
Recognizance  as  contract,  81  n. 
Record,  contracts  of,  70-81. 
Recoupment  for  duviatiou  from  con- 
tract, «>42,  644. 
Recovery  of  money  on  illegal  con- 
tract, see  Locus  poenitentiae. 
Rejection  of  offer,  conditional  accept- 
ance is,  74-76. 
Release, 
in  general,  625-626. 
by  one  joint  promisee,  492  n. 
of  promissory  note,  661. 
promise  does  not  revive  debt  after^ 

210-213. 
to  joint  obligor,  488. 
Remedy  for  breach  of  contract, 
in  general,  611-624,  644,  688. 
by    renunciation    during  perform- 
ance, 562,  568. 
for  misrepresentation,  280-282, 
for  personal  services,  664-671,  574- 

575. 
recovery  by  one  who  abandons  con- 
tract, 658  n. 
statutes  impairing  the,  677,  690- 

696. 
see  also  Damages,  Injunction,  Spe- 
cific performance. 
Renunciation  of  contract, 
before  performance  due,  368,  566- 

559,  674  n.,  843. 
during  performance,  661-674,  700- 
701,  857. 
Replevin,  273  n. 
Representation, 
distinguished  from  terms,  266-268. 
see  also  Fraud,  Misrepresentation. 
Request, 
consideration  moved  by  previous, 

201,  206-206. 
for  services,  allegation  necessary, 

66. 
to  party  to  incur  expense  for  prom- 
isee's benefit,  as  consideration, 
141-143. 
Rescission,  see  Discharge  by  agree- 
ment. 


896 


INDEX. 


Restraint  of  trade,  illegality  of  agree- 
ments in,  362-378,  380-383. 
Revival  of  agreement  tliat  is  barred 

by  rule  of  law,  208-213,  489  n. 
Revocation  of  offer,  49-62. 

communication  of,  57-62,  715. 

civil  law  rule,  67. 

impossible  after  acceptance,  60-54. 
Reward,  acceptance  of  offer  of,  62-67. 
Right  of  action,  discharge  of, 

by  accord  and  satisfaction,  627-631. 

by  judgment,  631-635. 

by  lapse  of  time,  635-638. 

by  release,  626-626. 
Rights,  assignment  of,  442-467. 
Roman  law,  see  Civil  law. 

Sale, 

acceptance  of  continuing  offer  of, 
50-54. 

by  sample,  596,  610. 

damages  when   vendee   refuses  to 
accept,  556,  564-568. 

non-disclosure    of    material    facts, 
282-288. 

of  annual  crops,  123-124. 

of  growing  timber,  124-127. 

offer  distinguished  from  invitation, 
67-71. 

payment  by  negotiable  paper,  539, 
660-664. 

retention  of  goods  as  acceptance, 
24-26, 

upon  condition  subsequent,  534. 

vendee    has    no    better  title  than 
vendor,  461. 

warranty  of  quality,  595-597. 

when  title  passes,  249-252,  650. 

see   also    Caveat    emptor,    frauds, 
statute  of,  seventeenth  section. 
Sample,  sale  by,  596,  610. 
Satisfaction,  accord    and,    442,   529, 

627-631. 
Satisfaction  of  promisee  with  perform- 
ance, 546-554. 
Seal, 

contract  under,  in  general,  82-92. 

and  illegal  consideration,  395-398. 

effect  of  legislation  upon,  56-57. 

express  terms   overcome  presump- 
tion of  consideration  by,  88. 

imports  consideration,  133. 


Seal  —  continued. 
irrevocability  of  offer  under,  64-67. 
parol  contract  to  dissolve  contract 

under,  528. 
promissory  note  under,  is  not  nego- 
tiable, 83. 
release  under,  625-626. 
simple  contract  distinguished  from 

contract  under,  86. 
what  constitutes,  86  n. 
see  also  Deed. 
Securities,  effect  of  illegality  on,  896- 

402. 
Services, 
assignability  of  contract  for,  448, 

451-452. 
contract    for    goods    distinguished 

from,  127-131. 
impossibility    of    performance    of, 

640,  655-658. 
inducing   breach  of    contract  for, 

416-419. 
misfeasance  in  gratuitous,  167-174. 
no  recovery  for  gratuitous,  14-15. 
remedy  for  breach  of  contract  for, 

564-571,  574-575. 
specific    performance    of    contract 

for,  616. 
survival  of  contract  for,  479-486. 
when  injunction    granted  in  con- 
tract for,  619-624. 
Several,  see  Joint. 

Sickness,  impossibility  by,  655-658. 
Signature    to    memorandum    under 

statute  of  frauds, 
by  party  to  be  charged  sufficient, 

102-108,  110  n. 
by  auctioneer,  101 . 
where  to  be  placed,  103. 
with  pencil,  108-109. 
Silence, 

as  acceptance,  21-25. 
see  also  Non-disclosure. 
Simple  contract   distinguished   from 

specialty  and  negotiable  paper, 

1.33. 
Specialty,  see  Seal. 
Specific  performance, 
meritorious  consideration  required, 

66. 
not  decreed  for  uncertainty,  159-160. 
when  decreed,  516-517,  6i;3-618. 


INDEX. 


897 


Stare  decisis,  illustrated,  188. 
State, 
breach  of  contract  by,  700-701. 
coniract  injurious  to  public  service 

:)f,  340-;U7. 
coiiti-act  injurious  to  relation  be- 
tween State  and,  215-217,  391- 
3Uo. 
statute  impairing   contracts  with, 
090-701. 
Statute, 
contracts  in  breach  of,  315-337. 
impairing  obligation  of  contracts, 
074-701. 
Statute  of  frauds,  see  Frauds,  statute 

of. 
Statute    of   limitations,  see  Limita- 
tions, statute  of. 
Stranger, 
interference  with  contract  by,  416- 

419. 
payment  of  another's  debt  by,  206- 
208,  412-415. 
Subject-matter, 
impossibility  arising  from  destruc- 
tion of,  649-655. 
mistake  as  to,  246-204. 
Subscriptions,  consideration  for,  35- 

38.  199  n. 
Subsidiary  promises,  see  Warranty, 
Substantial  performance,  542-654. 
Substituted  agreement,  177-195,  436, 

442-444,  524-530. 
Suggestion  of  falsehood,  284  n. 
Sunday  contracts,  318-323,  561. 
Suppression  of  truth,  see  Non-disclos- 
ure. 
Surety,  113-118,  489,  493. 
Survival   of   obligation   after   death, 
479-485. 

Tacit  contract,  379. 

Taxation  exemption  as  contract,  099  n. 

Telegraph,  contract  by,  46-48,  715. 

Tender, 
discharge  of  contract  by,  541-542. 
required  when  conditions  are  con- 
current, 570,  578,  580-682. 

Terms,  distinguished  from  representa- 
tions, 206-208. 

Tickets  of  common  carrier,  notice  of 
limitations  in,  15-20. 


Timber,  statute  of  frauds  and  aale  ot 

growing,  124-127. 
Time, 
as  of  essence  of  contract,  69,  615- 

617,  685. 
discharge  of  right  of  action  by  lapse 

of,  635-6:i8. 
lapse  of  offer,  41-48. 
payment  indivisible  when  it  is  to 
be  within  reasonable,  102. 
Title  to  personalty  when  pa«ses  by 

sale,  249-262,  660. 
Tobacco,  refraining  from,  as  consider- 
ation, 143-146. 
Tort, 
agreement  to  commit,  338-330. 
compromise  of,  349. 
inducing  breach  of  contract,  416- 

419. 
obligation  arising  from,  6  n. 
Trade,  restraint  of,  see  Kestraitif  of 

trade. 
Trust, 
obligation   arising   from,   147-150, 

423-427,  437  n. 
applicability  of  doctrine  in  contract 
for  benefit  of  third  party,  423- 
427,  428 n.,  430. 

Uberrima    fides,    273-280,    289-290, 
313-314. 

Ultra  vires,  222-223,  371. 

Uncertainty,  consideration  unreal  by, 
157-162. 

Undue  influence,  311-314,  406. 

Usages  of  trade,  608-610. 

Usury, 
cimsideration  for  substituted  non- 
usurious  contract,  211. 
effect  of,  663. 

Valuable  consideration, 
what  i.s,  152-174. 
when  ncces-sary,  151. 
Value,  mistake  as  to,  249-252,  26.>- 

201. 
Valid,    its    meaning    In    statute    of 

frauds,  96. 
Void, 
contracts  ultra  vires,  222-223. 
effect  of  illegal  distinguished  in»n 
883-380. 


898 


INDEX. 


Void,  when  infant's  contract  is,  218- 

219. 
Voidable, 
distinguished  from  null,  238-243. 
infant's  contract,  218-221. 
when   contract    by  lunatic  is  not, 
224-227. 
Voluntary  services,  see  Gratuitous. 

Wagers, 

at  cards,  390-391. 

in  insurance,  333-337. 

on  existing  fact,  324-325. 

on  marriage,  360. 

on  rise  and  fall  of  prices,  325-332, 
383-389,  796. 

on  sports,  407-411. 
Waiver, 

as  discharge,  522-524,  840. 

of  answer  to  insurer's  interroga- 
tory, 275. 

when  acceptance  of  less  is  no,  587. 


War,  contract  with  enemy,  215-217. 

Warranty, 
and  condition  distinguished,  353  n. , 

594-596,  598-603,  609-611. 
as  condition  subsequent,  609-611. 
deed,  covenants  distinct  in,  670. 
in  answer  to  insurer's  interrogatory, 

277. 
in  maritime  and  insurance  law  is 

condition,  586. 
of  quality,  595-597,  599,  601,  610. 
Writing,  contract  in, 
alteration  of,  660-666. 
does  not  import  consideration,  88, 

133-134. 
materials  used  for,  108-109. 
proof  of  execution,  500-502. 
whether   contract   or  evidence    of 

contract,  94. 
see  also  Frauds,  statute  of,  Parol 

evidence. 


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